CMS Proposes 2026 Medicare Physician Fee Schedule With Focus on Value and Telehealth

The Centers for Medicare and Medicaid Services (CMS) released its proposed 2026 Medicare Physician Fee Schedule, emphasizing enhancements in payment structures, quality measures, and chronic disease management. A key proposal includes the introduction of two distinct conversion factors based on provider participation in Advanced Alternative Payment Models (APMs), with Qualifying APM Participants set to receive a higher conversion factor increase. This adjustment aligns with CMS's focus on value-based care and accountability for costs and quality outcomes.

CMS is also proposing streamlined telehealth reimbursement, focusing on services deliverable via two-way audio-video communication. Additionally, the agency plans to revise the definition of "direct supervision" to allow certain lower-risk services to be supervised remotely via telehealth, enhancing flexibility for providers.

A major initiative within the proposed rule is the creation of the Ambulatory Specialty Model, a mandatory payment framework targeting chronic conditions such as heart failure and lower back pain, launching in 2027. This model will require providers to report specialty-specific measures and assume two-sided financial risk, aiming to incentivize improved chronic disease management and reduce unnecessary hospital use.

Further, CMS is proposing new add-on billing codes for primary care practices integrating behavioral health services, supporting care coordination for mental health needs through the psychiatric collaborative care model. This move could improve provider reimbursement and patient outcomes in behavioral health integration.

On the spending reduction front, CMS plans to reclassify Medicare payments for skin substitutes from biologicals to incident-to supplies, a change poised to reduce spending by about 90%. This adjustment reflects CMS's broader goal of controlling costs while maintaining quality.

Overall, the proposed rule underscores CMS's emphasis on cost efficiency, quality measurement through programs like the Merit-based Incentive Payment System's Value Pathways, and expanded telehealth access. Providers are encouraged to review the changes carefully and submit feedback before the September 12 deadline as the rule advances toward finalization.