The House Ways and Means Committee unanimously approved legislation that would promote Medicare physician fee service (PFS) payment stability by modernizing budget neutrality requirements.
Budget neutrality ensures that any Medicare PFS policy change resulting in a significant increase in spending, with a threshold of $20 million, which was set in 1992, is offset by reductions to other services or overall PFS reimbursement. This policy has frequently resulted in unfair and permanent cuts. The Provider Reimbursement Stability Act (H.R. 8163), led by Reps. Greg Murphy (R-NC) and Tom Suozzi (D-NY), increases the current budget neutrality threshold to $58 million, indexing it to inflation.
The impact of an outdated budget neutrality threshold has been exacerbated by the Centers for Medicare and Medicaid Services (CMS) incorrectly predicting the impact of their policy changes. For example, the primary care code (G2211) was overestimated by approximately $1 billion, resulting in a 10 percent decrease in PFS payments.
H.R. 8163 would improve transparency and accountability by requiring CMS to compare policy change cost estimates with actual utilization data and provide correction adjustments if inaccurate cuts were made.
The legislation also provides payment predictability by preventing CMS from making changes to the PFS that would result in year-to-year changes greater than 2.5 percent, and it requires CMS to incorporate more frequent and accurate cost inputs when determining the value of services. In 2022, CMS updated clinical labor rates for the first time in 20 years, causing a large swing in reimbursement evaluations.
ACOFP strongly supports H.R. 8163 and continues to encourage its members to contact congressional lawmakers and urge cosponsorship of the bill. ACOFP members can take action here.