This bill allows for larger annual adjustments to the Medicare physician fee schedule. It also requires the Centers for Medicare & Medicaid Services (CMS) to make certain corrections to compensate for expenditures under the fee schedule that exceed a certain amount in a given year, and it limits how much certain adjustment factors may vary each year.

Current law prohibits annual adjustments to the Medicare physician fee schedule that would result in a more than $20 million difference between the adjusted amount and the non-adjusted amount of total expenditures. The bill increases this threshold to $57.64 million beginning in 2028, with adjustments for inflation every five years beginning in 2033.

Additionally, for certain services, the bill requires the CMS to determine the difference between expenditures based on estimated utilization of the service and expenditures based on actual utilization. If this difference exceeds a certain percentage of total expenditures under the fee schedule, the CMS must reconcile this difference by adjusting payments for the following year. This requirement applies to services for which payment was bundled with another service and there was a separate or add-on payment during the previous year.

Finally, the CMS must update the prices and rates of each category of direct costs that affect payments (e.g., prices of equipment) at least every five years, with updates made to each category in the same year. The bill also prohibits the CMS from varying a certain adjustment factor by more than 2.5% each year.