CMS Releases CY 2026 Medicare Physician Fee Schedule Proposed Rule

Highlights

• The Centers for Medicare & Medicaid Services (CMS) has released the calendar year (CY) 2026 Medicare Physician Fee Schedule Proposed Rule aimed at payment policies and other outpatient services covered under Medicare Part B.
• Among adjustments from the previous year, the CY 2026 Qualifying Alternative Payment Model (APM) conversion factor is projected to increase by $1.24, or 3.83 percent. This is the first payment increase for physicians in five years.
• This Holland & Knight details the proposed rule, comments for which are due by Sept. 12, 2025.

The Centers for Medicare & Medicaid Services (CMS) on July 14, 2025, issued the calendar year (CY) 2026 Proposed Rule, which proposes payment policies and other outpatient services covered under Medicare Part B. Comments are due by Sept. 12, 2025.

Key Resources

• Proposed Rule Text (CMS-1832-P)
• CMS Press Release
• Fact Sheet – Full Physician Fee Schedule (PFS)
• Fact Sheet – Medicare Shared Savings Program (MSSP)
• CY 2026 Proposed Rule Supporting Materials/Addenda
• Quality Payment Program (QPP) Fact Sheet and Policy Comparison Table
• New Innovation Center Model – Ambulatory Specialty Model (ASM)

Key Takeaways

• Conversion Factor Updates. Separate updates for Qualifying Alternative Payment Model (APM) Participants (QP) and non-QP clinicians are proposed for 2026. This is the first year CMS will implement separate conversion factors based on QP status. The CY 2026 qualifying APM conversion factor is projected to increase by $1.24 (3.83 percent) to $33.59, from the current $32.35. Similarly, the CY 2026 nonqualifying APM conversion factor is projected to increase by $1.17 (3.62 percent) to $33.42, from $32.35.
• Efficiency Adjustment. In a groundbreaking move, CMS is proposing its first-ever efficiency adjustment. The adjustment would apply to the work Relative Value Unit (RVU) and corresponding intraservice portion of physician time of non-time-based services. This would apply to all codes except time-based codes, such as evaluation and management (E/M) services, care management services, behavioral health services and services on the Medicare telehealth list. Specialties that rely more heavily on time-based codes, such as family medicine and psychiatry, could see small RVU increases, while procedural or diagnostic specialties, such as radiology and some surgical fields, may see slight reductions. CMS anticipates that most specialties would see no more than a 1 percent change in total RVUs.
• Proposed Site of Service Payment Differential. CMS proposes adjusting the methodology for allocating indirect practice expense (PE) RVUs based on the site of service. Specifically, for services valued in the facility setting, CMS would reduce the portion of indirect PE RVUs tied to work RVUs to half the amount used for non-facility services.
• New ASM. CMS proposes implementing ASM to improve specialty care for heart failure and low back pain by incentivizing early detection and reduced hospitalizations. If finalized, the model will commence in January 2027 and run for five performance years through December 2031.
• Telehealth and Supervision Flexibilities. CMS proposes to permanently allow direct supervision via real-time audio/video for lower-risk services and extend telehealth billing flexibilities for federally qualified health centers (FQHCs) and rural health clinics (RHCs) through 2026.
• Prevention and Behavioral Health. CMS emphasizes chronic disease prevention and behavioral health integration, proposing new optional add-on codes to support advanced primary care and psychiatric Collaborative Care Model services.
• Inflation Reduction Act (IRA) Implementation. CMS seeks to clarify that units of selected drugs sold at the maximum fair price (MFP) under the Medicare Drug Price Negotiation Program must be included in average selling price (ASP) calculations and proposes methods to remove 340B units from inflation rebate calculations and establish a new 340B Repository.
• Skin Substitutes. CMS proposes treating skin substitutes as incident-to supplies rather than biologicals in an effort to curb Medicare spending.

Key Payment Updates

PFS Conversion Factor. Beginning in 2026, there will be two separate conversion factors for qualifying APM participants (QPs) and one for non-qualifying APM (non-QPs) participants. The update to the qualifying APM conversion factor (which applies to Physician Fee Schedule (PFS) payments for QPs) for CY 2026 is 0.75 percent, while the update to the nonqualifying APM conversion factor (which applies to MPFS payments for all other clinicians) for CY 2026 is 0.25 percent.

The change to the PFS conversion factors for CY 2026 includes these updates as required by statute (Section 71202 of the One Big Beautiful Bill Act – OBBB, H.R. 1), a one-year increase of 2.5 percent for CY 2026 and an estimated 0.55 percent adjustment necessary to account for proposed changes in work RVUs. Thus, the CY 2026 qualifying APM conversion factor represents a projected increase of $1.24 (3.83 percent) from the current conversion factor of $32.35, for a total of $33.59. Similarly, the CY 2026 nonqualifying APM conversion factor represents a projected increase of $1.17 (3.62 percent) from the current conversion factor of $32.35, for a total of $33.42. See Table 88 for more information.

Anesthesia Conversion Factor. Conversion factor of 20.6754. See Table 90 for more information.

Total Allowed Charges by Specialty. See Table 92, which 92 shows the impact on PFS payment for physicians' services based on the proposed policies included in this rule. Table 92 presents data by specialty and setting (facility or non-facility), showing the total allowed charges based on CY 2024 utilization and CY 2025 rates, which include coinsurance and deductibles. It details the estimated CY 2026 impact on these allowed charges from changes in work RVUs, practice expense (PE) RVUs and malpractice (MP) RVUs. The table also provides the combined estimated impact of these changes on allowed charges, though this combined figure may not exactly equal the sum of the individual impacts due to rounding. Many changes come from a small number of high-volume or high-value codes, so individual providers might experience different impacts than the specialty-wide average.

Key Policy Updates

Determination of PE RVUs

Background. Since 1992, Medicare has paid for physician services under the PFS using national relative values for work, PE and MP, adjusted geographically. The PE component accounts for general PEs (e.g., office rent, staff wages), excluding MP costs. CMS uses a resource-based approach to determine PE RVUs, factoring in both direct (clinical labor, supplies, equipment) and indirect (administrative, overhead) costs.

Direct PE Calculation. Calculated by totaling the clinical labor, supplies and equipment typically used per service based on CMS' PE database. These inputs are updated through Relative Value Scale Update Committee (RUC) recommendations and public comment, then scaled and converted to RVUs to fit within budget targets.

Indirect PE Calculation. Derived from specialty-specific survey data, primarily the 2007-2008 Physician Practice Information Survey (PPIS), which reports indirect costs per hour (PE/HR). CMS uses the higher of clinical labor or work RVUs, combined with direct costs, to calculate an "indirect allocator" for each service.

Facility vs. Non-Facility. Separate PE RVUs are calculated depending on the setting. Facility RVUs are typically lower as they exclude overhead costs covered by the facility. For services with both professional and technical components, CMS ensures that the sum of the component payments equals the global payment.

Final Adjustments. Direct and indirect PE RVUs are combined and adjusted for budget neutrality. Any RVU reductions over 20 percent are phased in over two years to maintain relativity across components. This ensures PE RVUs reflect actual resource use while maintaining appropriate relativity with work and MP RVUs.

Allocation of PE to Services: Proposed Site of Service Adjustment

In this proposed rule, CMS notes that data suggests that fewer than half of physicians currently own their practices, but the underlying assumption embedded in the PFS payment methodology presumed that physicians generally maintained office practices (and incurred associated indirect costs) even when they furnished care in facility settings. For these reasons, for each service valued in the facility setting under the PFS, CMS is proposing to reduce the portion of the facility PE RVUs allocated based on work RVUs to half the amount allocated to non-facility PE RVUs beginning in CY 2026. CMS states that allocating equal indirect PE across settings may overstate costs for facility-based physicians and distort relativity. CMS notes this change aims to better reflect the true expense profile of the service site.

Development of Strategies for Updates to PE Data Collection and Methodology

CMS does not propose to implement new PE/HR or cost share data from the American Medical Association's (AMA) recently submitted Physician Practice Information (PPI) and Clinician Practice Information (CPI) surveys for CY 2026 due to concerns about data accuracy and utility. The agency cites low response rates (3 percent to 9 percent), small effective sample sizes and wide confidence intervals that undermine confidence in specialty-level PE estimates. CMS will maintain current PE/HR data and the 2006-based Medicare Economic Index (MEI) cost shares for CY 2026.

Updates to Prices for Existing Direct PE Inputs and Technical Corrections

CMS proposes updated pricing for 35 supplies and seven equipment items based on public submissions. Additionally, 15 common supply packs with pricing discrepancies are proposed for adjustment through a multiyear transition. CMS also corrected various errors in equipment names and time inputs and declined to remove sub-$500 equipment from the database, citing long-standing use and negligible payment impact.

Payment for Services in Urgent Care Centers

CMS seeks comment on whether separate coding and payment is warranted for enhanced urgent care centers. A proposed add-on code would recognize unique costs associated with extended hours and diagnostic services. CMS invites input on whether the PE methodology adequately captures resource differences across non-facility settings.

Potentially Misvalued Services

CMS received 11 public nominations of potentially misvalued services for CY 2026, including:

• maxillofacial prosthetic services (CPT 21076-21087)
• allergen immunotherapy supervision (CPT 95145-95149)
• electronic neurostimulator analysis (CPT 95970, 95976-95977)
• excimer laser psoriasis treatment (CPT 96920-96922)
• fine needle aspiration (CPT 10021, 10004-10006)

Concerns raised included outdated PE inputs and changing site-of-service patterns. CMS is not proposing changes at this time but is seeking public comments and supporting data to evaluate these codes further.

Medicare Telehealth Services

Proposal to Modify the Medicare Telehealth Services List and Review Process

CMS proposes streamlining the Medicare Telehealth Services List review process by simplifying the current five-step evaluation. In response to stakeholder concerns that the existing process is unclear and requires clinical evidence that is often difficult to provide, CMS would eliminate Steps 4 and 5, which involve comparing the service being considered to existing services that have already been permanently approved, and assessing whether the telehealth version provides the same clinical benefit as in-person care. The streamlined three-step process would verify only that services are 1) separately payable under the PFS, 2) subject to Section 1834(m) and 3) capable of being furnished via interactive telecommunications. This change eliminates "permanent" vs. "provisional" distinctions, making all listed services permanent.

Changes to the Medicare Telehealth Services List

Under the simplified criteria, CMS is proposing adding five services: multiple-family group psychotherapy (90849), group behavioral counseling for obesity (G0473), infectious disease consultation add-on (G0545) and auditory osseointegrated sound processor services (92622, 92623). Table 2 reflects CMS' proposed determinations on requests received for additions to the Medicare Telehealth Services List. CMS declined to add dialysis procedures pending clarification on clinical circumstances and "hands-on" requirements, home INR monitoring (G0248), as it involves clinical staff rather than physicians, and telemedicine, E/M codes (98000-98015), as they are not separately payable.

Frequency Limitations on Telehealth Services

CMS proposes permanently removing frequency limitations established in 2011 and 2017 for subsequent inpatient visits (previously once every three days), subsequent nursing facility visits (once every 14 days) and critical care consultations (once daily). Claims data from 2020 to 2023 showed less than 5 percent of beneficiaries received these services via telehealth, and overwhelming stakeholder support exists for maintaining the flexibility introduced during the COVID-19 public health emergency (PHE).

Telehealth Originating Site Facility Fee Update

The facility fee for HCPCS Code Q3014 would increase from $31.01 to $31.85 for CY 2026.

Permanent Virtual Direct Supervision

Historically, "direct supervision" required a physician to be physically present in the office suite (though not necessarily in the same room) to provide immediate assistance if needed. During the COVID-19 PHE, CMS allowed virtual presence via real-time two-way audio/video to meet this requirement, a policy extended through Dec. 31, 2025. Recognizing its benefits for patient access and care modernization, CMS proposes to make virtual supervision permanent for most incident-to services under Section 410.26 starting Jan. 1, 2026. Exceptions include higher-risk surgeries with global surgery indicators 010 or 090, which would still require in-person supervision. Lower-risk services such as CPT 99211 would remain eligible for virtual supervision.

Direct Supervision via Use of Two-Way Audio/Video Communications Technology: FQHCs and RHCs

CMS is also proposing to permanently allow direct supervision through audio/video real-time communications technology (excluding audio-only) for RHCs and FQHCs, aligning with similar PFS proposals. This would formalize the flexibility implemented during the pandemic that has supported access and preserved workforce capacity.

Return to Pre-PHE Teaching Physician Policy

CMS proposes not extending the temporary PHE policy that allowed teaching physicians to have a virtual presence for billing services involving residents. Instead, the agency proposes reverting to the pre-PHE requirement for teaching physicians to be physically present during critical portions of resident-furnished services in Metropolitan Statistical Areas (MSAs), while maintaining the existing rural exception.

Valuation of Specific Codes

Efficiency Update: Establishing Work RVUs

CMS maintains the PFS through regular valuation of new, revised and potentially misvalued codes, utilizing recommendations from the RUC and other sources. Beginning in CY 2015, CMS transitioned from establishing interim final values to proposing values in the proposed rule for public comment. The agency reviews work RVUs, physician time and direct PE inputs using various methodologies, including survey data, building blocks, crosswalks and magnitude estimation. In this proposed rule, CMS is reassessing its reliance on RUC survey data due to growing concerns about its accuracy and representativeness. Issues include low response rates (as low as 2.2 percent), small sample sizes (some surveys had fewer than 30 respondents), potential conflicts of interest, and inflated or inconsistent time estimates. According to CMS, studies show RUC-reported times often exceed actual times, leading to overvalued procedure codes.

Recognizing that these surveys may not reflect real-world clinical practice, CMS is increasingly open to empirical alternatives such as data from electronic health records (EHRs), direct observation and claims data (e.g., anesthesia times). CMS also flags the infrequent revaluation of codes and ongoing undervaluation of E/M services. To address these concerns, CMS proposes a first-of-its-kind initial efficiency adjustment to the work RVUs and physician time inputs for non-time-based services (e.g., surgeries, imaging, diagnostics). This acknowledges that as clinicians gain experience and technology advances, procedures typically become more efficient.

CMS proposes a 2.5 percent downward adjustment, for certain codes, to work RVUs and intraservice physician time for non-time-based services (procedures, radiology, diagnostic tests) for CY 2026. Specialties that rely more heavily on time-based codes, such as family medicine and psychiatry, could see small RVU increases, while procedural or diagnostic specialties, such as radiology and some surgical fields, may see slight reductions. CMS anticipates that most specialties would see no more than a 1 percent change in total RVUs.

Proposed Methodology for the Efficiency Adjustment

To calculate the efficiency adjustment, CMS is proposing using the MEI productivity adjustment. For CY 2026, CMS is proposing to apply the efficiency adjustment using a lookback period of five years. CMS is soliciting comments on the initial lookback period and the use of the MEI productivity adjustment percentage values for calculation of the efficiency adjustment for 2026. CMS is seeking comments on whether adjustments should be made in future rulemaking to also adjust the direct PE inputs for clinical labor and equipment time that correspond with the physician time inputs.

If finalized for CY 2026, CMS is proposing to apply the efficiency adjustment to the intraservice portion of physician time and work RVUs every three years. This timing would imply that the next efficiency adjustment after CY 2026 would be calculated and applied in CY 2029 PFS rulemaking, reflecting efficiency gains measured from 2027 through 2029. CMS is proposing to update and apply the proposed efficiency adjustment with a cadence of every three years to align with the other updates under the PFS, including updates to the Geographic Practice Cost Index (GPCI) and MP RVUs, to allow for streamlining so that interested parties can expect updates on a similar time frame. CMS is also seeking comments as to whether efficiencies stop accruing for services after a predefined number of years.

Methodology for Direct PE Inputs

CMS reviews RUC-recommended direct PE inputs (clinical labor, supplies, equipment) on a code-by-code basis, refining recommendations to ensure consistency with established policies. Common refinements include adjustment changes in work time, standardization of equipment time calculations, application of standard clinical labor task times and removal of items that cannot be allocated to individual services. The agency encourages submission of invoices for new and existing supply and equipment items to improve pricing accuracy.

Valuation of Specific Codes for CY 2026

CMS proposes valuations for 149 codes across multiple specialties. Notable proposals include creating 46 new codes for lower extremity revascularization to replace 16 existing codes, establishing national pricing for previously contractor-priced services such as tympanostomy and prostate procedures, and seeking additional data for services such as MRI-guided ultrasound ablation (CPT 61715). For radiation oncology services, CMS proposes using the Outpatient Prospective Payment System (OPPS) APC relative weights rather than direct PE inputs to establish PE RVUs, addressing the capital-intensive nature of these services. Similarly, for remote monitoring codes (RPM/RTM), CMS proposes using OPPS cost data due to concerns about RUC-recommended PE input accuracy. The agency refined many RUC recommendations where decreases in surveyed work times were not adequately reflected in proposed work RVUs, particularly for surgical procedures showing significant time reductions.

E/M Visits and Integration of Behavioral Health Services

Background

In the CY 2024 PFS final rule, CMS finalized separate payment for the office/outpatient evaluation and management (O/O E/M) visit complexity add-on code, HCPCS Code G2211. This code was designed to capture the inherent complexity derived from longitudinal practitioner-patient relationships, recognizing the previously uncompensated cognitive effort involved in utilizing these relationships for diagnosis and treatment planning and building effective, trusting connections with patients. CMS established that the add-on code reflects the time, intensity and PE resources involved when practitioners serve as the continuing focal point for patients' healthcare needs or provide ongoing care for serious or complex conditions. The agency emphasized that billing eligibility is determined by the nature of the practitioner-patient relationship, rather than specific patient characteristics.

Proposed Expansion to Home and Residence E/M Visits

CMS is proposing to expand the use of HCPCS Code G2211 to include home and residence-based E/M visits (CPT Codes 99341, 99342, 99344, 99345, 99347, 99348, 99349, 99350). This proposal reflects stakeholder input emphasizing that home-based primary care often involves similarly complex, longitudinal relationships as those seen in office settings – particularly for patients who are unable to travel for care. CMS acknowledges that trust-building and ongoing relationship-based care are essential components of home visits, which typically occur monthly and involve comprehensive care coordination and proactive management of patients' full spectrum of needs. The agency further recognizes that these services require similar unreimbursed resource investments as office visits, particularly in maintaining clinical stability and avoiding complications. To support this, CMS proposes modifying the code descriptor for G2211 to explicitly include "home or residence" settings, thereby allowing clinicians to bill the add-on code when furnishing complex, relationship-based care across both office and home-based settings.

Enhanced Care Management. CMS is proposing three new add-on codes (GPCM1, GPCM2, GPCM3) to integrate behavioral health services into Advanced Primary Care Management (APCM) without requiring time-based documentation. Of note, CMS plans to value these codes by directly cross-walking from existing behavioral health integration (BHI) and collaborative care model (CoCM) codes and seeks input on cost-sharing for APCM services that may include preventive care and on potential new payments to accountable care organizations (ACOs) to promote broader use of APCM in primary care settings.

Advancing Access to Behavioral Health Services

Expanded Coverage for Digital Mental Health Treatment (DMHT)

CMS proposes expanding coverage to include U.S. Food and Drug Administration (FDA)-classified attention-deficit/hyperactivity disorder (ADHD) digital therapy devices under Section 882.5803, provided they are adjuncts to clinician-supervised care and meet special control requirements. Devices would follow the same payment conditions finalized for Codes G0552 to G0554 in CY 2025. CMS is also seeking input on covering similar devices for gastrointestinal (GI) conditions (Section 876.5960), sleep disorders (Section 882.5705) and fibromyalgia (Section 882.5804).

Comment Solicitation on SaaS Payment Policy

In response to comment feedback from an RFI in the CY 2025 proposed rule, CMS recognizes in this proposed rule that current PE valuation does not reflect the cost of software-as-a-service (SaaS) and artificial intelligence (AI)-driven technologies. CMS highlights its ongoing contract with RAND Corp. to analyze and develop alternative methods for measuring PE, its ongoing commitment to continue to study possible alternatives and its analysis of the updated PPI and CPI Survey data in this proposed rule. Further, the agency is requesting feedback on pricing methodologies, their use in risk-based models, valuation of physician interpretation work and whether OPPS rates could serve as benchmarks for SaaS-enabled procedures.

Chronic Disease Prevention and Management: RFI

CMS is soliciting input on enhancing Medicare's approach to chronic disease, including service coding gaps, use of wearable tech, social isolation interventions and support for intensive lifestyle or medically tailored meal programs. CMS is also seeking comment on covering FDA-cleared digital therapeutics, revising Annual Wellness Visit components and adding services such as motivational interviewing and health coaching under general supervision.

Behavioral Health Integration via CHI and PIN

CMS proposes clarifying that marriage and family therapists (MFTs) and mental health counselors (MHCs) may deliver comprehensive health integration (CHI) and principal illness navigation (PIN) services as auxiliary personnel under supervision, aligning their role with clinical social workers. CMS also proposes expanding allowable initiating visits for CHI to include CPT Codes 90791 and 96156 to 96168 when addressing mental illness,

Terminology Update for Upstream Drivers of Health

CMS plans to delete HCPCS Code G0136 for social determinants of health (SDOH) risk assessment, citing duplicative costs already captured in E/M services. The agency also proposes replacing SDOH with "upstream driver(s)" in G0019 .

Payment for Skin Substitutes. Starting Jan. 1, 2026, CMS proposes to implement separate payment for skin substitutes when furnished as incident-to supplies in conjunction with a covered procedure – marking a notable departure from the current bundled payment approach.

Historically, CMS has reimbursed skin substitutes primarily as biologicals under Section 1847A of the Social Security Act, using an ASP-based methodology. However, CMS notes that in recent years it has seen a proliferation of new products – particularly minimally manipulated tissues – with rising launch prices and utilization. CMS notes that according to Medicare claims data, Part B spending for these products rose from approximately $250 million in 2019 to more than $10 billion in 2024, a nearly 40-fold increase, while the number of patients receiving these products only doubled.

CMS previously raised concerns regarding the sustainability of existing payment models, as well as provider confusion stemming from coding inconsistencies and setting-based payment discrepancies.

Separate Payment as Incident-To Supplies

Beginning in CY 2026, CMS proposes to:

• pay separately for skin substitutes not licensed as biologicals under Section 351 of the Public Health Service (PHS) Act
• classify these products as incident-to supplies when used in conjunction with a covered application procedure under the PFS in non-facility settings and OPPS
• continue paying for Section 351-licensed biologicals using the existing ASP methodology

CMS emphasizes that site of service should not be distorted by payment disparities, nor should payment incentivize use of higher-cost products lacking additional clinical value.

Payment Categories Based on FDA Regulatory Pathways

CMS proposes to classify and reimburse skin substitutes using three FDA regulatory pathways – intended to reflect clinical distinctions, resource variability and regulatory rigor:

1. PMA-approved devices
2. 510(k)-cleared devices, including De Novo
3. self-determined 361 HCT/Ps

For CY 2026, CMS proposes a single blended rate of $125.38 per cm² across all categories. The rate was calculated based on proposed PE and MP RVUs prior to the application of geographic adjustments.

CMS proposes to base payment rates for each category on the volume-weighted average ASP for products within that group when ASP data is available. If ASP data is not available for a given product, CMS would use the MUC data from the hospital outpatient setting. If neither ASP nor MUC data is available, CMS would fall back on the wholesale acquisition cost (WAC) or 89.6 percent of the average wholesale price (AWP). The 89.6 percent of AWP was calculated by first reducing the usual 95 percent of AWP price by 6 percent to generate a value that is similar to WAC with no percentage markup. The agency plans to use hospital outpatient utilization patterns to inform the payment methodology, with the intent of eventually incorporating combined utilization data from both settings as it becomes available.

CMS will update payment rates annually through notice-and-comment rulemaking, using the most recent calendar quarter of ASP data when available. The agency is specifically seeking feedback on whether relying on a single quarter of ASP data is the most appropriate approach. CMS is also soliciting input on whether and how to apply PE scaling factors to maintain payment relativity between skin substitutes and other services and supplies paid under the PFS, particularly once broader utilization and cost data are available for use in PFS rate setting.

CMS is also seeking public comment on potential alternatives such as:

• setting separate rates for each category
• using pooled averages
• creating additional subgroupings to reflect product and resource variation

Codification and Coding Framework

To support the new policy, CMS proposes to:

• codify the term "biological" to refer specifically to products licensed under Section 351 of the PHS Act
• retain the existing HCPCS coding structure but align payment categories with FDA regulatory status rather than ASP data
• assign payment for new products based on FDA classification and update rates annually
• move all skin substitute HCPCS code applications to the standard biannual coding cycle beginning January 2026

Strategies for Improving Global Surgery Payment Accuracy

Notably, based on audit findings, the U.S. Department of Health and Human Services' (HHS) Office of Inspector General (OIG) recently concluded that providers are furnishing fewer postoperative visits than CMS assumes, indicating that global surgery payments may not reflect actual clinical practice. CMS notes in the proposal that its current assumed procedure shares are based on outdated or unclear data. For example, CMS assumed more post-operative visits happen than actually do, based on claims data. For 90-day global procedures in 2023, only about 28 percent of expected post-op visits actually occurred. Under the Medicare Access and CHIP Reauthorization Act (MACRA), CMS has been collecting real claims data on post-operative visits to better understand how many visits actually happen and how work is divided between surgeons and other providers. CMS has developed three alternative methods to calculate updated procedure shares, all based on claims and Physician Time File data, but differing in how they handle:

• work RVUs assigned to post-op visits
• the number of post-op visits expected or actually performed
• physician time spent on post-op care

CMS prefers the second approach, which uses claims-based counts of actual post-operative visits reported with no-pay CPT Code 99024. CMS also identified a few surgical codes categorized as 90-day global packages that do not have assigned percentages for pre-op, procedure or post-op care. CMS is seeking input on whether these codes should be classified as 90-day globals and, if so, what the correct percentage splits should be. CMS is requesting public comments on how procedure shares for 90-day global packages should be determined. Additionally, the agency is seeking input from stakeholders regarding current practice standards and how work is divided between surgeons and providers of post-operative care. Since there is currently no clear basis for the existing procedure shares, this process will provide an opportunity for stakeholders to help define what those shares should be.

Determination of MP RVUs

CMS is proposing updating MP RVUs using revised risk index values based on current state-level insurance premiums. CMS seeks comment on specialty mixes for low-volume codes, while ensuring changes remain budget-neutral.

GPCIs

CMS is proposing updating Geographic Practice Cost Indices (GPCIs) using refreshed wage, rent and insurance data to better reflect local cost differences. The GPCIs will be phased in over two years as required by law, with half applied in 2026. Of note, statutory floors for Alaska and frontier states are retained, and territories such as Puerto Rico and the U.S. Virgin Islands will continue to use national averages. CMS will keep using 2006-based cost share weights and invites feedback on future integration of updated data and streamlined methodologies.

ASM

The CMS Innovation Center is proposing a mandatory five-year ASM aimed at holding specialists who historically treated at least 20 Original Medicare patients with heart failure (HF) or low back pain and within selected core-based statistical areas or metropolitan divisions (roughly one quarter) financially accountable for management of these chronic conditions. The ASM is proposed for the performance period from Jan. 1, 2027, through Dec. 31, 2031 (payment period from Jan. 1, 2029, through Dec. 31, 2033).

For heart failure, participants would be physicians who specialize in general cardiology. For low back pain, participants would be physicians who specialize in anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, or physical medicine and rehabilitation. Participants (individual specialists) would be assessed for their performance in four categories: quality, cost, care improvement and improving interoperability. Based upon participants final scores in these categories, participants would receive a positive, negative or neutral adjustment on future Medicare Part B claims for covered services, ranging from +/-9 percent for the first payment year.

The model aims to reward specialists for effective disease management, reduced "avoidable" hospital admissions, adherence to clinical guidelines for care and coordination with other providers involved in the management of their patients' care.

If finalized as proposed, CMS would provide enhanced data feedback to participants and require them to implement:

• collaborative care arrangements with primary care
• preventive care screening in partnership with primary care
• support for lifestyle changes and health-related social needs screening in partnership with primary care
• health information exchange data sharing

MDPP

CMS is proposing several Medicare Diabetes Prevention Program (MDPP) changes, including testing asynchronous online delivery from 2026 to 2029, adding new definitions and flexibilities to support virtual participation and aligning with Centers for Disease Control and Prevention (CDC) standards. Of note, the proposal includes allowing weight documentation from medical records, expanding acceptable self-reporting locations, and introducing a new HCPCS code (G9871) with an $18 payment rate for online sessions

Medicare Prescription Drug Inflation Rebate Program

CMS is using this rulemaking to propose changes to both Part D and Part B Inflation Rebates programs. Generally, CMS is proposing technical refinements in Part B, including methods for calculating payment amounts when standard data are unavailable and treating drugs covered as additional preventive services as rebatable drugs. Notably, CMS is proposing significant changes:

Drugs and Biological Products Paid Under Medicare Part B Requiring Manufacturers of Certain Single-Dose Container or Single-Use Package Drugs to Provide Refunds with Respect to Discarded Amounts

CMS received two applications (Leukine and Jelmyto) for increased applicable percentage. In both cases, CMS is proposing to maintain current rates and does not anticipate an impact on Medicare spending

Average Sales Price: Price Concessions and BFSFs

CMS is proposing to add a definition of "bundled arrangement" at Section 414.802, requiring manufacturers to allocate discounts proportionally across all products in bundled sales arrangements, consistent with Medicaid's approach. The proposal addresses how manufacturers should "unbundle" both contingent and noncontingent discounts and allocate them proportionally to the total dollar value of all products in the arrangement. CMS seeks comment on alternative allocation methods for complex bundled arrangements and how to handle discounts across time periods for value-based purchasing arrangements

CMS is also proposing to revise the definition of "Bona Fide Service Fees" (BFSFs) by 1) specifying the methodology that should be used to determine Fair Market Value (FMV) and the time period after which manufacturers should reassess the FMV and 2) further explaining what CMS considers to be sufficient evidence of whether or not a fee is passed on in whole or in part to an affiliate, client or customer of an entity. Effective January 2026, manufacturers must submit certification letters from BFSF recipients confirming fees are not passed to affiliates, clients or customers under the proposal. CMS provides specific examples of fees that should be considered price concessions rather than BFSFs, including payments to distributors for credit card processing fees that enable purchasers to avoid additional charges, payments for tissue procurement as part of manufacturing processes, certain data-sharing service fees that exceed FMV or are required for legal compliance, and distribution service fees that exceed FMV.

CMS Comments on Further Guidance on BFSF Definition

CMS acknowledges that it discussed the option of providing a list of bona fide services in the CY 2007 PFS Final Rule but that "many commenters at that time were opposed to establishing a list ... ." Now, CMS is stating it is "proposing some specific, non-exhaustive examples of fees and how they should be considered in the calculation of manufacturer's ASP."

ASP: Units Sold at MFP

Under the Medicare Drug Price Negotiation Program, CMS negotiates an MFP for certain high-expenditure, single-source drugs payable under Medicare Part B and covered under Part D (i.e., selected drugs). In this proposed rule, CMS clarifies that because the statute does not explicitly exclude these sales, units of selected drugs sold at the MFP must be included in the calculation of a manufacturer's ASP, effective Jan. 1, 2026.

Autologous Cell-Based Immunotherapy and Gene Therapy Payment

Consistent with current payment policies for Chimeric Antigen Receptor (CAR) T-cell therapies, CMS proposes to not pay separately for individual steps involved in manufacturing autologous cell-based immunotherapies or gene therapies, such as raw material collection or related labor. CMS considers these manufacturing steps to be included in the payment for the drug or biological itself, as reflected in the billing and payment code for the product.

Beginning Jan. 1, 2026 (for sales occurring on or after that date), CMS also proposes that any preparatory procedures for tissue procurement paid by the manufacturer must be included in the calculation of the manufacturer's ASP. Additionally, payments made by the manufacturer to an entity for tissue procurement would not qualify as BFSFs, as CMS considers these services integral to the product's manufacture and, therefore, part of its total price.

MSSP

CMS is proposing several MSSP changes, including limiting one-sided risk participation to five years for new ACOs, requiring at least 5,000 assigned beneficiaries in benchmark year three and capping savings/losses for smaller ACOs.

Changes to Regulations Associated with the Ambulance Fee Schedule

CMS is proposing two temporary payment add-ons extended in the Full-Year Continuing Appropriations and Extensions Act of 2025: Medicare ground ambulance add-on payments and the Super Rural Bonus.

Updates to QPP and Medicare Promoting Interoperability Program

CMS notes that it is proposing "... a limited number of policies for QPP, keeping our focus on stability in the program." Effectively, the proposed rule seeks to simplify current reporting measures by updating several calculation methodologies. Notably, one of the new improvement activities includes "Patient Safety Use of Artificial Intelligence," which would involve developing a new data-collection field within patient safety reporting systems for AI-attributable events. According to the proposal, this would include events where "actual harm was caused to a patient because AI technology was used, as well as near misses" (Table F-B1). CMS is also seeking input on well-being and nutrition measures for future years in the QPP.

Significant adjustments are proposed to existing and new Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs), with proposed updates including six new MVPs for the CY 2026 performance period – Diagnostic Radiology, Interventional Radiology, Neuropsychology, Pathology, Podiatry and Vascular Surgery – beginning with the CY 2026 performance period/2028 MIPS payment year. CMS has updated the format of the MVP tables to stratify quality measures by clinical conditions and/or episodes of care for each MVP identified as "Clinical Groupings." When applicable, an "Advancing Health and Wellness" and/or "Experience of Care" clinical grouping is included for cross-cutting quality measures. (In addition, CMS is proposing to give qualified clinical data registries (QCDRs) and qualified registries additional flexibility by allowing up to one year after an MVP is finalized to support it – relieving some immediate reporting burdens for groups transitioning to MVP.

Regarding the performance threshold, CMS is proposing to maintain the performance threshold at 75 points through the CY 2028 performance period/2030 MIPS payment year.

For specialty sets that included "Screening for Social Drivers of Health," "Connection to Community Service Provider" and "Adult COVID-19 Vaccination Status," CMS has proposed removal.

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