Medicare Physician Data-driven Performance Payment System Act of 2026

Key Points

• This bill replaces the current Merit-based Incentive Payment System (MIPS) with a new Data-driven Performance Payment System (DPPS) starting January 1, 2027. The new system changes how Medicare measures and rewards physician performance.
• Starting in 2028, doctors who score above the performance threshold get a 25% bonus (factor of 1.25), those at the threshold get no change (factor of 1), those below get a 25% cut (factor of 0.75), and the lowest performers who fail to report required data get a 50% cut (factor of 0.5).
• Doctors are protected from penalties if the government fails to send them timely performance feedback. The government must deliver quarterly reports within 60 days of the end of each quarter, or the penalty cannot be applied.
• Small practices with 15 or fewer professionals can receive extra lump-sum payments from leftover penalty funds to improve care, adopt health technology, or join value-based care models. Rural, shortage area, and underserved practices may get priority.
• The bill caps how high the performance threshold can be set through 2033 (no higher than 75 points), giving doctors years to adjust. The cap can be extended if extraordinary events like natural disasters, public health emergencies, or cyberattacks disrupt data collection.
• The system is designed to be budget neutral. The bonus payments to high-performing doctors are funded entirely by the penalty reductions applied to low-performing doctors, so total Medicare spending stays the same.