Response to the Centers for Medicare & Medicaid Services CY 2026 Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies Proposed Rule

On July 14, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that solicits public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2026.¹ The National Academies of Sciences, Engineering, and Medicine (the National Academies) appointed the Committee on the Response to the Centers for Medicare & Medicaid Services CY 2026 Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies Proposed Rule.² This report responds to select requests for feedback CMS included in its proposed rule. The committee’s statement of task, which details the topics from the proposed rule that the committee is responding to, is in Appendix A. Brief biographical sketches of committee members and staff are in Appendix B.

DATA SOURCES AND ASSESSMENT APPROACHES FOR THE VALUATION OF SERVICES FOR THE PHYSICIAN FEE SCHEDULE

In its proposed rule, CMS stated:

We look forward to continuing to engage with interested parties and commenters, including the RUC [the American Medical Association’s Relative Value Scale Update Committee], as we prioritize our obligation to value new, revised, and potentially misvalued codes; and we will continue to welcome feedback from all interested parties regarding valuation of services for consideration throughout our rulemaking process. (CMS, 2025b, p. 142)

CMS also stated, “We solicit comments on what kinds of data CMS should consider as valid, reliable, empiric information for this purpose [valuation]” (CMS, 2025b, p. 152). In this section, the committee is offering responses to these requests for comments on valuation methods and processes.

Committee Response

The 2025 National Academies report Improving Primary Care Valuation Processes to Inform the Physician Fee Schedule briefly summarized the PFS valuation process (NASEM, 2025b). Currently, the PFS specifies payments for services provided by physicians and other clinicians participating in Medicare Part B, including professional fees and fees for diagnostic tests and radiology services. (CMS, 2024). By law, payments must be for “services furnished” and cannot be only paid to a specific specialty. Because the PFS must be budget neutral by law, if CMS decides to increase the value of a PFS service code, offsetting savings must be achieved by reducing the value of other services (NASEM, 2021, 2025b).

Currently, the Resource-Based Relative Value Scale (RBRVS) is the predominant mechanism used by CMS to translate data into recommendations for updates to the PFS. The American Medical Association’s RUC was established to offer annual recommendations to CMS on the RBRVS; if adopted by CMS, revisions to RBRVS values for existing CPT codes or valuation of new Current Procedural Terminology (CPT) codes ultimately lead to PFS changes. While CMS can accept recommendations from any interested stakeholders, the RUC has been uniquely influential in submitting recommendations that conform to statutory requirements for input on rulemaking. While not required to do so, CMS typically accepts between 85 and 90 percent of the RUC’s recommendations each year (Laugesen et al., 2012; Moore, 2023). These recommendations greatly affect how physicians and medical providers are compensated for their work, as the PFS determines not only what CMS pays physicians through Medicare, but also what physicians are paid by the majority of state Medicaid programs and commercial payers (including Medicare Advantage plans) that model their fee schedules on the PFS. Beyond influencing payment rates by government

as well as high-quality surveys (e.g., validated surveys with response rates in line with generally accepted research standards and adequate characterization of respondents and non-respondents) (Fincham, 2008; JAMA, 2025), analyzed using complementary approaches such as time-driven activity-based costing and validated large language modeling.

• The 2025 National Academies report Improving Primary Care Valuation Processes to Inform the Physician Fee Schedule examined alternative data sources and methodologies that would “enhance the accuracy, generalizability, and comprehensiveness of payment rate determinations” for primary care (NASEM, 2025b). Ideally, the report stated, thorough valuation of primary care would consider the full scope of work performed by primary care clinicians and other interprofessional team members (e.g., clinical pharmacists, behavioral health specialists, community health workers, social workers, and others) both synchronously and asynchronously. Examples of activities the report recommended should be considered in the valuation process as part of high-quality primary care include care coordination, patient navigation, specialty care referral management, results review, remote monitoring, data analytics to support population health initiatives, and more. Data used for valuation purposes should be transparent, reproducible, and not burdensome to measure. Options for more objective data sources as detailed in the 2025 report include better surveys, qualitative data, direction observation and time-motion studies, electronic health record system-event log data, artificial intelligence and large language models, time-driven activity-based costing, and simulation/modeling (NASEM, 2025b).

PROPOSED EFFICIENCY ADJUSTMENT POLICY

As part of the CY 2026 proposed Medicare PFS rule (CMS, 2025b), CMS proposes including a new efficiency adjustment for non-time-based service codes to account for the efficiency gains that accrue over time in the performance of procedures and similar services. The time spent by a clinician performing a service is a major factor for determining the work RVU of a service. CMS notes that very few codes are reassessed for the time factor after determination of the initial valuation score, and that there is considerable evidence that non-time-based services “become more efficient as they become more common, professionals gain more experience, technology is improved, and other operational improvements…are implemented” (CMS, 2025b, p. 145). CMS also cites evidence that studies objectively measuring physician time for diagnostic, anesthesia, and procedural services

for determining future efficiency adjustments as part of the systematic reform of the overall CMS approach to using more valid and reliable empiric data sources and analytic methods for determining and updating relative value unit scores. Objective reevaluation of clinician time for procedure codes should be done at least every 5 years for the most common procedure codes billed to CMS (e.g., the most frequently billed codes that in the aggregate account for 50 percent of procedure claims or 50 percent of the approved payments for procedure codes).

• As Recommendation 1 states, CMS should implement alternative sources of more objective data and analytic methods for empirically based determination of valuation, including objective measures of clinician time, such as those described earlier in this report and by the National Academies (NASEM, 2025b). Recognizing that it will take time for CMS to implement such a systematic reform of its valuation data sources and methods, adoption of an efficiency adjustment based on the MEI productivity adjustment is a reasonable first step for estimating temporal trends in clinician time for procedural and related codes. This approach is consistent with options MedPAC has recommended for PFS efficiency adjustment (MedPAC, 2018).
• The 5-year look-back period is a conservative window for the efficiency adjustment. As CMS notes, 17 or more years typically elapse before codes are reevaluated by the RUC under current methodology (CMS, 2025b). Although the committee believes that a longer look-back period (e.g., 8–9 years, which would be half of the current average reevaluation periodicity) could be justified, the 5-year period is a reasonable start in such a rapidly changing health care landscape.
• Because clinician time almost certainly closely correlates with key elements of practice expense, such as equipment time and nonclinician labor time, the efficiency adjustment should include these practice expense factors. Objective measurement of these types of practice expense factors should be included in the future valuation methodology. In the interim, it is reasonable for CMS to incorporate practice expenses into its MEI productivity adjustment for computing the efficiency adjustment.

ADVANCED PRIMARY CARE MANAGEMENT SERVICES

CMS’ proposed rule (CMS, 2025b) asks for comments on several proposed changes for enhanced care management, including integrating behavioral health into Advanced Primary Care Management (APCM) and

Committee Response

BHI “blends care in one setting for medical conditions and related behavioral health factors” (AHRQ, 2024). Various integrated behavioral health models have been studied including the collaborative care model, primary care behavioral health model, and others (Collins et al., 2010; Hunter et al., 2018; Reiter et al., 2018; Unutzer et al., 2002). In 2020, the Substance Abuse and Mental Health Services Administration’s National Center for Excellence for Integrated Health Solutions created the Comprehensive Healthcare Integration Framework, a structured approach that incorporates best practices, evidence-based interventions, and organizational strategies from preceding integrated behavioral health models (National Council for Mental Wellbeing, 2025). The framework emphasizes team-based care, patient-centered care, shared care plans, integrated workflows, data-driven decision making, sustainability through payment models, training and workforce development, and access and equity. This framework highlights that the specific BHI model or structure used by a practice and community may not matter as much as ensuring the collaborative concepts of BHI. Another similar conceptual framework is the Building Blocks of Behavioral Health (Gold et al., 2022). There is no one-size-fits-all model for BHI; different approaches may be appropriate based on a given practice’s patient population needs and resources.

Recommendation 4: The Centers for Medicare & Medicaid Services should implement a method to enhance Advanced Primary Care Management (APCM) payments to support primary care practices’ capacity to deliver integrated behavioral health services. The committee supports the proposed APCM add-on codes GPCM1, GPCM2, and GPCM3 for integrated behavioral health services as a meritorious step toward that payment goal.

Recommendation 5: The Centers for Medicare & Medicaid Services should consider in future rulemaking an alternative payment model for behavioral health integration linked with Advanced Primary Care Management (APCM) payment that allows practices to attest to providing behavioral health integration, qualifying them for a higher APCM payment valuation for the base APCM G-codes G0556, G0557, G0558. This approach may facilitate practices’ ability to build and sustain capacity for delivering integrated behavioral health services.

• The committee agrees with the 2024 National Academies report that presented evidence around BHI and recommended incorporating behavioral health services into APCM (NASEM, 2024).

• Primary care is a natural home for much of behavioral health care and currently provides about 60 percent of all behavioral health care (Park and Zarate, 2019); however, there is a substantial national shortage of mental health clinicians with two-thirds of U.S. counties designated as mental health professional shortage areas (Hoffmann et al., 2023).
• Evidence shows that BHI in primary care can reduce costs, improve care experience and patient outcomes, build trust, and promote adherence, and it is more patient centered (Asarnow et al., 2015; Rapp et al., 2017).
• The proposed add-on codes GPCM1, GPCM2, and GPCM3 represent an improvement over existing codes for behavioral health integration (99484) and psychiatric collaborative care management (99494, 99493, and 99494) by not requiring time-based billing. Administrative barriers such as tracking service time have contributed to the relatively low uptake of the existing codes by primary care practices and collaborating behavioral health clinicians (Brown et al., 2021; Carlo et al., 2019). The proposed approach of linking new behavioral health integration codes with APCM codes without time-based requirements may reduce barriers to uptake and enhance delivery of behavioral health services by building this onto the platform of the APCM codes.
• While supporting the add-on codes as a worthwhile first step, the committee recognizes some limitations of the add-on code approach. The add-on codes still require tracking of individual patient services on a monthly basis to be able to appropriately bill for GPCM1 and GPCM2 in the first and second months of service, respectively, and to bill for GPCM3 in subsequent months. While it might be relatively clear to practices how to bill for GPCM1 and GPCM2 for the first and second months that a patient receives integrated behavioral health services, the number of months practices could submit GPCM3 add-ons in subsequent months might be confusing. Tracking each individual behavioral service delivered to qualify for a GPCM3 billing in a given month makes this approach have the character of traditional itemized fee-for-service billing rather than the goal of APCM to support a practice’s capacity to deliver advanced primary care.
• Other successful payment models for BHI programs have used prospective monthly payments to support primary care in building interprofessional care teams and processes (Goldman et al., 2022; Malâtre-Lansac et al., 2020; McGinty and Daumit, 2020; Miller et al., 2017; O’Donnell et al., 2013; Santos et al., 2024; Virginia Center for Health Innovation, n.d.). These models have required

• practices to attest to the availability of behavioral health services, such as behavioral health clinicians employed or colocated at the practice or contractual relationships with decentralized behavioral health clinicians, to qualify for the additional BHI prospective payment. CMS could use an analogous approach to have practices participating in APCM attest to BHI capacity to receive a higher payment level for their core APCM codes (G0556, G0557, and G0558). Practices could demonstrate their ability to provide BHI through multiple models as described above. Small independent or rural practices may not be able to hire behavioral health clinicians and may need to create collaborative care agreements. Practices could attest to their ability to provide the critical elements of BHI rather than any specific structure or model of BHI (Gold et al., 2022).
• Having practices, including Federally Qualified Health Centers and Rural Health Centers, attest to their ability to provide BHI to qualify for increased APCM payments, rather than using add-on payments, aligns with CMS’ APCM principles of stable, dependable payments; low reporting burden; avoiding time-based or time-limited requirements; and tailoring services to patient needs. Because participating practices already have to attest that they are providing the 10 service elements required for APCM, attesting to one additional optional service element seems like a reasonable and low burden way to add BHI to APCM.

APCM, Prevention, and Cost Sharing

CMS’ proposed rule also considers the extent to which APCM services include preventive services, with implications for beneficiary cost sharing and what services are included in the APCM bundle, such as annual wellness visits. The committee is offering responses to the following prevention-related questions in CMS’ proposed rule (CMS, 2025b):

• How should CMS consider application of cost sharing for APCM services, particularly if it were to include preventive services within the APCM bundles?
• How should CMS account for cost sharing if APCM includes both preventive services and other Part B services?
• Should CMS consider including the annual wellness visit, depression screening, or other preventative services in the APCM bundle, and if so, which services and why?
• Should CMS consider other changes to APCM or additional coding to further recognize the work of advanced primary care practices in preventing and managing chronic disease?

Committee Response

Recommendation 6: Starting in 2026, the Centers for Medicare & Medicaid Services should waive cost sharing for the Advanced Primary Care Management (APCM) services as the 10 elements of APCM are essential functions to effectively deliver recommended preventive services, including secondary and tertiary prevention (e.g., chronic care management), that are mandated to not have cost sharing by the Affordable Care Act.

• In its 2024 response to CMS’ 2025 proposed rule that included the APCM model, the National Academies recommended waiving cost sharing in APCM (NASEM, 2024). As that report cited, cost sharing is a known barrier to necessary medical care. In 2017, 11 percent of Medicare beneficiaries reported delaying care because of worries about costs, with lower-income beneficiaries being twice as likely to delay care as those with higher incomes (Madden et al., 2021).
• The Affordable Care Act prohibits cost sharing for preventive services. This includes the delivery of preventive services such as colonoscopies, mammograms, lipid measurements, and vaccinations). Many of the required APCM elements, such as patient-centered care plans, coordination of care, population management, and performance measurement, are essential activities needed for primary care to coordinate and ensure the delivery of preventive services, including secondary and tertiary prevention such as care coordination for individuals with chronic conditions. Separating where these elements or care capacities are focused on prevention rather than other aspects of care is not feasible. These coordination activities were not reimbursed under the PFS until the recent creation of the APCM G-codes (Lesser et al., 2011). Coordination and delivery of preventive services represent a substantial burden of work (Privett and Guerrier, 2021), and APCM should be viewed as paying primary care for these preventive service coordination activities.

Recommendation 7: The Centers for Medicare & Medicaid Services (CMS) should focus efforts on promoting the uptake and use of the existing Advanced Primary Care Management (APCM) codes at this time. However, it is reasonable for CMS to add an already widely adopted preventive service, such as depression screening, in APCM requirements while exercising caution in adding more codes for prevention or chronic care services that have not achieved widespread uptake (such as the annual wellness visit).

• While the 2024 National Academies report responding to CMS’ 2025 proposed rule recommended that CMS consider adding “an annual wellness visit or chronic care management visit to create personalized care plans and to establish attribution” in future hybrid models (NASEM, 2024), this committee feels it is too soon to do so before there is significant uptake of APCM.
• Studies of depression screening implementation show that there have been high levels of uptake, particularly when system-level policy requires screening or it is integrated into the electronic health record workflow in primary care settings (Garcia et al., 2022; Thompson et al., 2019).
• CMS implemented the annual wellness visit in 2011 (and previously the Welcome to Medicare Visit in 2005), but widespread adoption did not occur until 2018–2022 (Gabbard et al., 2025). By 2013, only 8–23 percent of eligible beneficiaries had received an annual wellness visit, and as late as 2015, over half of practices (51.2 percent) had not adopted it at all (Ganguli et al., 2018; Jensen et al., 2015; Lind et al., 2019). Given this history, significant uptake of APCM in its first year is unlikely.
• Expanding beyond the 10 required service elements of APCM and bundling more chronic disease management and prevention services into these hybrid payments while practices are still learning about how to operationalize APCM may result in greater hesitation for primary care practices to participate in APCM at this time (Khullar et al., 2021; Leao et al., 2023; Sandhu et al., 2023).
• If APCM payments and policies are designed to support delivery of preventive services and the annual wellness visit already requires a 10-year prevention plan, it is reasonable to expect that promoting APCM uptake would improve preventive service delivery for beneficiaries without adding new mandates or requirements to the APCM model.

APCM and Accountable Care Organizations

CMS’ proposed rule also includes the following questions regarding APCM payments and accountable care organizations (ACOs) (CMS, 2025b):

• Should CMS consider new payments to Shared Savings Program ACOs for prospective monthly APCM payments to be delivered to primary care practices that satisfy the APCM billing requirements, with the payments reconciled under the ACO benchmark?

• If so, how should CMS consider consent and other features of APCM in these contexts?
• Should CMS consider other updates to APCM payments or Shared Savings Program policies that would drive increased participation of primary care practitioners in ACOs?

The committee is offering a response to these questions below.

Committee Response

Recommendation 8: The Centers for Medicare & Medicaid Services should exclude Advanced Primary Care Management (APCM) payments from reconciliation accounting for Shared Savings Program accountable care organizations (ACOs) during the initial years of evaluating the new APCM codes to prevent a disincentive for ACOs to adopt appropriate use of these codes by primary care practices in the ACO.

Recommendation 9: The Centers for Medicare & Medicaid Services should stipulate in their agreements with accountable care organizations that payments for Advanced Primary Care Management (APCM) codes flow directly to frontline practices to support interprofessional teams to deliver the required APCM elements.

• Shared savings for ACOs are based on accounting of expenditures for Medicare beneficiaries in the ACO relative to a spending target for the ACO. Although payments for APCM codes are likely to be a very small portion of total expenditure, it is not implausible that an ACO might discourage uptake of APCM codes if the ACO leadership perceived additional revenues from APCM billings as potentially jeopardizing performance on shared savings goals.
• One strategy to mitigate this potential unintended consequence of the new APCM codes would be to exclude payments for these codes from ACO shared savings reconciliations, at least for the first few years of APCM implementation while CMS is evaluating the uptake and effect of the APCM codes.
• Ensuring that APCM payments to an ACO flow to the participating primary care practices generating those codes might provide an incentive to drive increased participation of primary care practitioners in ACOs. The 2025 National Academies report Building a Workforce to Develop and Sustain Interprofessional Primary Care Teams recommended that through contractual agreements, payers and health care organizations such as ACOs make sure that

• enhanced payments for primary care are used for their intended purpose of supporting primary care practices to deliver high-quality primary care (NASEM, 2025a).

MANAGEMENT AND PREVENTION OF CHRONIC DISEASE

CMS is soliciting feedback on how the agency might better understand how to enhance and support management for prevention of chronic disease. The agency asks for comments on several specific aspects of this topic, including self-management, health coaching, and motivational interviewing.

The committee is offering responses to the following questions included in CMS’ proposed rule (CMS, 2025b):

• How could CMS better support prevention and management, including self-management, of chronic disease?
• Are there certain services that address the root causes of disease, chronic disease management, or prevention, where the time and resources to perform the services are not adequately captured by the current Physician Fee Schedule code set? If so, please provide specific examples.

Committee Response

Recommendation 10: The Centers for Medicare & Medicaid Services (CMS) should focus its efforts on strengthening primary care to operationalize its strategy to better support prevention and management of chronic disease. To do this, CMS should closely monitor and promote wide uptake of Advanced Primary Care Management (APCM) codes to support comprehensive preventive and chronic care management services delivered by interprofessional primary care teams and perform ongoing empiric assessment of the time and resources required to deliver the APCM elements necessary for high-quality prevention and chronic care to ensure appropriate valuation of APCM codes.

• The 2025 National Academies report Building a Workforce to Develop and Sustain Interprofessional Primary Care Team documented the central role primary care practices play in delivering preventive and chronic care services. Most preventive care services, and a large proportion of chronic care services, are provided in primary care rather than specialty settings (NASEM, 2025a). As that report stated, primary care practices that include health care professionals with complementary skills, including skills in preventive

• and chronic care and behavior change, are key to delivering the comprehensive care patients need. Support for wellness, prevention, and self-management is often most effective when it is integrated into a relationship-based, whole-health model of primary care rather than delivered in a reductionist manner in specialty programs (NASEM, 2023).
• The traditional form and level of primary care payment has been insufficient for recruiting and sustaining the clinicians and interprofessional team staff required for high-quality, comprehensive primary care (NASEM, 2025a). The Medicare PFS traditionally did not include codes that compensated primary care practices for the extensive non-visit-based work of coordinating and ensuring delivery of evidence-based preventive services. Reform of payment to better support primary care is therefore foundational to CMS efforts to promote prevention and management of chronic disease.
• Previous National Academies reports on the primary care workforce and CY 2025 PFS rules presented evidence and endorsed CMS’ implementation of a novel set of APCM codes as an important step toward enhanced payment to support comprehensive, interprofessional team-based primary care (NASEM, 2024, 2025a). The APCM codes provide a logical platform upon which to build additional support for comprehensive prevention and chronic disease management.
• It is critical that CMS evaluate the uptake and effect of the new APCM codes and intervene on an ongoing basis as necessary to ensure appropriate uptake and valuation of these codes, given their potentially pivotal role in advancing CMS goals for prevention and chronic disease management. A recent report published by the Bipartisan Policy Center recommends how CMS could do this and what it should consider (Strong et al., 2025).

HEALTH COACHING AND MOTIVATIONAL INTERVIEWING

CMS is seeking feedback specifically on motivational interviewing and health coaches for prevention and management of chronic disease.

Motivational interviewing, self-management support, and health coaching are approaches to supporting people to make healthy behavior changes (Morton et al., 2015). Motivational interviewing is a counseling method to facilitate behavior changes, such as reducing unhealthy levels of alcohol consumption and increasing physical activity (Britt et al., 2004; Cole et al., 2023; Morton et al., 2015). Self-management support is a structured method to educate patients about their chronic conditions such as diabetes,

Recommendation 4 in this report on APCM and behavioral health integration, CMS should consider setting a higher valuation on APCM codes for practices that attest to staff trained in health coaching.

Recommendation 12: The Centers for Medicare & Medicaid Services payment rules should support a variety of appropriately trained and supervised staff members on interprofessional primary care teams to perform health coaching. A health coaching certificate issued by a national certifying board should not be required for staff providing health coaching services on integrated teams under appropriate supervision but should be required for coaches practicing independently.

• Motivational interviewing is best understood as a counseling method that can be used for health coaching and behavioral health care and not as a distinct service. One commonly accepted definition of health coaching based on a systematic review of 214 published articles characterized its essential features as: (1) patient centered; (2) includes patient determined goals; (3) incorporates self-discovery and active learning processes; (4) encourages accountability for behavioral goals; (5) provides some education alongside coaching; and (6) a health professional who is trained in behavior change, communication, and motivational interviewing skills (Wolever et al., 2013).
• Research has found that health coaching has a small to moderate effect on behavior change and health outcomes, such as increased physical activity and better glycemic control (Racey et al., 2022). Studies have demonstrated the efficacy of health coaching performed by members of integrated primary care teams. This approach may have particular benefit for health promotion and chronic disease management for low-income patients. For example, a series of studies conducted at a county-administered clinic system found that health coaching had benefit for self-management of diabetes and chronic obstructive pulmonary disease (Sharma et al., 2016; Willard-Grace et al., 2015, 2020). The Veterans Health Administration has incorporated health coaches as a key element of its team approach to whole health, with improved outcomes in reduced use of opiates and improved pain management (NASEM, 2023).
• Although a distinct occupation of health and wellness coaching has emerged in recent years, in practice, health coaching has been incorporated into the work of a wide variety of health professionals, including both licensed professionals such as nurses, clinicians, therapists, and social workers, and unlicensed professionals such as

• medical assistants and community health workers (NASEM, 2023; Wolever et al., 2013). Research has also demonstrated the contributions of peer coaches in improving care (Willard-Grace et al., 2020), and national organizations such as the National Board for Health & Wellness Coaching, the National Commission for Health Education Credentialing, and the International Coaching Federation offer formal credentialing and training program accreditation for health and wellness coaching (Abu Dabrh et al., 2025). These organizations typically require a minimum of 60 to 75 hours of training for certification eligibility. Many individuals with certification are in private practice. Most staff performing health coaching in studies in health care settings that have demonstrated coaching effectiveness were not formally certified as health coaches and had received far fewer hours of coaching training than that required for formal certification (Wolever et al., 2013).
• In 2019, the American Medical Association approved three new category III (nonbillable) CPT codes for health coaching (0591T, 0592T, and 0593T) that may only be used when the service is provided by an individual with national certification as a health and wellness coach (Abu Dabrh et al., 2025). In 2024, CMS temporarily allowed billing to Medicare for these codes as telehealth services when provided under the supervision of a physician and then proposed a systematic evaluation of this temporary policy.
• The committee urges CMS to exercise caution in adding new billable CPT codes for health coaching while carefully evaluating evidence on the potential benefit to Medicare beneficiaries of services provided by independent certified health coaches via in-person or telehealth services. Consistent with the findings and recommendations of this report and other National Academies reports responding to CMS 2025 PFS rules, primary care valuation, and building the primary care workforce, CMS should continue to enhance the APCM code set and move to hybrid payment models that would provide payment to support evidence-based health coaching by diverse members of interprofessional primary care teams as part of comprehensive, whole-person care (NASEM, 2024, 2025a,b).

UPDATES TO PRACTICE EXPENSE METHODOLOGY

CMS is proposing to reduce the portion of the practice expense RVUs for facility-based services relative to the portion for non-facility-based services. The total RVU in the PFS is composed of three components: clinician work, practice expenses, and malpractice liability expense. The practice expense component consists of both direct expense and indirect expense

Committee Response

Recommendation 13: The Centers for Medicare & Medicaid Services should follow the Medicare Payment Advisory Commission’s recommendation to intentionally target a rule change for practice expense allocation for facility-based services rather than implementing the proposed across-the-board 50 percent reduction. Such an intentional targeting should consider factors such as the wide variation in the difference in fees for office-based and facility-based codes for different categories of services and specialties.

• In its 2025 report MedPAC concluded that: “Ideally, policies to reduce or eliminate fee schedule indirect PE [practice expense] RVUs for facility services should be targeted toward clinicians who do not pay indirect PE costs because they do not maintain or finance a separate practice” (MedPAC, 2025, p. 33). The committee is concerned that CMS’ proposed across-the-board reduction in indirect expense allowance for all facility-based services insufficiently targets this rule change. The facility-based disparity in fees is greatest for procedural codes, which are on average 270 percent higher for facility-based than office-based services for the same code (Gillis, 2023). Moreover, there is large variation across service codes in the proportion that are billed as facility based, with very high proportions for services such as CT scans and emergency department visits and much lower proportions for ambulatory E/M codes (Burgette et al., 2018). Similarly, a preponderance of physicians in certain specialties such as hospitalists and interventional radiologists furnish the majority of their services in facility settings (MedPAC, 2025).
• The simulation models in the MedPAC 2025 report of different policy options for addressing indirect practice expenses provide an excellent foundation for CMS to continue to iterate a targeted policy and evaluate the likely effect (MedPAC, 2025). Future modeling could include a focus on the effect on ambulatory E/M codes to ensure that the effect is not at odds with CMS’ goal of strengthening primary care.

REFERENCES