CMS releases 2026 Medicare Physician Fee Schedule proposed rule

Today, the Centers for Medicare & Medicaid Services (CMS) released the 2026 Medicare Physician Fee Schedule (PFS) proposed rule. For the first time in five years, CMS has proposed a slight increase in physician payment rates. While this prevents another cut, these proposed adjustments remain insufficient to keep pace with rising practice costs and inflation. The AADA continues to advocate for comprehensive Medicare payment reform to preserve the viability of physician practices and patient access to dermatologic care.

CMS proposed two separate conversion factors in accordance with the Medicare Access and CHIP Reauthorization Act (MACRA): one for Qualifying Alternative Payment Model Participants (QPs), and another for all other Medicare physicians. QPs receive a 0.75% payment update, while non-QPs receive a 0.25% update. These figures also reflect a budget neutrality adjustment of 0.55% and a 2.5% temporary increase for 2026 provided by the One Big Beautiful Bill Act (OBBBA). The proposed conversion factors are as follows:

• For QPs: $33.59, which is a projected increase of $1.24 (3.83%) from the final 2025 conversion factor of $32.35.
  
  
• For all others: $33.42, which is a projected increase of $1.07 (3.32%) from the final 2025 conversion factor.

The proposed rule also includes updates to other Medicare payment policies, as well as updates to the Quality Payment Program, including the Merit-based Incentive Payment System (MIPS), MIPS Value Pathways (MVP), and Alternative Payment Models (APMs).

Key proposals:

• CMS is proposing to apply a -2.5% “efficiency adjustment” to work Relative Value Units (RVUs) and physician time for non-time-based services to account for improved technology, workflows, and clinician experience.
  
  
• CMS is proposing to maintain the current 2006-based Medicare Economic Index (MEI) cost share weights and not adjust RVUs to reflect the updated 2017-based MEI policy or the AMA’s newly submitted Physician Practice Information (PPI) survey data for CY 2026.
  
  
• CMS is again seeking comments on strategies to improve the accuracy of payment for global surgical packages.
  
  
• CMS proposed to separately reimburse certain skin substitutes as incident-to supplies, not drugs, under the PFS starting in 2026.
  
  
• CMS proposed several telehealth policies, including permanently adopting a definition of direct supervision that allows physicians or supervising practitioners to do so via real-time audio and visual telecommunications.
  
  
• CMS agreed with the RUC-recommended values for the two new CPT codes for superficial radiation therapy (SRT) that include physician work (77X05 and 77X09). CMS did not accept the RUC-recommended practice expense (PE) and instead proposed the use of Hospital Outpatient Prospective Payment System data to inform rates for certain technical services, including new SRT treatment delivery code 77X07. Please note: The Academy supports consideration of superficial radiation therapy as a secondary option for the treatment of BCC and SCC, for use in special circumstances, such as when surgical intervention is contraindicated or refused and after the benefits and risks of treatment alternatives have been discussed with the patient.
  
  
• CMS proposed to maintain the MIPS performance threshold at 75 through the CY 2028 performance period/2030 MIPS payment year.
  
  
• CMS proposed adding two MIPS dermatology quality measures to the Dermatological Care MVP: Q238: Use of High-Risk Medications in Older Adults and Q047: Advance Care Plan.
  
  
• CMS proposed to top out MIPS Measure 397: Melanoma Reporting.

The AADA remains fully committed to securing meaningful Medicare physician payment reform. We continue to call on Congress to enact legislation that provides an inflation-based update and fixes the structural flaws in the Medicare payment system.

AADA staff are reviewing the more than 1,800+ page rule and working with Academy leaders to submit comments to CMS in response to the proposals. An in-depth analysis of the proposed policies will be featured in upcoming issues of DermWorld Weekly and on AAD.org.

For more information, please review the proposed rule, the CMS press release, the Medicare Physician Fee Schedule fact sheet, and the QPP fact sheet.