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September 18, 2025 – Comments on the calendar year (CY) 2026 Physician Fee Schedule (PFS) proposed rule were due last Friday. This is the major annual reg that affects payments for physicians and other clinicians under Medicare. Now the Centers for Medicare & Medicaid Services (CMS) must review the comments and issue a final reg on or around November 1, 2025 – 60 days before the start of the new year.
As usual, stakeholders submitted tens of thousands of comment letters on this massive reg. While we are still going through the responses, here are five major themes that my colleagues Rachel Hollander, Kristen O’Brien and I have found thus far.
For the first time in six years, CMS proposed an increase to the PFS conversion factors, aided primarily by a one-time 2.5% bump up provided by the One Big Beautiful Bill Act. While provider groups said they appreciated this payment increase for CY 2026, they expressed concern that some of the other proposals in the rule (mainly the efficiency adjustment and the indirect practice expense (PE) reduction described below) would actually negate this increase for certain clinicians. These physician groups argued that although Congress intended to provide some stability to the PFS for CY 2026, certain proposals potentially conflict with that goal and would lead to continued instability within the PFS if finalized. They requested that CMS not finalize these overarching policy changes and instead allow all clinicians to fully experience a payment increase in CY 2026, as Congress intended. They also urged CMS to work with Congress on enacting permanent reform to the PFS.
CMS proposed an efficiency adjustment of 2.5% to the work relative value units (RVUs) and the intra-service physician time for non-time-based services, to be updated and reapplied every three years. Under this schedule, the next efficiency adjustment after CY 2026 would be calculated and applied in CY 2029, based on measured changes from 2027 through 2029. For a deeper dive, see our July and August +Insights on the proposal.
While many stakeholders agreed with CMS’s goal of ensuring that the data used in work RVUs is accurate and that services are regularly reviewed to account for efficiencies, they disagreed with the proposed approach. Commenters raised a range of service- and specialty-specific concerns, and a few overarching themes emerged:
Notwithstanding these concerns, some commenters, including the Medicare Payment Advisory Commission (MedPAC), supported implementing the proposed efficiency adjustment for CY 2026, framing it as a pragmatic step to address valuation drift and related budget-neutrality distortions across the PFS. Importantly, MedPAC coupled its support with reservations, urging CMS to treat 2026 as an evidence-building phase and to conduct a rigorous claims-based assessment of access and service mix impacts before considering any subsequent adjustment in 2029.
Many stakeholders also endorsed CMS’s objective of aligning indirect PE with actual costs and avoiding duplication with facility payments, but they opposed the uniform proposal to reduce facility indirect PE RVUs by cutting the portion allocated based on work RVUs to 50% of the amount used in the non-facility setting. Key themes from the comments included:
Commenters also offered constructive alternatives to pursue CMS’s goal while minimizing unintended consequences, including:
Despite broad stakeholder opposition, some commenters were supportive. Most notably, MedPAC argued that the change would improve PFS accuracy by curbing potential overpayment for facility services and redirecting resources toward non-facility care. The Paragon Institute also stated that this policy would reduce incentives that lead to consolidation in healthcare. Further, some physician groups whose members primarily work in non-facility settings argued that the proposal is a step in the right direction to appropriately reimburse primary care and independent practices. However, some of these same groups expressed concern that certain specialties would face disproportionate impacts under the proposed changes and questioned how CMS arrived at its decision to reduce the indirect PE by half.
Most provider groups and telehealth stakeholders supported CMS’s proposal to simplify the Medicare Telehealth Services List review process by removing the distinction between provisional and permanent services and focusing the review on whether the service can be furnished using an interactive, two-way audio-video telecommunications system. These stakeholders appreciated that CMS proposed to eliminate what they characterized as an unnecessary and burdensome multistep approach to adding services to the Medicare Telehealth Services List.
Commenters also generally supported CMS’s proposal to extend certain telehealth flexibilities but noted that congressional action is necessary to extend some of them, including the originating site and geographic restriction waivers. Commenters supported CMS’s proposal to permanently extend the existing (and temporary) policy of allowing clinicians to satisfy direct supervision requirements for diagnostic tests, services furnished incident to a physician’s services, and some hospital outpatient services through virtual presence using real-time audio/video technology.
Commenters expressed some concerns about CMS’s proposal to revert to the pre-COVID-19 public health emergency (PHE) policy of only allowing teaching physicians to supervise residents via telehealth in rural areas, rather than in all teaching settings, as has been permitted for the last several years. They urged CMS to extend the virtual presence flexibilities for both urban and rural areas on a permanent basis. They argued that the existing flexibilities have improved patient access across the country and maximized limited teaching physician capacity given prevalent staffing shortages.
Many commenters mentioned that the proposed rule did not address the upcoming expiration of the provider home address policy. During the COVID-19 PHE, CMS allowed clinicians to deliver telehealth services from their homes without reporting their home address on their Medicare enrollment while continuing to bill from their currently enrolled location. CMS extended this policy through CY 2025, but it is now set to expire since CMS did not propose a further extension in the rule. Commenters expressed concern that sunsetting this policy would pose substantial privacy issues since home addresses may be publicly available without clinicians’ knowledge or consent.
Many provider groups supported CMS’s proposed approach to promote stability in the Merit-based Incentive Payment System (MIPS). They supported the proposal to maintain the MIPS performance threshold of 75 points through performance year 2028/payment year 2030, especially since it would provide a longer runway for physicians to continue their current performance in MIPS.
However, physician groups continued to question CMS’s overall approach to transitioning the MIPS program to MIPs Value Pathways (MVPs). Many commenters urged CMS to keep participation in MVPs voluntary and to not sunset traditional MIPS. Some also expressed concerns about CMS’s idea to use MVPs as the foundation for the newly proposed Ambulatory Specialty Model. These stakeholders argued that CMS should make fundamental improvements to MVPs, including eliminating population-based measures and significantly modifying the subgroup reporting option (which becomes mandatory in 2026), before using MVPs as the foundation for any sort of alternative payment model.
While comments featured overarching support for many of the core MIPS proposals (with some notable exceptions and requested modifications), stakeholders generally stated that the proposals would not fundamentally address the major issues that they believe to be present within the program. As described in this Regs & Eggs blog post, some stakeholders have expressed concern that MIPS is not achieving its intended purpose of improving quality and reducing costs. In many stakeholders’ view, for MIPS to achieve its intended purpose, it must be totally restructured, which could take congressional action to accomplish. Finally, stakeholders also voiced concerns about how CMS intends to move to digital quality measures without incentives or structural support to change current quality measure reporting.
We are still poring over different stakeholder reactions and expect more nuanced trends and themes to emerge. We would love to hear your thoughts on these reactions to the reg and key issues you’re seeing and tracking.
Until next week, this is Jeffrey (and Rachel and Kristen) saying, enjoy reading regs with your eggs.
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