Тhe CY 2026 PFS Proposed Rule: Opportunities and Challenges for Medicare Providers in a Value-Driven Era 

For American physicians and practices navigating the shifting sands of Medicare reimbursement, the Centers for Medicare & Medicaid Services (CMS) Calendar Year (CY) 2026 Physician Fee Schedule (PFS) proposed rule—CMS-1832-P—arrives as both a scalpel and a shield. Released on July 14, 2025, this rulemaking targets explosive spending growth, streamlines preventive care, and introduces accountability mechanisms that could reshape specialty workflows. With comments closed on September 12, 2025, the final rule looms large, promising modest payment bumps alongside efficiency mandates that demand proactive adaptation. At its core, the proposal aligns with the Trump administration’s “Make America Healthy Again” agenda, emphasizing fraud reduction, chronic disease prevention, and data-driven valuation—potentially safeguarding independent practices while pressuring high-volume proceduralists to pivot toward outcomes. 

For providers, the stakes are clear: a projected 3.3% to 3.8% conversion factor increase offers breathing room amid inflation, but a -2.5% efficiency adjustment for non-time-based services signals CMS’s intolerance for outdated valuations. As the U.S. Health and Human Services Secretary Robert F. Kennedy, Jr., noted, “For the last four years, powerful interests have targeted independent medical practices… This rule modernizes CMS payment systems, eliminates perverse incentives, and harnesses better data to improve care.” Yet, implementation will test operational agility, particularly in wound care, chronic management, and specialty coordination. 

Taming the Skin Substitute Surge: A 90% Spending Cut on the Horizon 

No element of the proposed rule has sparked more urgency among dermatologists, podiatrists, and wound care specialists than the overhaul of skin substitute payments. Medicare Part B expenditures for these products in non-facility settings ballooned from $252 million in 2019 to over $10 billion in 2024—a nearly 40-fold leap driven by aggressive pricing and questionable clinical utility. CMS attributes much of this to abusive practices, exemplified by the Fraud Defense Operations Center’s interception of over $1 million in improper claims from a medical group where a psychiatrist allegedly billed for wound services. 

Under current policy, skin substitutes are reimbursed as high-cost biologicals—up to $2,000 per square inch—fueling volume over value. The proposal reclassifies them as “incident-to” supplies, pegged to FDA status (e.g., HCT/Ps, PMAs, 510(k) devices), with a single blended rate for CY 2026 and differentiated payments thereafter. This shift, applicable in both physician offices and hospital outpatient departments, is projected to slash spending by nearly 90%, yielding billions in Trust Fund savings without curtailing access to evidence-based options. 

For providers, this isn’t mere belt-tightening; it’s a call to audit inventories and prioritize clinically validated products. Early adopters could leverage the change to streamline supply chains, reducing administrative drag while aligning with CMS’s push for competition. However, transitional disruptions loom: practices reliant on high-margin substitutes may face cash flow squeezes, underscoring the need for diversified revenue in preventive wound management. As CMS Administrator Dr. Mehmet Oz emphasized, “We’re cracking down on abuse that drives up costs… This is how we protect Medicare for the next generation.” 

Elevating Prevention: Streamlined Measures and Expanded Diabetes Support 

The rule’s preventive thrust resonates deeply with primary care providers, who bear the brunt of chronic disease burdens—six in ten Americans have at least one, four in ten two or more. To refocus the Merit-based Incentive Payment System (MIPS), CMS proposes trimming the quality measure roster from 195 to 190 by removing 10 topped-out or misaligned metrics, such as Colonoscopy Interval for Adenomatous Polyps (ID 185) and Overuse of Imaging for Primary Headache (ID 419). In their place, five new measures emphasize actionable prevention: Screening for Abnormal Glucose Metabolism (eCQM) to flag prediabetes risks; Patient-Reported Falls and Plan of Care for neurological patients; and Hepatitis C Sustained Virological Response (SVR) for virologic cure tracking. 

Central to this is the expanded Medicare Diabetes Prevention Program (MDPP), now accessible at no cost to prediabetic beneficiaries for lifestyle coaching, peer support, and behavior change training—poised to delay Type 2 onset and avert downstream costs. Complementing this, optional add-on G-codes for Advanced Primary Care Management (APCM) integrate behavioral health (BHI/CoCM), easing documentation burdens and fostering holistic care. A parallel Request for Information (RFI) seeks input on nutrition counseling, physical activity, and well-being metrics, potentially birthing measures for emotional health and social connections. 

Providers stand to gain from reduced reporting fatigue—MIPS performance threshold holds at 75 points through 2028—and new Improvement Activities like Integrating Oral Health in Primary Care, which could unlock medium scoring (20 points) via targeted trainings. Yet, the “health equity” pivot from high-priority definitions may dilute focus on social determinants, challenging practices in underserved areas to demonstrate value without explicit incentives. 

The Ambulatory Specialty Model: Rewarding Coordination in High-Cost Arenas 

For cardiologists and orthopedists, the proposed Ambulatory Specialty Model (ASM) introduces mandatory accountability in selected regions, targeting heart failure (HF) and low back pain (LBP)—Medicare’s costliest chronic conditions via avoidable hospitalizations and procedures. Launching January 1, 2027, for five years through 2031, ASM holds outpatient specialists to performance metrics: early deterioration detection, functional gains, hospitalization reductions, and electronic data-sharing with primary care. 

Incentives tilt toward collaboration—upside payments for superior outcomes and coordination—while downside risks enforce cost accountability, generating shared savings. This upstream focus could cut low-value interventions, but regional mandates risk uneven burdens; voluntary pilots might have eased entry. As Deputy Administrator Chris Klomp stated, “We’re advancing technical improvements that reward high-quality, efficient care.” Specialists should view ASM as a data hygiene imperative, investing in interoperable tech to thrive. 

Precision in Payments: Efficiency, Telehealth, and Innovation 

Broader reforms aim for valuation equity. A -2.5% work RVU efficiency adjustment—mirroring five-year Medicare Economic Index productivity trends—targets non-time-based codes, potentially trimming reimbursements for procedures like imaging. CMS favors empiric claims data over low-response surveys for future inputs, using hospital Outpatient Prospective Payment System (OPPS) benchmarks for radiation and monitoring services to bridge office-facility gaps. 

Telehealth gains permanence: no frequency caps, audio-video virtual supervision, and extended non-behavioral billing (G2025) through 2026. Digital mental health treatments expand to ADHD devices under behavioral plans, broadening access. Conversion factors reflect this balance: Qualifying APM Participants (QPs) at $33.59 (+3.8%), non-QPs at $33.42 (+3.3%), incorporating statutory hikes and RVU tweaks. 

These tweaks favor integrated, tech-savvy practices, but smaller ones may need MIPS Value Pathways (MVPs)—now including six new specialties like podiatry—to consolidate reporting. 

Provider Strategies in a Reformed Landscape 

The CY 2026 PFS proposal heralds a Medicare ecosystem where value trumps volume, offering providers tools to combat burnout and fraud while demanding outcome accountability. Independent practices, per Kennedy’s vision, gain from waste curbs and prevention incentives, yet must operationalize ASM and measure shifts swiftly. As finalization approaches, engaging CMS via ongoing RFIs could refine burdens—e.g., advocating empiric data thresholds to protect equitable valuations. 

In sum, this rule isn’t punitive; it’s prescriptive. Providers who embed prevention, harness data interoperability, and audit high-risk billings will not only comply but capitalize, ensuring Medicare’s sustainability and their practices’ vitality. Oz’s words ring true: “We’re making it easier for seniors to access preventive services, incentivizing health care providers to deliver real results.” The question is: Will your practice lead the charge? 

Sources 

1. CMS. “Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Proposed Rule (CMS-1832-P).” July 14, 2025. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-pfs-proposed-rule-cms-1832-p 

2. CMS. “CMS Proposes Physician Payment Rule to Significantly Cut Spending Waste…” Press Release. July 14, 2025. https://www.cms.gov/newsroom/press-releases/cms-proposes-physician-payment-rule-significantly-cut-spending-waste-enhance-quality-measures-and 

3. Federal Register. “Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule…” July 16, 2025. https://www.federalregister.gov/documents/2025/07/16/2025-13271/medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other 

4. CMS Quality Payment Program. “2026 QPP Proposed Rule Fact Sheet and Policy Comparison Table.” 2025. https://qpp-cm-prod-content.s3.amazonaws.com/uploads/3362/2026-QPP-Proposed-Rule-Fact-Sheet-and-Policy-Comparison-Table.pdf 

5. CMS. “ASM (Ambulatory Specialty Model).” 2025. https://www.cms.gov/priorities/innovation/innovation-models/asm 

6. OIG. “Medicare Part B Payment Trends for Skin Substitutes Raise Major Concerns…” September 8, 2025. https://oig.hhs.gov/reports/all/2025/medicare-part-b-payment-trends-for-skin-substitutes-raise-major-concerns-about-fraud-waste-and-abuse/ 

7. Holland & Knight. “CMS Releases CY 2026 Medicare Physician Fee Schedule Proposed Rule.” July 16, 2025. https://www.hklaw.com/en/insights/publications/2025/07/cms-releases-cy-2026-medicare-physician-fee-schedule-proposed-rule 

8. American Society of Hematology. “CY 2026 Medicare Physician Fee Schedule Proposed Rule Summary.” August 7, 2025. https://www.hematology.org/advocacy/federal-rule-summaries/cy-2026-medicare-physician-fee-schedule-proposed-rule-summary 

9. ASA. “Calendar Year (CY) 2026 Medicare Conversion Factors Higher for Physicians in Alternative Payment Models.” August 6, 2025. https://www.asahq.org/quality-and-practice-management/managing-your-practice/timely-topics-in-payment-and-practice-management/2026-medicare-conversion-factors-higher