This bill amends Medicare payment law to change how certain surgical procedures that rely on high‑cost supplies are paid when they are done in physician offices. It directs CMS to treat those procedures more like ambulatory surgical center services for payment purposes, establishes an "office‑based facility" enrollment route with health and safety standards, and directs CMS to limit beneficiary coinsurance for these procedures while adjusting provider payments.
The change is aimed at recognizing the real supply costs of some office procedures and reducing patients' out‑of‑pocket exposure, but it also rewrites site‑of‑service payment incentives, creates new enrollment and compliance obligations for physician practices, and hands CMS a new annual rulemaking task to maintain the list of covered procedures and thresholds.
At a Glance
What It Does
Directs CMS to apply ASC‑style payment rules to a set of surgical procedures performed in physician offices that involve expensive supplies, while creating a distinct office‑based facility category that must meet standards and enroll with Medicare. It also caps beneficiary coinsurance for those procedures and requires CMS to annually review which procedures qualify.
Who It Affects
Physician practices that perform supply‑intensive procedures in office settings, ambulatory surgical centers and hospital outpatient departments that compete for the same cases, Medicare beneficiaries who receive those procedures, and CMS (which must administer the new payment rules and enrollment requirements).
Why It Matters
Shifts reimbursement toward recognizing supply costs in office settings and changes site‑of‑service incentives—potentially increasing program outlays while altering where procedures are performed, who is paid, and how much patients owe at point of care.
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What This Bill Actually Does
The bill creates a new statutory pathway so certain supply‑intensive surgical procedures performed in a physician’s office can be paid under Medicare as if they were ambulatory surgical center (ASC) services, but subject to modified facility payment rules. To do that it adds a new subsection to the payment rules that cross‑references ASC payment methodology and a separate statutory vehicle that specifies how facility payments for these office settings are calculated.
CMS is told to treat the specified procedures as ASC‑type services for payment purposes, but the law layers on carve‑outs and adjustments intended to differentiate true ASCs from office settings.
To be eligible to receive the modified payments, a physician’s office must qualify as an "office‑based facility" under new statutory criteria. That category is not merely a label: the office must meet health, safety, and other standards prescribed by the Secretary, sign an agreement to accept the statutory payment as full payment for facility services, accept assignment for Medicare claims for those services, and participate for all such procedures.
The bill also integrates state inspection and certification processes by directing CMS to consult state agencies when establishing conditions of participation and permitting states to help determine compliance.The bill relies on a 2023 baseline to identify which procedures fall into the covered class: it looks at which codes, when billed in physician offices, included supply price inputs above a specified threshold in the practice expense methodology. CMS must review that list every year and add or remove procedures through rulemaking based on updated price inputs and an indexing rule tied to the Medicare Economic Index.
For procedures that are classified as device‑intensive under existing Medicare regulatory criteria, the statute instructs CMS to apply the existing device‑intensive payment formulas but with a reduced non‑device component.Beneficiary liability is adjusted: the statute imposes an upper limit on coinsurance for these facility services (linked to Medicare’s inpatient hospital deductible) and includes a mechanism that increases the office‑based facility’s payment when enforcing that cap would otherwise reduce the provider's net payment. The result is a blended statutory regime that attempts to recognize high supply costs in office settings while preserving ceilings on what beneficiaries can be charged and formalizing the enrollment/compliance pathway for offices that want the new payment.
The Five Things You Need to Know
The payment rules for these office‑based, high‑supply procedures take effect beginning in 2027.
The statute layers two adjustments so that facility payments to enrolled office‑based facilities end up at 80% of the amount calculated under the new 1834(bb) rule, and that 1834(bb) itself sets facility payments at 90% of the ASC payment amount—together producing a net payment equal to 72% of the ASC facility payment for a comparable service.
The bill caps beneficiary coinsurance for these facility services at the Medicare inpatient hospital deductible for the year; if applying that cap would lower what a provider would otherwise receive, CMS must increase the payment to the office‑based facility by the difference.
A surgical procedure qualifies if, per a 2023 baseline, it was payable as an ASC service when performed in an ASC and, when performed in a physician’s office, included a HCPCS code whose practice‑expense supply price input exceeded $500 (with a special rule that sums multiple identical supply items when applicable).
An office must enroll as an "office‑based facility," meet CMS health and safety standards, sign an agreement to accept the payment amounts as full payment, accept assignment for claims, and participate under Medicare for all such procedures to receive the new facility payments.
Section-by-Section Breakdown
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Short title
Names the measure the Promoting Fairness for Medicare Providers Act of 2026. This is the formal caption used to reference the statute in reports and rulemakings; it carries no operational effect but signals the bill’s policy focus to agencies and stakeholders.
Coverage expansion language
Amends the coverage clause in section 1832(a)(2)(F) to explicitly include "specified high supply cost surgical procedures" furnished in an office‑based facility. Practically, this removes an ambiguity that previously limited facility‑service coverage to entities the Secretary specified and makes the category available by statute for procedures that meet the bill’s definition.
New payment method for specified procedures
Adds a new payment subsection (1834(bb)) that instructs CMS to calculate payment for the identified procedures by treating them similarly to ASC services while imposing a tailored facility payment percentage. It also amends the general payment provision in 1833(a)(1) so that facility services associated with these procedures get paid under the new 1834(bb) path and are reduced by an additional statutory fraction. The law also creates a special application route for procedures that meet CMS’s device‑intensive regulatory definition, directing CMS to apply the device‑intensive formulas with an adjusted non‑device portion.
Coinsurance cap and make‑whole for providers
Places a statutory ceiling on beneficiary coinsurance for the facility portion of these procedures by tying it to the inpatient hospital deductible, and requires CMS to increase the facility payment to the office‑based facility by any difference if applying the cap would otherwise reduce the provider’s total coinsurance collection. That creates an explicit mechanism to keep provider receipts whole while limiting patient out‑of‑pocket exposure.
Definition and annual review process
Defines qualifying procedures using a 2023 baseline: the procedure must be ASC‑payable when performed in an ASC and, when performed in an office, include a HCPCS code where the practice‑expense supply price input exceeded a statutory threshold. The Secretary must perform an annual review starting in 2028 to add or remove procedures via rulemaking, using a threshold that is adjusted by the Medicare Economic Index and with permissive removal criteria tied to a percentage of that threshold. The statute also includes a logic rule for procedures that use multiple identical supply items to ensure cumulative costs are counted.
Office‑based facility enrollment, standards, and provider agreements
Creates the "office‑based facility" concept and conditions participation on meeting CMS regulations for safety and standards and on executing an agreement that accepts statutory payment amounts and assignment of benefits. The bill amends provider agreement and enrollment statutes to require CMS to treat approved physician offices under these new terms and to consult state agencies when setting conditions of participation and determining compliance, leveraging state inspection capacity.
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Explore Healthcare in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Medicare beneficiaries receiving supply‑intensive office procedures — they face a statutory cap on coinsurance tied to the inpatient deductible, which reduces point‑of‑care out‑of‑pocket exposure for costly supplies.
- Physician practices that perform qualifying procedures in office settings — they gain access to facility payments through the new office‑based facility enrollment route, creating a revenue stream that recognizes supply costs previously absorbed as practice expense.
- Device and high‑cost supply manufacturers and suppliers — the law explicitly recognizes expensive supply inputs within Medicare’s payment calculus, preserving reimbursement that underwrites continued use of those supplies in office settings.
Who Bears the Cost
- The Medicare program (taxpayer/benefit financing) — expanded payment recognition and the make‑whole mechanism for providers increase program outlays relative to current office‑only practice expense payments.
- CMS and federal/state oversight bodies — agencies must implement annual reviews, complex payment calculations (including device‑intensive rules), establish office standards, run enrollment, and coordinate with state agencies, adding administrative burden and rulemaking demand.
- Small physician offices that seek to enroll — clinics must invest in meeting CMS health and safety standards, negotiate the enrollment agreement, and comply with assignment and billing rules, imposing operational and compliance costs.
Key Issues
The Core Tension
The central dilemma is between fairly compensating office‑based care for legitimately high supply costs (improving access and reducing patient bills) and protecting Medicare’s budget and the integrity of site‑of‑service payment incentives; the bill solves the first at the risk of expanding program outlays and creating incentives and administrative complexity that could be gamed or that may shift care to less regulated settings.
The bill attempts to thread a narrow needle: it wants to pay for genuine high‑supply costs in office settings without simply converting every office procedure into an ASC payment. That approach creates several implementation and policy risks.
First, basing qualification on historical practice‑expense price inputs from 2023 and a single dollar threshold invites gaming and freezes reimbursement eligibility on past coding and price reporting rather than on current clinical necessity. Providers or coders could reclassify supply items or bundle items to meet thresholds, and CMS will have to police those coding incentives.
Second, the payment architecture is layered and mechanically complex: it cross‑references ASC payment rules, applies a reduced facility fraction, then applies another statutory fraction through the general payment clause, and then provides a make‑whole adjustment tied to beneficiary coinsurance limits. That complexity raises disputes over how to map existing codes and supply inputs into the new math, especially for device‑intensive procedures that invoke Federal Register formulae.
Administrative burdens and appeals may increase as providers and CMS reconcile calculations. Finally, the policy trade‑off between improving beneficiary protection and controlling program spending is explicit: capping coinsurance and making providers whole shifts costs to Medicare and may encourage migration of procedures to office settings to capture facility payments, with uncertain implications for quality, oversight, and total program spending.
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