CMS has unveiled a proposed rule for the 2026 Medicare Physician Fee Schedule, including a new ambulatory specialty care model aimed at improving chronic disease management and reducing costs.
“We are taking meaningful steps to modernize Medicare, cut waste and improve patient care,” Mehmet Oz, MD, CMS administrator, said in a July 14 news release. “We’re making it easier for seniors to access preventive services, incentivizing health care providers to deliver real results, and cracking down on abuse that drives up costs. This is how we protect Medicare for the next generation while helping Americans live longer, healthier lives.”
Here are six notes on the rule:
1. The newly proposed ambulatory specialty model claims to address “significant areas of Medicare spending” like low back pain and heart failure. Specialists who detect worsening chronic condition signs early will be rewarded beginning in January 2027 for avoiding hospitalizations, coordinating better with primary care and early intervention. The model encourages tech-enabled patient engagement and will run through December 2031.
2. Medicare spending on skin substitutes increased from $256 million in 2019 to more than $10 billion in 2024, the release said, according to Medicare Part B claims data. To tackle this, CMS has proposed treating skin substitutes as incident-to supplies instead of biologicals, which could cut product spending by up to 90% and save billions without foregoing patient access.
3. CMS proposed removing 10 quality measures that do not improve patient health outcomes and introduced five new ones, with an emphasis on preventive services and expanding Medicare diabetes prevention program access through offering no-cost support, coaching dietary change practical training, behavior change strategies and physical activity to prevent Type 2 diabetes for prediabetic Medicare beneficiaries.
“CMS is also issuing a request for information to gather recommendations on improving wellness, prevention, and chronic disease management,” the release said. “This includes input on nutrition counseling and physical activity.”
4. Through use of hospital data and by moving away from outdated practitioner surveys, CMS aims to better align physician payments across settings of care. It is also working to make certain COVID-era telehealth flexibilities permanent and to expand digital mental health tool coverage.
5. CMS has proposed two separate conversion factors for 2026 to reflect statutory changes and adjustments for proposed work relative value units. Qualifying [advanced alternative payment] participants would see a 3.83% increase to $33.59 and non-QPs would see a 3.62% increase to $33.42.
6. “For the last four years, powerful interests have targeted independent medical practices,” HHS Secretary Robert F. Kennedy Jr., said in the release. “Thanks to Dr. Oz’s decisive leadership, this rule modernizes CMS payment systems, eliminates perverse incentives and harnesses better data to improve care for patients with chronic disease while protecting the future of hometown doctors.”
