A bipartisan group of lawmakers introduced the Provider Reimbursement Stability Act on March 31, 2026 — legislation that would fundamentally restructure how Medicare calculates annual physician payment updates. The bill, introduced by Rep. Greg Murphy, MD (R-NC) and supported by members of both parties, would cap year-over-year changes in the Medicare conversion factor at 2.5%, index the budget neutrality threshold to inflation, and require CMS to update practice expense calculations at least every five years. For the specialty practices, ASCs, and anesthesia groups that Cosentus serves, this is one of the most significant reimbursement reform proposals in years — and one that directly addresses the compounding financial pressure physicians have absorbed over the past decade.
1. The Problem: 33% Real-Dollar Decline Since 2001
The urgency behind the Provider Reimbursement Stability Act is rooted in a stark financial reality. According to the American Medical Association, when adjusted for inflation, Medicare reimbursement for physician services has declined 33% from 2001 to 2026. Most physicians absorbed a 2.9% pay cut in 2025, and the current fee schedule already projects another 2.2% cut in 2027 under existing law. These are not hypothetical future risks — they are built into the Medicare formula unless Congress acts. For the specialty practices most dependent on Medicare — including orthopedics, anesthesia, pain management, cardiology, and behavioral health — this trajectory has created a structural mismatch between the cost of delivering care and the revenue Medicare returns for it. As labor costs, malpractice premiums, and supply expenses climb, Medicare reimbursement goes in the opposite direction. The result is shrinking margins, reduced access for Medicare patients, and growing pressure on independent practices to consolidate or exit the Medicare program altogether.
2. What the Bill Would Do — Three Key Provisions
The Provider Reimbursement Stability Act addresses the core structural flaws in Medicare’sphysician payment formula with three targeted reforms:
First, it would cap annual variance in the Medicare conversion factor at plus or minus 2.5%. Under current law, the budget neutrality requirement can trigger arbitrary and unpredictable cuts when new codes are added or utilization patterns shift — with no floor on how deep those cuts can go. A 2.5% cap would give practices a reliable ceiling on how much Medicare revenue can decline in any single year, enabling more accurate financial planning and reducing the volatility that makes multi-year practice investment decisions difficult.
Second, the bill would raise the budget neutrality threshold from $20 million to $54.3 million and index it to inflation going forward. The current $20 million threshold was set in the 1990s and has never been updated — meaning that coding updates and valuation changes that would barely register at a modern healthcare scale trigger sweeping reimbursement reductions under a formula that was never designed to handle them. Adjusting this threshold to reflect current realities would significantly reduce the frequency and severity of payment cuts triggered by routine administrative updates.
Third, the legislation would require CMS to update practice expense calculations at least every five years. These calculations — which determine how much of a physician payment reflects overhead, staff, and supplies — have not been comprehensively refreshed to reflect modern clinical practice costs. As telehealth, EHR infrastructure, and clinical support staffing have become standard operating costs for specialty practices, the underlying expense data driving Medicare payments has fallen increasingly out of step with reality.
3. Impact on Specialty Practices and ASCs
If enacted, the Provider Reimbursement Stability Act would have meaningful and immediate implications for every specialty that Cosentus serves. In orthopedics, where procedure codes like total knee and hip arthroplasty have already been subject to CMS reimbursement reductions, a 2.5% cap would limit the damage from future formula-driven cuts. In anesthesia,where Medicare base units and time units drive case-level revenue, preventing sudden rate swings would allow groups to manage staffing and contract structures with greater predictability.
For pain management and behavioral health practices — which often operate on tighter margins and see a higher proportion of Medicare patients than other specialties — stabilizing the conversion factor is a direct bottom-line issue. And for ASCs planning capital investment in new service lines or facility expansions, the ability to model physician revenue over a multi-year horizon without planning for worst-case annual cuts changes the investment calculus significantly.
4. Where the Bill Stands — and Why RCM Teams Should Pay Attention Now
The Provider Reimbursement Stability Act has bipartisan support and backing from major physician organizations including the American Medical Association. Similar legislation was introduced in the prior Congress but did not advance to a floor vote. The political environment in 2026 — with physician payment cuts already locked in for 2027 and broad provider community pressure — gives this bill a more realistic path forward than previous iterations.
Even while the bill moves through the legislative process, its introduction signals the direction of federal policy pressure and gives revenue cycle teams a concrete framework for planning. Practices should use this moment to benchmark their current Medicare revenue exposure by specialty and procedure, model the impact of both best-case (bill passes) and baseline (cuts proceed) scenarios on 2027 cash flow, and ensure their coding and documentation practices are optimized to capture every allowable reimbursement dollar under the current fee schedule while reform efforts continue.
5. What a Stabilized Payment System Means for Revenue Cycle Strategy
One of the underappreciated consequences of annual Medicare payment volatility is the distortion it creates in revenue cycle planning. When practices cannot predict whether Medicare revenue will fall 2% or 5% in a given year, it creates a bias toward conservative coding, under-investment in billing infrastructure, and reactive rather than strategic RCM management. A more stable payment environment changes this dynamic — allowing practices to invest in the process improvements, technology, and staffing that drive long-term revenue performance rather than simply defending against the next cut.
Regardless of how the legislation progresses, the environment it reflects — growing bipartisan recognition that physician reimbursement has fallen to unsustainable levels — reinforces the case for RCM excellence. Every dollar of Medicare revenue that a practice is entitled to but fails to capture due to coding gaps, claim errors, or missed documentation is a dollar that cannot be recovered through legislative action. The stability that the Provider Reimbursement Stability Act would provide is meaningful precisely because it preserves the base from which revenue cycle performance drives actual practice income.
What This Means for Specialty Practices
The Provider Reimbursement Stability Act is the most significant Medicare physician payment reform proposal in years — and it addresses a problem that every specialty practice billing Medicare has felt for decades. Whether or not it passes in its current form, it confirms that the status quo of compounding annual cuts is politically and financially unsustainable. For RCM teams, the most productive response is not to wait on legislation — it is to ensure that the Medicare revenue your practice is already entitled to is being captured with precision, speed, and maximum compliance. That is where Cosentus operates every day.
How Cosentus Helps
Cosentus provides full-service revenue cycle management for ASCs and specialty practices —built to maximize Medicare reimbursement under any payment environment:
- Medicare Coding Optimization: We audit your procedure and diagnosis coding against current CMS fee schedules to identify undercoding, missed modifiers, and documentation gaps that reduce Medicare payment.
- Conversion Factor Monitoring: Our team tracks CMS rule changes, MAC bulletins, and legislative developments in real time — so your practice knows the moment any reimbursement update affects your specialties.
- Denial Management & Appeals: We identify and appeal Medicare claim denials with specialty-specific expertise, recovering revenue that generic RCM processes routinely leave behind.
- Anesthesia & Orthopedic Billing: We specialize in the high-complexity billing requirements of anesthesia, orthopedics, pain management, cardiology, and behavioral health — the specialties most exposed to Medicare payment volatility.
- Reimbursement Scenario Modeling: We work with practice leadership to model revenue impact under proposed and enacted CMS payment changes — enabling proactive planning rather than reactive damage control.
Schedule a revenue cycle assessment with Cosentus: cosentus.com/contact
