July 14, 2025
Contact: Erin Hemlin, APG Vice President of Communications
ehemlin@apg.org; Tel: (202) 770-1901
WASHINGTON — Many physicians and other clinicians who are members of America’s Physician Groups (APG), and who are paid under the Medicare Physician Fee Schedule, will see a welcome 3.8 percent increase in 2026. The change is in contrast to the five previous years of cuts, America’s Physician Groups said this week in response to the Centers for Medicare & Medicaid Services newly released proposed rule.
“We thank Congress and the Trump administration for these positive shifts, which we hope bodes well in terms of making future changes to compensate physicians fairly and preserve access to health care for Medicare beneficiaries,” said Susan Dentzer, President and CEO of APG.
The 3.8 percent proposed increase for 2026 is a function of legislative changes recently adopted in reconciliation legislation plus proposed changes in the work relative value unit weighting for some services. APG is pleased that these legislative changes included a 2.5 percent fee schedule increase for 2026, and also created a separate conversion factor for qualifying participants in advanced alternative payment models (AAPMs), for which the update in 2026 will be .75 percent. Because many members of APG participate in these AAPMs, they will receive the full 3.8 percent update, whereas clinicians who are not in AAPMs will receive a 3.6 percent increase.
Dentzer said that APG looks forward to working with policymakers to effectuate other key changes in physician payment, including a regular annual update linked to practice cost inflation; a rollback of all or part of the 2025 Medicare physician fee cut of 2.8 percent; and restoration of the separate AAPM incentive payments that expired this year, ideally at their original 5 percent level. “As the Medicare trustees have now observed for three straight years, Medicare beneficiaries’ access to quality health care will be at risk without sufficient attention to the issue of adequacy of physician payment,” Dentzer said.
Still other aspects of the proposed rule also hold promise for AAPMs and value-based care in general, according to APG. Among additional proposed changes that APG welcomes are these:
- Creation of a new, mandatory Ambulatory Specialty Model under the CMS Innovation Center focused on specialty care for beneficiaries with heart failure and low back pain. If not well managed, these conditions can lead to avoidable hospitalization and generate substantial provision of low-value care. A mandatory model for these conditions along the lines of others that have been tested in the past is overdue, Dentzer said.
- A faster push toward two-sided risk arrangements: Under terms of the proposed rule, an ACO identified as inexperienced with performance-based risk Medicare ACO initiatives may participate in the Medicare Shared Savings Program (MSSP) under a one-sided model for up to five performance years under the ACO’s first agreement period in the BASIC track’s glide path (if eligible), instead of a maximum of seven performance years spanning two agreement periods in the BASIC track, as currently allowed. The change would apply to agreement periods taking effect in 2027. APG strongly believes that, while organizations inexperienced with risk should begin in one-sided models, optimal performance in terms of quality and costs only result when organizations are fully at risk in two-sided models.
- A change in the way relative value units in the fee schedule are estimated that moves away from use of flawed survey data and could lead to more accurate valuation of services. APG and many other medical groups have long been concerned that, as currently constructed, the Medicare Physician Fee Schedule overweights procedure-based and certain specialty care at the expense of primary and more cognitively-based care. New methods and better accounting for increased efficiencies in procedures and tests are likely to produce fairer and more accurate payment rates for all physicians and other clinicians.
- A change in classification of costly skin substitutes that will curb excessive use of and spending on these products. This apparent overuse may constitute inappropriate care and has posed cost concerns for multiple accountable care organizations within APG’s membership. CMS currently treats skin substitutes as biologicals for the purposes of Medicare payment, such that payment can reach as high as $2,000 per square inch of product. Under the proposed rule, CMS would reclassify skin substitutes as “incident-to” supplies, which are those provided as part of professional services during diagnosis and treatment. The change is expected to reduce current Medicare spending on skin substitutes by nearly 90 percent and incentivize use of more appropriate and cost-effective products for wound care and similar services.
APG will consult with members on these and other aspects of the proposed rule to develop further comments, which are due back to the agency by September 12.
About America’s Physician Groups
APG’s approximately 340 physician groups comprise nearly 260,00 physicians and other clinicians providing care to nearly 90 million patients, including an estimated 1 in 4 Americans and 1 in 3 Medicare Advantage enrollees. APG’s motto, ‘Taking Responsibility for America’s Health,’ represents our members’ commitment to clinically integrated, coordinated, value-based health care in which physician groups are accountable for the costs and quality of patient care. Visit us at www.apg.org.
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