proposed
CMS proposes a 3.8% payment increase for physicians, the first in 5 years, along with a 2.6% increase for ASC payments and an 8%–10% increase for office-based services. However, payments […]
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CMS proposes a 3.8% payment increase for physicians, the first in 5 years, along with a 2.6% increase for ASC payments and an 8%–10% increase for office-based services.
However, payments for hospital and ASC-based physician services are reduced by 8%–10%.
PHYSICIAN PAYMENTS
On July 14, 2025, the Centers for Medicare & Medicaid Services (CMS) released the proposed rule for the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS). The rule introduces significant changes to physician payment policies and updates to the Quality Payment Program (QPP), including the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs).
KEY PROPOSED CHANGES:
1. Conversion Factor (CF) Updates
- Proposed Conversion Factor Increase:
- The proposed conversion factor for qualifying participants (QPs) is $33.59 (a 3.83% increase from 2025), and for non-QPs, it is $33.42 (a 3.62% increase).
- These increases reflect a one-time 2.5% statutory payment adjustment from the One Big Beautiful Bill Act, in addition to other updates.
- ASIPP’s Comments:
- ASIPP welcomes the proposed increases but cautions that much of the adjustment is temporary, raising concerns about potential future pay cuts. ASIPP continues to advocate for a permanent inflationary adjustment and the elimination of budget neutrality constraints. Notably, ASIPP has submitted a nonpartisan proposal to reform Medicare physician payments, which includes a permanent fix and the elimination of the 2% sequestration cuts (https://asipp.org/draft-drm-non-partisan-proposal-for-reforming/).
We are already experiencing clawbacks from increases provided during the COVID-19 pandemic under the Trump Administration, with ongoing rulemaking leading to a 2.8% cut for 2025. Furthermore, the 2% sequestration cut, originally intended to expire years ago, has now been extended until 2031.
2. Efficiency Adjustment
- Purpose: CMS proposes a new -2.5% efficiency adjustment for non-time-based codes, applied every 3 years.
- CMS Rationale: This adjustment reflects concerns about potentially overestimated time assumptions and aims to account for increasing physician efficiency.
- ASIPP’s Comments: ASIPP supports initiatives that encourage efficiency; however, applying a reduction in work value for perceived efficiency gains is inappropriate. Despite advancements in EMRs and AI, administrative burdens have only increased, leading to greater stress rather than relief.
Additionally, physicians face growing challenges with preauthorizations, expanding Medicare regulations (including LCDs), and cascading requirements from Medicare Advantage Plans, Medicaid, and private insurers. These are compounded by ongoing audits, with approximately 30% of interventional pain physicians under audit at any given time. IPM physicians are dedicating significant time to documentation, preauthorizations, and compliance with LCDs and medical policies. As such, a 2.5% reduction in work value, without accounting for inflation or the cumulative 33% reduction in physician payments from 2001 to 2025, raises serious concerns.
3. Practice Expense (PE) Methodology
- Proposed Change: CMS proposes reducing the portion of indirect PE for facility-based services, citing outdated assumptions and the increasing trend toward hospital employment.
- CMS Rationale: The goal is to discourage hospital consolidation and promote payment parity across care settings.
- Impact: This proposal could result in approximately 10% total RVU reductions for facility-based (hospital and ASC) interventional pain management (IPM) services.
- ASIPP’s Comments: ASIPP is deeply concerned about the negative impact on independent practices. There must be an appropriate methodology to address this issue. The vast majority of physicians practicing in ASCs—and many non-primary care independent practitioners—also provide care in hospital settings. Importantly, many procedures cannot be performed in office settings, and not all physicians are equipped to offer these services outside ASCs. In many cases, Ambulatory Surgery Centers effectively serve as an extension of a physician’s office. ASIPP urges CMS to revise this policy by distinguishing between procedures performed in ASCs and those in hospital settings, and by implementing a methodology to differentiate independent physicians from hospital-based physicians.
4. Telehealth
- No proposed extension: CMS’s proposed rule does not provide any evidence or statements supporting a permanent extension of telehealth services.
- CMS proposed changes: However, CMS does propose permanent changes such as a revised definition of “direct supervision.”
- Our sources at CMS indicate that telehealth is included in the 2026 physician fee schedule.
BRIEFLY:
ASIPP analysis indicates that office payments, including physician payments, for procedures and evaluation and management (E/M) services are expected to increase by approximately 10%.
Conversely, payments to physicians for services performed in hospitals or ASCs, whether by independent or hospital-based physicians, are projected to decrease by about 8%, including reductions to E/M services.
SUMMARY OF PHYSICIAN PAYMENT REFORM
2026 Proposed – Physician Payment Rates Compared to 2025 (
https://asipp.org/2026physicians_proposed/)
2026 AMBULATORY SURGERY CENTER RULE
The Centers for Medicare & Medicaid Services (CMS) has proposed a 2.4% payment increase for Ambulatory Surgical Centers (ASCs) in the CY 2026 payment rule. This increase is contingent upon ASCs meeting quality reporting requirements. Additionally, CMS proposes significant expansions to the ASC Covered Procedures List (ASC-CPL), allowing a broader range of procedures to be performed in ASCs.
Payment Rate Increase:
- CMS proposes a 2.4% payment increase for both Ambulatory Surgery Centers (ASCs) and Hospital Outpatient Departments (HOPDs).
- This increase reflects a 3.2% market basket update, offset by a 0.8% productivity adjustment—consistent with the Inpatient Prospective Payment System (IPPS) update factor.
2026 ASC Proposed Payment Rates Compared to 2025 Rates
https://asipp.org/2026asc_prposed/)
SUMMARY OF CMS PAYMENT RULES
This summary highlights the good, the bad and the ugly.
Good:
- Conversion factor increase of 3.6% to 3.8%.
- Payment increases of approximately 10% for office procedures and 7%–10% for evaluation and management (E/M) services.
- 2.6% payment increase for Ambulatory Surgery Center (ASC) services.
Bad:
- No permanent extension of telehealth services, despite multiple established rules.
- 8%–10% reductions in physician payments for services provided in hospitals or ASCs.
Ugly:
- A 2.5% efficiency adjustment applied to work RVUs for non-time-based services.
In addition, physicians continue to face increasing administrative burdens, including preauthorizations, expanding Medicare regulations through LCDs (which are adopted by Medicare Advantage Plans, Medicaid, and incorporated into private medical policies), and frequent audits. At any given time, approximately 30% of interventional pain physicians are under audit. This has resulted in significant time spent on documentation, preauthorizations, and adherence to the appropriateness criteria set by LCDs and medical policies.
This is not a realistic assessment, given that physician payments have already decreased by 33% since 2001. The situation is further compounded by an ever-growing number of rules, regulations, and administrative burdens associated with EMRs—and now AI. Physician workload continues to rise, not fall. Remember the concept of “pajama time,” as many physicians work late into the evening to complete their documentation.
- The proposed conversion factor increase is only a temporary measure and may be clawed back, similar to the post-COVID cuts that followed payment increases under the Trump Administration.
- ASCs are being grouped with hospitals, despite being overwhelmingly owned and operated by independent physicians.
- ASCs essentially function as extensions of office practices.
- Independent physicians providing services at hospitals and ASCs are inaccurately classified as hospital-based physicians.
While ASIPP appreciates the positive changes, it continues to advocate for revisions to the fee schedule that distinguish independent physicians from hospital-based physicians. This distinction is critical to ensure that independent physicians working in hospitals and ASCs are not unfairly subjected to payment reductions intended for hospital-employed providers.