CMS.gov Press Release 10/31/2025 - Final Rule on Medicare Physician Payments

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Some Doctors who treat Medicare beneficiaries are getting a 2.5% raise next year under a regulation the Centers for Medicare and Medicaid Services issued Friday 10/31/2025. The 2026 Medicare Physician Fee Schedule final rule implements provisions from the new tax law enacted in July, which mandated a pay hike and reversed a multiyear trend of reimbursement cuts..

Also CMS on Friday finalized a controversial plan to reevaluate how Medicare calculates doctor payments that will result in lower rates for specialty services. Medicare will implement a 2.5% cut next year to payments for services like radiology and gastroenterology that are based on more than time spent delivering the service.

CMS also spells out its plans for an “efficiency adjuster” that will reduce some payments with a new payment model, and new flexibilities for telehealth coverage.

CMS Modernizes Payment Accuracy and Significantly Cuts Spending Waste while Improving Chronic Disease Management for Medicare Beneficiaries

CMS.gov - Press Release 10/31/2025 - CMS Modernizes Payment Accuracy and Significantly Cuts Spending... 

excerpts from the above link ~

The Centers for Medicare & Medicaid Services (CMS) is increasing quality of care for Medicare beneficiaries while significantly reducing unnecessary spending and promoting payment accuracy. The calendar year (CY) 2026 Medicare Physician Fee Schedule (PFS) final rule advances primary care management through improved quality measures, reduces waste and unnecessary use of skin substitutes, and introduces a new payment model focused on improving care for chronic disease management.

Modernizing Payment Accuracy 

In the CY 2026 Physician Fee Schedule (PFS) final rule, CMS is finalizing a modest -2.5% efficiency adjustment to select services to better recognize that some services are likely to become more efficient over time, as compared to time-based services like office visits or behavioral health therapy. The efficiency adjustment targets services that have likely become able to be furnished more efficiently over time but still retain valuations based on outdated assumptions. Examples include surgical procedures, diagnostic imaging interpretation, outpatient interventions, interventional pain management, and orthopedic services. These tend to benefit from technological advancements or standardized workflows that reduce time and resource use, without corresponding payment adjustments.

CMS is reinforcing primary care as the foundation of a better healthcare system while ensuring Medicare dollars support real value for patients, and not the kind of waste or abuse that erodes trust in the system,” said Chris Klomp, CMS Deputy Administrator and Director of the Center for Medicare. “Our goal is simple: deliver better outcomes for patients and be wise stewards of the taxpayer resources that make Medicare possible.”

Some of the actions:

1.  Reducing Medicare Spending Waste for Skin Substitutes 

Medicare spending on wound care products known as “skin substitutes” has had unprecedented growth, rising from $256 million in 2019 to over $10 billion in 2024, according to Medicare Part B claims data. This dramatic spending increase is largely attributed to abusive pricing practices in the sector, including the use of products with limited evidence of clinical value. Current prices can reach more than $2,000 per square centimeter. 

In 2025, the CMS Fraud Defense Operations Center (FDOC) stopped nearly $185 million in improper payments to suspect providers billing for skin substitutes. . . . 

CMS currently treats skin substitutes as biologicals for the purposes of Medicare payment. In the CY 2026 PFS final rule, CMS will pay for skin substitutes under the PFS as incident-to supplies, a change expected to reduce Medicare spending on these products by nearly 90% without compromising patient access or quality of care.

2. Shifting the Healthcare Paradigm to Prevention and Wellness

.. . . by repurposing a previous risk assessment code to focus on essential patient behaviors to reduce chronic disease and improve health – physical activity and nutrition. CMS is also improving the care of chronic diseases by ensuring advanced primary care management services are able to integrate behavioral health. Finally, we are shifting our focus in quality measurement towards prevention-focused measures. . . . 

CMS is also finalizing changes to the Medicare Diabetes Prevention Program which will allow more people with Medicare to access coaching, peer support, and practical training in dietary change, physical activity, and behavior change strategies to delay or prevent the onset of Type 2 diabetes for people with prediabetes, at no cost to the beneficiary.

3. New Payment Model to Improve the Upstream Management of High-Cost Chronic Conditions 

CMS is finalizing the new Ambulatory Specialty Model, a mandatory payment model focused on specialty care for beneficiaries with heart failure and low back pain – significant areas of Medicare spending. The model aims to enhance the quality of care and reduce low-value care by improving beneficiary and provider engagement, incentivizing preventive care, and increasing financial accountability for specialists.

This model will begin in January 2027 and run for five performance years through December 2031.

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Just hitting some of the highlights here - more can be found at the above link as well as the one below which discusses the Background on the Physician Fee Schedule as well as other changes like Telehealth Services under the PFS.

CMS.gov - News Release - 10/31/2025 - Calendar Year (CY) 2026 Medicare Physician Fee Schedule Final ...