The Centers for Medicare & Medicaid Services (CMS) has released the highly anticipated CY 2026 Medicare Physician Fee Schedule (MPFS) proposed rule. This sweeping proposal, spanning over 1,800 pages, outlines crucial updates to physician reimbursement, practice expense methodology, value-based care programs, and drug pricing under Medicare Part B and D.
Whether you’re a solo physician, practice administrator, or health system leader, understanding these proposed Medicare payment changes is essential for planning and compliance in the upcoming year.
Key Payment Updates in the 2026 MPFS Proposed Rule
📌 Dual Conversion Factors for APM and Non-APM Providers
Beginning in 2026, CMS proposes:
- 1.2% increase for Qualifying APM participants (Conversion Factor: $32.7365)
- 0.7% increase for non-APM providers (Conversion Factor: $32.5765)
This change stems from statutory mandates under Section 1848(d)(20) of the Social Security Act and recognizes providers’ participation in value-based care models.
Practice Expense RVU Reform and Supply Pack Pricing Overhaul
🧾 Refined Practice Expense (PE) Methodology
CMS is proposing a major shift in indirect PE allocation:
- Facility-setting services will see only half the indirect PE RVUs allocated via work RVUs, recognizing reduced overhead for hospital-employed or facility-based physicians.
💼 Supply Pack Price Updates
In response to stakeholder feedback, CMS proposes:
- Price corrections for 15+ supply packs, with changes phased in over four years (2025–2028) to avoid major payment disruptions.
- Examples:
- Pelvic Exam Pack (SA051): reduced from $20.16 to $2.81
- Post-op Suture Care Pack (SA054): increased from $4.62 to $10.34
This gradual implementation mirrors CMS’s past transitions and aims to maintain RVU relativity and budget neutrality.
Major Programmatic Updates and Quality Initiatives
🩺 Telehealth Expansion and Audio/Video Supervision
CMS continues expanding coverage and payment for:
- Digital mental health services
- Two-way audio/video supervision for select services
- Remote supervision for incident-to billing, critical in behavioral health and primary care settings.
🧠 Behavioral Health Access Improvements
Key additions include:
- Payment codes for enhanced care management
- Greater support for integrated behavioral health models
- Revisions to the digital mental health treatment codes
💊 Medicare Drug Inflation Rebate Program Enhancements
CMS refines the rebate calculation formulas and proposes:
- 340B discount data repository for Part D
- New methodologies for excluding certain drug units from rebates.
Shared Savings Program (ACO) and Quality Payment Program (QPP) Revisions
🏥 ACO Participation and Benchmarking
Changes aim to:
- Refine beneficiary assignment
- Update benchmarking methodology
- Clarify ownership change rules for SNF affiliates and ACO participants.
📊 QPP and MIPS Enhancements
CMS updates:
- Performance measures
- Promoting Interoperability Program
- Rules for Advanced APM track participation.
Regulatory & Economic Impact
The Office of Management and Budget (OMB) considers this proposed rule economically significant, with implications for over $90 billion in annual Medicare payments. The proposed updates reflect CMS’s attempt to modernize reimbursement to align with evolving practice models, technology, and legislative mandates (e.g., Inflation Reduction Act, CAA 2023).
Submit Your Comments: Deadline and Participation
Stakeholders are encouraged to submit feedback by [INSERT 60-day date post July 16, 2025] through:
- 💻 Regulations.gov (File code: CMS-1832-P)
This is a critical opportunity to influence final rulemaking and protect your practice’s financial sustainability.
Final Thoughts
The CY 2026 MPFS proposed rule reflects significant shifts in how Medicare values physician services, from site-neutral indirect PE allocations to a more refined supply cost framework. Practices must review their coding, billing, and operational strategies now to prepare for January 2026.
Stay tuned as we monitor CMS’s final rule release and provide deeper dives into the policy implications for specialties, settings, and service lines.
