Health Care Matters | November 7
CY 2026 Medicare Physician Fee Schedule Final Rule
CMS released the highly anticipated CY 2026 Medicare Physician Fee Schedule (MPFS) Final Rule, finalizing annual updates to Medicare Part B payment policies and changes to the Medicare Shared Savings Program (MSSP) and Quality Payment Program (QPP). The Ambulatory Specialty Model (ASM) was largely finalized as proposed despite significant pushback from stakeholders regarding the inclusion of low back pain as a targeted condition and mandatory individual-level participation. Overall, CMS finalized most policies as proposed:
MSSP
Inexperienced ACOs can participate in a one-sided risk model under MSSP (BASIC Levels A and B) for up to 5 performance years under the ACO’s first agreement, instead of 7 as currently allowed (starting in PY 2027). Additionally, ACOs entering a new agreement period may have fewer than 5,000 assigned beneficiaries in base years (BY) 1, 2, or both. However, they are only allowed to enter the BASIC track, and if at any time during the agreement period they fall below the 5,000 minimum, CMS can cap shared savings/losses at a lesser amount.
ACOs will be required to update their participant list for a participant or SNF affiliate (for ACOs that participate in the SNF waiver) that experience a change in ownership (CHOW) during the performance year, outside of the annual change request cycle (starting in PY 2026).
CMS will include new behavioral health integration and psychiatric collaborative care management add-on services in MSSP attribution, when these services are furnished with advanced primary care management services (starting in PY 2026)
QPP
CMS will conduct Qualifying APM Participant (QP) determinations at both the individual and APM entity levels concurrently to determine eligibility.
Performance threshold will remain at 75 points through the 2028 PY/2030 MIPS payment year.
Other
Conversion Factor: The CY2026 conversion factor for QPs is projected at $33.57 while the non-QPs conversion factor is projected at $33.40.
Telehealth: CMS will permanently allow direct supervision via two-way audio/video communication (excluding audio-only). Due to widespread feedback, CMS is permanently allowing teaching physicians to have a virtual presence in all teaching settings. However, this will only be allowed in clinical instances when the service was furnished virtually.
Skin substitutes: CMS will reimburse skin substitute services (CPT codes 15271 through 15278) as incident-to supplies instead of biologics. CMS is finalizing the use of a single payment rate, reflecting the highest average for the three categories of skin substitute products which will be approximately $127.28.
Read here.
Why It Matters
CMS’s 2026 MPFS Final Rule makes it clear that the agency is doubling down on value-based care. The rule expands flexibility within MSSP and QPP, while also finalizing ASM. For ACOs, clinically integrated networks (CINs), aggregators, and provider practices (including specialty groups) it’s worth taking a close look at how the rule’s changes to RVUs and the conversion factor could affect reimbursement. Additionally, although the conversion factor for QPs is slightly higher than for non-QPs, positive MIPS adjustments could tip the scales for provider groups deciding whether to stay in FFS or move further into value-based models. Now is a good time for organizations to think about how they’re communicating the long-term benefits of value-based participation to their clinicians and partners. Many stakeholders will welcome the finalized skin substitute billing policy, following years of advocacy for reform. CMS projects that this change alone will reduce program spending by nearly $20 billion in 2026.
State Medicaid Programs Ordered to Find Undocumented Immigrants
The Trump administration has ordered state Medicaid programs to investigate over 170,000 enrollees to verify their immigration status, representing a significant expansion of federal oversight into state-run health programs as part of the president's immigration enforcement agenda. CMS Administrator Mehmet Oz claimed that more than $1 billion in federal taxpayer dollars was spent on Medicaid coverage for undocumented immigrants across five states and Washington, D.C., though several states have disputed these figures as inaccurate or misleading. The directive, which began in August 2025, requires states to reverify individuals whose immigration status couldn't be confirmed through federal databases. Read more here and here.
Why It Matters
This initiative escalates the administration's immigration enforcement efforts and creates substantial administrative burdens for already-strained state Medicaid agencies. Advocates warn that the duplicative verification process could result in eligible citizens and lawful immigrants losing coverage simply due to missed paperwork deadlines or database errors like name misspellings or outdated information. When Oz publicly called out specific states on social media for alleged misspending, he only named Democratic-led states that voted against Trump in 2024, while omitting states like Pennsylvania that also received names to investigate but voted for Trump. Looking ahead, we expect continued friction between federal and state governments, potential legal challenges similar to the August court order blocking HHS from sharing Medicaid data with immigration authorities, and likely coverage losses among vulnerable populations regardless of their actual eligibility status. This comes as states are already implementing the OBBBA, which adds work requirements and increases eligibility verification frequency, compounding administrative complexity.
Look for the Helpers: Iowa’s Medicaid Pilot Proves a Ride Can Be a Lifeline
Iowa Medicaid’s three MCOs partnered with Kaizen Health to pilot on-demand transportation for members of the Iowa Health and Wellness Plan, expanding access beyond medical appointments to include rides for work, groceries, education, and social needs. Over nine months, 206 participants completed 1,164 rides; 27% for employment, 15% for visiting family or friends, and 14% for grocery shopping. Members rated their ride experience 3.9 out of 4, demonstrating how flexible, person-centered transportation can help remove everyday barriers to health and stability. Read here.
What We're Writing
Three Things States Should Know Before Applying for CMMI’s Innovation in Behavioral Health Model
CMMI’s Innovation in Behavioral Health Model offers states an opportunity to accelerate behavioral health integration and advance value-based payment across systems of care. In our latest blog post co-authored by Tracy Johnson, we outline three key priorities for states considering an application, from aligning existing initiatives to investing in behavioral health technology. Read here.
What We Are Reading
Rapid Learning For Accountable Care Adoption
A Health Affairs Forefront article charts how a “rapid-learning” approach could accelerate adoption of accountable care across providers by using real-time data, shared learning and iterative improvement cycles to help organizations move beyond piloting into sustainable scale. Read here.
How Some Rural Communities Maintain Access to Labor and Delivery Services
A new Commonwealth Fund report highlights how some rural hospitals are sustaining labor and delivery services through creative financing, community partnerships, and policy supports, even as more than 100 rural units have closed in recent years and only 42% of rural hospitals continue to offer childbirth services. Read here.
Private Equity Acquisition Of Substance Use Treatment Centers Increases Probability Of Public Health Insurance Acceptance
A new study in Health Affairs finds that private equity firms acquired hundreds of substance-use-disorder treatment facilities over the past decade but offers mixed evidence on whether the acquisitions have improved care access or outcomes. Read here.
What We're Watching
John Oliver Last Week Tonight on MA
A recent episode of Last Week Tonight with John Oliver examined marketing practices in the Medicare Advantage market and included a parody commercial featuring a toll-free number that, when called, plays a recorded message from actor Nick Offerman offering woodworking tips. Watch here.
