CMS to bump physician pay 3.62% in proposed rule

The Centers for Medicare and Medicaid Services is proposing a 3.62% pay bump for physicians, according to a fact sheet posted by the administration on Monday.

The proposed physician fee schedule would set the conversion factor at $33.42, an increase over the 2025 rate of $32.35. The conversion factor is the amount Medicare pays per relative value unit (RVU).

The increase includes a 2.5% payment adjustment that’s required by the Big Beautiful Bill Act, as well as an additional 0.55% increase in response to changes to some RVUs, according to CMS.

WHAT’S THE IMPACT

CMS said it also wants to calculate more accurate payment rates for certain services and better account for increased efficiencies in procedures and tests, in order to reduce payment differences for physicians across different care settings.

The agency said it’s also moving away from low-response rate surveys of practitioners to determine the value of services, instead using “empriric” information. It’s also proposing to make some COVID-19-era flexibilities permanent, and to simplify the process by which services can be made available through telehealth. 

In addition, CMS is proposing the new Ambulatory Specialty Model (ASM), a mandatory payment model focused on specialty care for beneficiaries with heart failure and low back pain, which the agency identified as “significant areas of Medicare spending.”

The proposed ASM, one of the newest CMS Innovation Center models, aims to incentivize preventive care and increase financial accountability for specialists, CMS said. ASM rewards specialists who detect signs of worsening chronic conditions early, enhance patients’ function, reduce avoidable hospitalizations, and use technology that allows them to communicate and share data electronically with patients and their primary care providers, the agency said.

If finalized, the model will begin in January 2027 and run for five performance years through December 2031.

CMS is also proposing a change to the Medicare Diabetes Prevention Program, allowing for more Medicare beneficiaries to access coaching, peer support and training in dietary change, physical activity and behavior change strategies to delay or prevent the onset of Type 2 diabetes for people with prediabetes. This would be at no cost to the beneficiary. 

CMS is issuing a Request for Information to gather recommendations on improving wellness, prevention and chronic disease management. This includes input on nutrition counseling and physical activity.

THE LARGER TREND

Medicare spending on skin substitutes drew attention from CMS, which claimed spending has risen from $256 million in 2019 to over $10 billion in 2024, according to Medicare Part B claims data. CMS attributed the spending increase largely to “abusive pricing practices” in the sector, including the use of products with limited evidence of clinical value. 

CMS currently treats skin substitutes as biologicals for the purposes of Medicare payment, which can reach as high as $2,000 per square inch. CMS is proposing to pay for skin substitutes as incident-to supplies, a change expected to reduce spending on these products by nearly 90%. 

These proposed savings would not come at the expense of patient access or quality of care, CMS said.

ON THE RECORD

“We are taking meaningful steps to modernize Medicare, cut waste, and improve patient care,” said CMS Administrator Dr. Mehmet Oz. “We’re making it easier for seniors to access preventive services, incentivizing health care providers to deliver real results, and cracking down on abuse that drives up costs. This is how we protect Medicare for the next generation while helping Americans live longer, healthier lives.