Provider Reimbursement Stability Act Introduced to Adjust Medicare Physician Payment Framework

A bipartisan group of lawmakers has introduced new legislation aimed at modifying how physician payments are determined under Medicare, with a focus on improving flexibility while limiting sharp annual changes. The proposal, titled the Provider Reimbursement Stability Act, was introduced in the House earlier this week and referred to committee.

The bill is led by Rep. Greg Murphy, M.D., R-N.C., who had previously put forward similar legislation in an earlier Congress that did not advance. The current proposal has support from members of both political parties and comes amid ongoing concerns from physician groups regarding payment reductions under existing law.

Recent adjustments to physician reimbursement have included a 2.9% decrease in 2025, followed by a 3.3% increase in 2026, which incorporates a temporary 2.5% boost from the One Big Beautiful Bill Act. However, a further 2.2% reduction is scheduled for 2027. According to physicians and Murphy, these fluctuations do not keep pace with rising operational costs and may contribute to workforce changes such as retirements or consolidation of practices.

The legislation does not propose long-term increases in physician pay but instead seeks to address variability in annual payment updates. Supporters have indicated that current mechanisms for determining payment rates can lead to inconsistencies between projected and actual costs.

One component of the bill would raise the budget neutrality threshold from $20 million to $54.3 million. It also includes a provision to adjust that threshold every five years in line with medical expense inflation. This change is intended to give the Centers for Medicare and Medicaid Services (CMS) more flexibility when modifying payment rates for specific services without requiring offsetting reductions elsewhere.

Additionally, the bill would allow CMS to revise inaccurate utilization forecasts for billing codes without triggering automatic payment cuts under existing budget neutrality rules. It also proposes limiting annual changes to the conversion factor, the amount Medicare pays per relative value unit (RVU), to 2.5%, which is intended to provide more consistency for physician practices when planning budgets. Another provision would require CMS to update the direct cost inputs used in calculating practice expense RVUs every five years.

“Unfortunately, the current budget neutrality framework within the Medicare physician fee schedule can create uncertainty and unintended pay cuts based on outdated policies or faulty assumptions,” said Rep. Tom Suozzi, D-N.Y., in a statement.

Medical organizations have expressed support for the proposed changes. The American Medical Association noted that inaccurate forecasts for new services can result in unintended financial consequences for providers and patients. Its president, Bobby Mukkamala, M.D., stated that the legislation would allow for recalibration when projections do not match actual utilization, helping to avoid unnecessary reductions.

The Medical Group Management Association also commented on the proposal, stating that existing budget neutrality requirements can lead to reimbursement reductions in unrelated areas when adjustments are made. Anders Gilberg, the organization’s senior vice president of government affairs, said these rules have affected payment stability and the ability of medical groups to continue serving Medicare patients, while adding that the group plans to work with Congress on the legislation.

In addition to Murphy and Suozzi, the bill is sponsored by several representatives, including Brad Schneider, John Joyce, Marianette Miller-Meeks, Bob Onder, Jimmy Panetta, Kim Schrier, and Robin Kelly.

What Is the Provider Reimbursement Stability Act?

The Provider Reimbursement Stability Act is a proposed policy aimed at restructuring how reimbursement is calculated under Medicare. The goal of this reimbursement reform is to stabilize physician payments, reduce uncertainty, and align reimbursement models with current healthcare costs and inflation trends.

Why Reimbursement Reform Is Needed

Healthcare providers have faced repeated reimbursement cuts and inconsistent updates under the existing Medicare payment framework. This reimbursement instability can impact patient access to care and strain provider operations. The new reimbursement legislation aims to introduce a more predictable and transparent payment structure.