July 9 - July 23, 2025

Welcome to The Partnership to Empower Physician-Led Care monthly newsletter, which includes news from our members, legislative and Administration updates, news clips, and studies about value-based care, primary care, and independent physicians. 

 Administration News  

CMS (7/14) CY 2026 PFS Proposed Rule – CMS issued the Calendar Year (CY) 2026 Physician Fee Schedule (PFS) proposed rule, which proposes payment rates and policy changes effective January 1, 2026. The rule proposes a 3.6% payment increase and 3.8% payment increase for practitioners participating in Advanced APMs. CMS also proposes to apply an efficiency adjustment to payment for non-time based services, most commonly performed by specialists, which would will result in a -2.5% decrease to the work RVU calculation in 2026; a site-of-service payment adjustment, increasing indirect cost payments by an average 4% for services delivered in non-facility settings, while reducing payments by an average 7% for the same services in facility settings; and a new payment approach for skin substitutes, which would reduce Medicare spending by more than $9 billion. Comments are due September 12.

In the PFS, CMS also proposed the Ambulatory Specialty Model (ASM), which would be a mandatory model beginning on January 1, 2027. ASM would leverage the MIPS Value Pathway framework to create a two-sided risk model for specialists treating heart failure and low back pain. The proposed model would overlap with other CMMI and ACO models, which CMS hopes will lead to increased coordination and collaboration across specialties. Should the model be finalized, CMS would notify participants in selected regions by July 2026.

CMS (7/15) CY 2026 OPPS Proposed Rule – CMS issued the CY 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center proposed rule, which sets Medicare payment policies and rates for hospital outpatient and Ambulatory Surgical Center (ASC) services. CMS is proposing to phase out the inpatient only (IPO) list over a three-year period, an action also taken during the first Trump Administration; expand site neutral payment policy to drug administration services in off-campus outpatient departments and solicit comments on additional services to consider for site neutral payment; and implement a new payment policy for skin substitutes, which aligns with the PFS proposal. Comments are due September 15.

• Healthcare Dive (7/16) Medicare Targets Site Neutrality, Price Transparency in Hospital Outpatient Rule – The Trump administration is proposing to expand some site-neutral payment policies. Currently, under Medicare, hospital outpatient departments receive higher reimbursement than independent physician offices and ambulatory surgery centers for providing the same care. The discrepancy is a source of frustration for spending watchdogs and some lawmakers who argue aligning payment rates across settings would drive down patient costs while saving Medicare money. CMS proposed phasing out the IPO list, a list of which surgical procedures have to be furnished in hospitals. The government wants to phase out the list over a three-year period, beginning with removing 285 procedures, mostly musculoskeletal, for 2026.

News Clips  

Health Affairs (7/16) Making Value-Based Payment the Best Choice for Providers – Providers will only make a decisive pivot toward value and health generation if the business case for value-based payment (VBP) is compelling and other paths to sustainable revenues are closed off. CMMI can catalyze such a pivot by deploying its resources and legal flexibilities to broaden VBP participation and diminish arbitrage opportunities. Doing so will require political courage. At this juncture, continuing to curate models or layering new technologies and patient engagement strategies over the same models will only yield marginal gains. CMMI should instead consider investing in mandatory models to drive organizational focus on VBP and foundational research and development of alternative fee schedules and risk-adjustment methodologies. These are activities that CMMI has unique legal authority and resources to undertake.

National Bureau of Economic Research (7/16) Are Hospital Acquisitions of Physician Practices Anticompetitive? – This paper empirically analyzes the effects of mergers between complementary firms on competition and pricing. As these non-horizontal mergers have become more common, there is increasing interest in evaluating both potential efficiencies such as eliminating double marginalization and potential anticompetitive effects such as foreclosure and recapture. Hospital acquisitions of physician practices have reshaped the $1 trillion US physician industry, nearly doubling the share of physicians working for hospitals between 2008 and 2016. Focusing on childbirths, the most ubiquitous admission among the privately insured, these mergers led to price increases for hospitals and physicians of 3.3 percent and 15.1 percent, respectively, with no discernible effects on quality measures. Our estimates suggest that the costs of these mergers of hospitals and physicians have been substantial, and our mechanism tests offer guidance in predicting where the anticompetitive effects of non-horizontal mergers are likely to be strongest.

Healthcare Innovation (7/21) Expert: Corporatization Is Already Harming U.S. Healthcare – Confronting corporatization may require a fundamental reorientation of the industrial organization of the health system. Additional reforms could entail structurally separating (“breaking up”) conglomerates that sit on both sides of the payer–provider bargaining dyad by barring insurers from owning physician practices or PBMs from owning pharmacies, standardizing prices to limit monopoly power and financial preferencing of an organization’s related entities over competitors, expanding alternative sources of capital, and modernizing corporate-practice-of-medicine laws. Furthermore, rules for governance and ownership of health care entities might be revisited to require, for example, higher standards for nonprofit tax exemption, clinical and community representation on governing boards, fiduciary duties beyond shareholder primacy, or increased parent-company or investor liability for operational choices that harm patients or the community’s access to care.

Health Affairs (7/22) Revisiting Geographic Direct Contracting: A Blueprint for a Better Version – Health policy experts speculate that the 2021 Geographic Direct Contracting (Geo) Model will be one of the potential revivals of previously shelved Center for Medicare and Medicaid Innovation (CMMI) models during the second Trump administration. The Biden administration suspended the Geo model before implementation began, but with CMMI’s focus on rising health care costs and Medicare’s increasing fiscal challenges the model may be an opportunity to create the reforms this administration wants. The authors provide recommendations for how CMMI could improve a revitalized Geo model including leveraging Medicare’s administrative efficiency, simplifying financial mechanisms, implementing a gradual and predictable discount structure, simplifying alignment methodology, and building on existing ACO infrastructure. This paper also highlights elements of the original Geo model that CMMI should preserve including regional accountability, flexible provider arrangements, and outcomes-based quality measurement.

Events

July

• July 24-27, 2025 – American Academy of Family Physicians (AAFP), “Direct Primary Care (DPC) Summit.”

If you would like your event to be included in the next newsletter, please email sarah@physiciansforvalue.org