The U.S. Centers for Medicare & Medicaid Services (CMS) released its proposed physician fee schedule for 2026 on July 14, along with a flurry of potential changes, including a new payment model for specialty ambulatory services.
Beginning in 2026, there will be two separate conversion factors that CMS uses in its calculations. One will be for qualifying alternative payment model (APM) participations, while the second will be for physicians and practitioners who don’t fall into that category.
“[The] CY 2026 qualifying APM conversion factor represents a projected increase of $1.24 (3.83%) from the current conversion factor of $32.35, for a total of $33.59,” CMS explained in a fact sheet. “Similarly, the CY 2026 nonqualifying APM conversion factor represents a projected increase of $1.17 (3.62%) from the current conversion factor of $32.35, for a total of $33.42.”
Included in the updates is a 2.5% payment adjustment, as required by the One Big Beautiful Bill Act (OBBA), signed into law on July 4.
Physicians’ services paid under the physician fee schedule are furnished in a variety of settings, including physician offices, hospitals and ambulatory surgical centers (ASCs), among others.
“This move reflects our continued shift toward smarter, data-informed policymaking,” Chris Klomp, deputy administrator and director of the Center for Medicare at CMS, said in a statement. “We’re advancing technical improvements that reward high-quality, efficient care; addressing the root causes of unique health challenges; and aligning health care spending with value so that new innovations help to deliver better quality at a lower price.”
Additionally, CMS is proposing to remove 10 quality measures that “did not directly improve patient health outcomes,” while adding five new outcome measures focused on the prevention of chronic disease, including pre-screening for diabetes.
Other proposed changes include permanently adopting a waiver defining direct supervision to include virtual presence via audio/video real-time communications technology. CMS is also seeking to extend its waiver allowing federally qualified health centers and rural health clinics to bill for telehealth services through 2026.
CMS is also issuing a request for information (RFI) to gather recommendations on improving wellness, prevention and chronic disease management.
The 60-day comment period for the 2026 proposed physician fee schedule ends on Sept. 12.
A new ambulatory payment model
CMS is likewise proposing a new mandatory payment model, the Ambulatory Specialty Model (ASM), which will focus on specialty care for beneficiaries with heart failure and low back pain. Those are “significant areas of Medicare spending,” according to CMS.
“The model aims to enhance the quality of care and reduce low-value care by improving upstream chronic disease management,” CMS wrote in its fact sheet. “Participants will be held accountable for their performance, generating savings.”
Broadly, ASM is designed to incentivize 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,” according to CMS.
If finalized, the model will begin in January 2027 and run through December 2031.
Based upon its framework, participants in the new payment model could be exposed to 9% upside or downside risk.
“We have designed ASM with a focus on clinicians who commonly treat patients in the ambulatory setting, develop longitudinal relationships with patients and co-manage beneficiaries with primary care clinicians,” the text of the proposed rule reads.
In terms of heart failure, only cardiologists would be required to participate in the model, according to CMS.
Of note for ASCs, in the low back pain group, CMS is going to include specialities from both non-surgical and surgical backgrounds.
“Because orthopedic surgeons and neurosurgeons primarily treat low back pain nonsurgically, we believe it is acceptable to include both surgical and nonsurgical specialists in the ASM low back pain cohort,” the proposed rule states.
“We propose at § 512.710(d)(2), for the ASM low back pain cohort, to select clinicians with a specialty type of anesthesiology, interventional pain management, neurosurgery, orthopedic surgery, pain management, and physical medicine and rehabilitation, provided they meet all applicable ASM participant eligibility criteria for an ASM performance year,” the proposed rule continues. “We note that there may be some overlap between pain management, interventional pain management, and anesthesiology.”
