On July 14, 2025, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule for the 2026 Medicare Physician Fee Schedule (PFS). The proposal delivers a wide range of updates, as expected, aimed at refining Medicare Part B payments while emphasizing value and efficiency.
Here’s a breakdown of some important changes:
- Payment Updates Under MACRA
- CMS is continuing with the MACRA framework, meaning payment updates will vary based on whether providers participate in an Advanced Alternative Payment Model (AAPM).
- AAPM Qualifying Participants (QPs) will see a 0.75% increase with a conversion factor of $33.59.
- Non-QPs (including those from MIPS) get a 0.25% increase with a conversion factor of $33.42. These participants are also eligible for potential performance-based adjustments paid out in 2028.
- Why It Matters: Being part of an ACO in an Advanced APM means higher payments and less reporting work, underscoring CMS’s steady shift toward value-based care.
- CMS is continuing with the MACRA framework, meaning payment updates will vary based on whether providers participate in an Advanced Alternative Payment Model (AAPM).
- Tackling Payment Disparities Across Care Settings
- To reduce the gap in payments between hospital-based and outpatient services, CMS is proposing:
- Lowering practice expense inputs for facility-based providers.
- Using hospital outpatient data to set payment rates for services like radiation therapy and remote monitoring.
- Why It Matters: Lower reimbursement for hospital-based care could push more services into outpatient settings, which are generally more cost-effective.
- To reduce the gap in payments between hospital-based and outpatient services, CMS is proposing:
- Updates to Medicare Shared Savings Program (MSSP)
- Key proposed changes to the MSSP program include:
- Limiting participation to upside only for 5 years (down from 7).
- More flexibility with the 5,000-beneficiary requirement.
- Introducing new G-codes for behavioral health integration and collaborative psychiatric care.
- Covering cyber-attacks under the Extreme and Uncontrollable Circumstances (EUC) policy.
- Why It Matters: These changes are intended to help small or rural ACOs stay engaged in MSSP by offering greater flexibility and support.
- Key proposed changes to the MSSP program include:
- MSSP Quality Reporting Changes
- CMS is proposing to:
- Remove the Screening for Social Drivers of Health measure.
- Eliminate the health equity adjustment from final quality scores.
- Align MSSP assignment to Medicare CQM patient population definitions.
- Make changes to Breast Cancer Screening measure specifications to align the eligible age range across all reporting times (40-74).
- CMS is proposing to:
- Quality Payment Program (QPP) and MIPS Updates
- MIPS performance threshold will stay at 75 points through 2028.
- Adds individual QP determinations for clinicians in AAPMs.
- Six new MIPS Value Pathways (MVPs) are proposed for specialties like radiology, neuropsychology, pathology, podiatry, and vascular surgery.
- Why It Matters: This offers stability for MIPS participants and opens more tailored pathways for specialists to engage in value-based care.
- Telehealth Expansion
- The Medicare Physician Fee Schedule Proposed Rule outlines several changes designed to increase flexibility and remove administrative burdens:
- Continued coverage for a broad range of telehealth services.
- Support for audio-only telehealth in specific circumstances.
- Why It Matters: This proposal aims to protect access to care in underserved and rural regions and provide greater support for ongoing care needs, especially in behavioral health and chronic disease management.
- The Medicare Physician Fee Schedule Proposed Rule outlines several changes designed to increase flexibility and remove administrative burdens:
- Skin Substitute Reform
- CMS suggests changing how it pays for skin substitutes under Part B. Some skin substitutes would no longer use the Average Sales Price (ASP) methodology but would be reimbursed as “incident-to” supplies with a single payment per square centimeter, subject to geographic adjustment.
- Why It Matters: This reform targets wasteful spending while preserving access to clinically effective wound care products.
- Other Annual Payment Updates
- Home Health: A proposed 6.4% cut in payments.
- DME: Updates to Medicare’s DME provision process, accreditation renewals, and home medical equipment suppliers.
- ERSD: A 1.9% increase, bringing the base rate to $281.06.
- OPPS/ASC: A 2.4% payment update for providers who meet quality reporting requirements.
What This Means for Providers
If finalized, the Medicare Physician Fee Schedule Proposed Rule will bring payment increases for most providers, though efficiency adjustments could offset gains for certain services. Telehealth and behavioral health services would see expanded support, while reforms in skin substitutes and drug pricing aim to curb costs. Rural and underserved practices may benefit from continued flexibility in supervision and telehealth billing.
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