NAACOS Analysis of the CY 2026 Proposed Medicare Physician Fee Schedule

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Executive Summary

On July 14, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Proposed Rule. It proposes significant changes to payment for skin substitutes but contains minimal changes for the Medicare Shared Savings Program (MSSP).

In this analysis, we provide details on key proposals affecting ACOs. The rule is summarized in several fact sheets provided by CMS: PFS Fact Sheet, MSSP Fact Sheet, Quality Payment Program (QPP) Fact Sheet, and Ambulatory Specialty Model (ASM) Fact Sheet.

Comments to CMS in response to the proposed rule are due on September 12 and may be submitted via regulations.gov. NAACOS is seeking member input on the proposals in this rule, which will help shape our comments. Please share your feedback by emailing us at [email protected].  NAACOS will provide draft comments ahead of the deadline. CMS will review comments and issue a final rule later this year; typically, by November 1.

Medicare Physician Payment Proposals

  • Implements a Congressionally directed 2.5 percent update to the conversion factor (CF) for 2026.
    • Qualifying APM CF: Increases from $32.35 to $33.59 representing a +3.83 percent increase.
    • Non-qualifying CF: Increases from $32.35 to $33.42 representing a +3.62 percent increase.
  • Modifies payment policies for skin substitutes by:
    • Paying for skin substitutes as incident-to supplies,
    • Aligning skin substitute categories with Food and Drug Administration’s (FDA) regulatory statuses, and
    • Establishing a single payment rate based on the highest average for the three FDA approval categories of skin substitute products.
  • Revises the practice expense methodology.
  • Creates behavioral health add-on codes for behavioral health integration and Collaborative Care Model services as an optional addition to Advanced Primary Care Management services.
  • Expands payment policies for digital mental health treatment services to cover devices used in the treatment of attention deficit hyperactivity disorder.
  • Streamlines the process for adding services to the Telehealth Services List.

Medicare Shared Savings Program Proposals

Eligibility and Participation Options:

  • Reduces the maximum amount of time inexperienced ACOs may participate under a one-sided model from 7 years spanning two agreement periods to 5 years in a single agreement period.
  • Requires ACOs to report certain changes to the participant list during the performance year when ACO participant TINs or SNF affiliate TINs undergo a change of ownership.
  • Amends eligibility requirements to allow participation of ACOs with fewer than 5,000 beneficiaries in Benchmark Year 1, 2, or both.

Benchmarks:

  • Renames the Health Equity Benchmark Adjustment as the “population adjustment.”

Assignment:

  • Adds three new codes to and removes one code from the definition of primary care services used in assignment.

Quality:

  • Removes the health equity adjustment applied to an ACO’s quality score beginning in performance year 2025 and revises terminology used to describe the adjustment.
  • Revises the definition of a “beneficiary eligible for Medicare CQMs” to more closely align with the assignable population.
  • Updates the MSSP quality measure set by removing the Screening for Social Drivers of Health measure.
  • Expands the survey modes for the CAHPS for MIPS survey to include a web-mail-phone administration protocol beginning in performance year 2027.
  • Expands the application of the extreme and uncontrollable circumstances policies for quality and financial performance to ACOs that are affected by a cyberattack beginning in performance year 2025.
  • Modifies ACO monitoring and compliance actions to account for the alternative quality performance standard, codifying current practice.

Quality Payment Program Proposals

Advanced APMs:

  • Modifies Qualifying APM Participant (QP) determinations by making determinations at both the individual and APM entity level, while also adding “covered professional services” to QP determinations.   

MIPS:

  • Maintains the MIPS performance threshold of 75 points through the 2028 performance period.
  • Modifies measures for the promoting interoperability performance category.
  • Creates a new mandatory Ambulatory Specialty Model to hold specialists accountable for the upstream management of chronic conditions, including low back pain and congestive heart failure, with the model set to begin January 1, 2027, and run for 5 performance years.
  • Requests feedback on the transition to digital quality measurement, measures related to wellbeing and nutrition, data quality, and other potential changes to the MIPS program.
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