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S 5180

Provider Reimbursement Stability Act of 2026

119th Congress Introduced by John Boozman and 5 co-sponsors

The bill stabilizes Medicare provider payments by replacing budget neutrality rules with explicit, indexed thresholds and periodic updates to costs and utilization to reduce paymen

Introduced in Senate
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WeVote Research Nonpartisan
Bill Summary · S 5180

Overview

  • Title: Provider Reimbursement Stability Act of 2026
  • Bill number: S.5180 (119th Congress, 2nd Session)
  • Purpose: Amend title XVIII of the Social Security Act to enhance stability and predictability of Medicare provider payments, primarily by adjusting budget neutrality rules, updating payment calculations, and improving timing and transparency of changes to the Medicare Physician Fee Schedule (MPFS) and related conversion factors.
  • Introduced: July 30, 2026
  • Principal sponsors: Sen. Boozman (with cosponsors including Sens. Welch, King, Marshall, Tillis, Shaheen)

What the bill intends to do

  • Stabilize Medicare provider payments under the Physician Fee Schedule by modifying how budget neutrality adjustments are calculated and applied.
  • Introduce explicit, gradually increasing budget neutrality thresholds and indexing mechanisms.
  • Improve accuracy and timeliness of cost inputs and utilization estimates used to set Medicare payment rates.
  • Limit year-to-year volatility in the conversion factor used to compute payments.

Key provisions and changes

1) Updating the budget neutrality threshold

  • Replaces the current threshold with a new “Amount Specified” structure.
  • Sets explicit annual dollar thresholds for the budget neutrality calculation:
    • Before 2028: $20,000,000
    • 2028: $57,640,000
    • 2029 and thereafter: the amount from the preceding year (with automatic annual carryover)
  • Adds an indexing mechanism:
    • Every 5 years starting in 2033 (i.e., 2033 and every fifth year thereafter), the amount is increased by the cumulative MEI (Medicare Economic Index) growth for physicians’ services over the previous five-year period.

2) Budget neutrality corrections related to estimated utilization

  • Creates a new subsection (clause (vii)) to handle adjustments when utilization is estimated rather than observed.
  • For years beginning in 2029, if there is a discrepancy between estimated and actual utilization for a specified service, the Secretary may adjust the conversion factor during the assumption correction period to reconcile the difference if it exceeds a defined threshold.
  • Defines terms:
    • Assumption correction period: the second year after the applicable year.
    • Estimated utilization: use of estimates for applying the budget neutrality adjustments.
    • Specified service: a service with expenditures based on estimated utilization above a threshold and with payment bundled into another service in the prior year.
    • Threshold amount: 0.1% of total estimated expenditures under this part for the year.

3) Exclusions related to reconciliation adjustments

  • Clarifies that certain assumption-correction adjustments are not counted when applying other reconciliation adjustments.
  • Adds a new subclause to address reductions attributable to assumption corrections during the correction period.

4) Timely updates to direct costs used to calculate practice expense RVUs

  • Requires simultaneous updates to direct cost inputs (at least every 5 years) used to calculate practice expense relative value units (RVUs) for physician services.
  • Updates must apply category-wide and be coordinated in the same year across all relevant direct-cost input categories (e.g., clinical staff wages, medical supplies, equipment).
  • Mandates Secretary consultation with stakeholders (including physician specialty societies) in making updates.

5) Limitation on year-to-year conversion factor variance

  • Beginning in 2028, caps the annual variance in the conversion factor due to budget neutrality adjustments to 2.5% relative to the prior year’s established factor, excluding any adjustments already provided under the statute.
  • Reiterates that the overarching budget neutrality requirement remains in effect notwithstanding this limitation.

Who is affected

  • Medicare providers and practitioners who participate in the Physician Fee Schedule (physician, clinical, and related professionals) whose payments are calculated under MPFS.
  • Direct-cost input authors (e.g., medical suppliers, equipment manufacturers, healthcare employers) due to updated input pricing.
  • The Centers for Medicare & Medicaid Services (CMS) and the Secretary of Health and Human Services, which would administer the revised budget neutrality rules, utilization adjustments, and input updates.

Procedural and timeline aspects

  • Effective date alignment begins with calendar year 2029 for certain utilization-based adjustments.
  • Introduces a schedule for updating direct-cost inputs at least every five years, with the first update due within five years after enactment.
  • Indexing adjustments occur every five years starting in 2033.
  • The 2.5% annual conversion factor variance cap applies beginning in 2028.
  • The bill specifies how adjustments are to be implemented within the final rulemaking for the physician fee schedule and defines associated correction periods.

Potential impact (high-level)

  • Aims to reduce abrupt payment swings in Medicare provider payments by stabilizing budget neutrality calculations and tying adjustments to explicit, indexed thresholds.
  • Seeks to improve accuracy of payer calculations by aligning updates to actual cost inputs with updated utilization estimates.
  • Could improve predictability for medical practices in budgeting and staffing decisions, while balancing federal budget neutrality requirements.
  • Might increase CMS administrative complexity due to new correction periods, threshold computations, and stakeholder consultation processes.

Compiled from official sources — confirm details with the bill’s official record.

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