CMS Proposes Physician Payment Rule

Disclaimer: This blog article was written by an AdvancedMD partner. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the official policy or position of AdvancedMD.

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would increase quality care for Medicare recipients while significantly reducing unnecessary spending. The calendar year (CY) 2026 Medicare Physician Fee Schedule (PFS) proposed rule would advance primary care management through new quality measures, reduce waste and unnecessary use of skin substitutes, and introduce a new payment model focused on improving care for chronic disease management.

Medicare spending on 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. In one notable case, the CMS Fraud Defense Operations Center stopped more than $1 million in improper payments for skin substitutes to a medical group practice. The practice was submitting Medicare claims for wound care services allegedly performed by the owner, a psychiatrist.

CMS currently treats skin substitutes as biologicals for the purposes of Medicare payment, which can reach as high as $2,000 per square inch. CMS is proposing to pay for skin substitutes as incident-to supplies, a change expected to reduce spending on these products by nearly 90%. These proposed savings would not come at the expense of patient access or quality of care. If finalized, this will save billions for Medicare and taxpayers and incentivize the use of products with the most clinical evidence of success.