Rule2026-22743
Medicare and Medicaid Programs; CY 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program
Primary source
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Published
November 9, 2026
Effective
January 1, 2027
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This final rule addresses: changes to the physician fee schedule (PFS); other changes to Medicare Part B payment policies to ensure that payment systems are updated to reflect changes in medical practice, relative value of services, and changes in the statute; codification of establishment of new policies for: the Medicare Prescription Drug Inflation Rebate Program under the Inflation Reduction Act of 2022; limiting Medicare coverage of certain individuals; the Ambulatory Specialty Model; updates to drugs and biological products paid under Part B; Medicare Shared Savings Program requirements; updates to the Quality Payment Program; updates to policies for Rural Health Clinics and Federally Qualified Health Centers; update to the Ambulance Fee Schedule regulations; codification of the Inflation Reduction Act and Consolidated Appropriations Act, 2026 provisions; updates to Clinical Laboratory Fee Schedule regulations; updates to the Medicare Promoting Interoperability Program.
Full Text
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[Federal Register Volume 91, Number 215 (Monday, November 9, 2026)]
[Rules and Regulations]
[Pages 70992-72020]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-22743]
[[Page 70991]]
Vol. 91
Monday,
No. 215
November 9, 2026
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 400, 405, et al.
Medicare and Medicaid Programs; CY 2027 Payment Policies Under the
Physician Fee Schedule and Other Changes to Part B Payment and Coverage
Policies; Medicare Shared Savings Program Requirements; and Medicare
Prescription Drug Inflation Rebate Program; Final Rule
Federal Register / Vol. 91 , No. 215 / Monday, November 9, 2026 /
Rules and Regulations
[[Page 70992]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 400, 405, 406, 407, 410, 414, 415, 417, 422, 423, 424,
425, 427, 428, and 512
[CMS-1848-F]
RIN 0938-AV82
Medicare and Medicaid Programs; CY 2027 Payment Policies Under
the Physician Fee Schedule and Other Changes to Part B Payment and
Coverage Policies; Medicare Shared Savings Program Requirements; and
Medicare Prescription Drug Inflation Rebate Program
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Final rule.
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SUMMARY: This final rule addresses: changes to the physician fee
schedule (PFS); other changes to Medicare Part B payment policies to
ensure that payment systems are updated to reflect changes in medical
practice, relative value of services, and changes in the statute;
codification of establishment of new policies for: the Medicare
Prescription Drug Inflation Rebate Program under the Inflation
Reduction Act of 2022; limiting Medicare coverage of certain
individuals; the Ambulatory Specialty Model; updates to drugs and
biological products paid under Part B; Medicare Shared Savings Program
requirements; updates to the Quality Payment Program; updates to
policies for Rural Health Clinics and Federally Qualified Health
Centers; update to the Ambulance Fee Schedule regulations; codification
of the Inflation Reduction Act and Consolidated Appropriations Act,
2026 provisions; updates to Clinical Laboratory Fee Schedule
regulations; updates to the Medicare Promoting Interoperability
Program.
DATES: These regulations are effective on January 1, 2027.
FOR FURTHER INFORMATION CONTACT:
<a href="/cdn-cgi/l/email-protection#84c9e1e0ede7e5f6e1d4ecfdf7ede7ede5eac2e1e1d7e7ece1e0f1e8e1c4e7e9f7aaececf7aae3ebf2"><span class="__cf_email__" data-cfemail="410c2425282220332411293832282228202f0724241222292425342d2401222c326f2929326f262e37">[email protected]</span></a>, for any issues not
identified below. Please indicate the specific issue in the subject
line of the email. For all questions related to reporting a service on
a claim, please contact your Medicare Administrative Contractor.
Michael Soracoe, Morgan Kitzmiller, or
<a href="/cdn-cgi/l/email-protection#fab79f9e93999b889faa9283899399939b94bc9f9fa999929f9e8f969fba999789d4929289d49d958c"><span class="__cf_email__" data-cfemail="2a674f4e43494b584f7a4253594349434b446c4f4f7949424f4e5f464f6a49475904424259044d455c">[email protected]</span></a>, for issues related to
practice expense, work RVUs, conversion factor, and PFS specialty-
specific impacts.
Hannah Ahn, Allison Bramlett, or
<a href="/cdn-cgi/l/email-protection#eda08889848e8c9f88bd85949e848e848c83ab8888be8e858889988188ad8e809ec385859ec38a829b"><span class="__cf_email__" data-cfemail="18557d7c717b796a7d4870616b717b7179765e7d7d4b7b707d7c6d747d587b756b3670706b367f776e">[email protected]</span></a>, for issues related to
potentially misvalued services under the PFS.
Mikayla Murphy, or <a href="/cdn-cgi/l/email-protection#abe6cecfc2c8cad9cefbc3d2d8c2c8c2cac5edcecef8c8c3cecfdec7ceebc8c6d885c3c3d885ccc4dd"><span class="__cf_email__" data-cfemail="f8b59d9c919b998a9da890818b919b919996be9d9dab9b909d9c8d949db89b958bd690908bd69f978e">[email protected]</span></a>, for
issues related to direct supervision using two-way audio/video
communication technology, telehealth, and other services involving
communications technology.
<a href="/cdn-cgi/l/email-protection#e9a48c8d808a889b8cb981909a808a808887af8c8cba8a818c8d9c858ca98a849ac781819ac78e869f"><span class="__cf_email__" data-cfemail="d994bcbdb0bab8abbc89b1a0aab0bab0b8b79fbcbc8abab1bcbdacb5bc99bab4aaf7b1b1aaf7beb6af">[email protected]</span></a>, for issues related to E/M
overlap between stand-alone visits and global periods, and E/M visit
complexity add-on code (B1 and B2).
Terry Simananda, or <a href="/cdn-cgi/l/email-protection#9ad7fffef3f9fbe8ffcaf2e3e9f3f9f3fbf4dcffffc9f9f2fffeeff6ffdaf9f7e9b4f2f2e9b4fdf5ec"><span class="__cf_email__" data-cfemail="d895bdbcb1bbb9aabd88b0a1abb1bbb1b9b69ebdbd8bbbb0bdbcadb4bd98bbb5abf6b0b0abf6bfb7ae">[email protected]</span></a>, for
issues related to smoking and tobacco use cessation, screening, brief
intervention, and referral to treatment, psychiatric collaborative care
model, and shared medical appointments.
Sarah Leipnik, or <a href="/cdn-cgi/l/email-protection#054860616c66647760556d7c766c666c646b43606056666d6061706960456668762b6d6d762b626a73"><span class="__cf_email__" data-cfemail="18557d7c717b796a7d4870616b717b7179765e7d7d4b7b707d7c6d747d587b756b3670706b367f776e">[email protected]</span></a>, for
issues related to global surgery payment accuracy.
Pamela West, or <a href="/cdn-cgi/l/email-protection#09446c6d606a687b6c5961707a606a6068674f6c6c5a6a616c6d7c656c496a647a2761617a276e667f"><span class="__cf_email__" data-cfemail="7a371f1e13191b081f2a1203091319131b143c1f1f2919121f1e0f161f3a19170954121209541d150c">[email protected]</span></a>, for
issues related to comprehensive outpatient rehabilitation facility
(CORF) services and KX modifier thresholds.
Zehra Hussain, or <a href="/cdn-cgi/l/email-protection#652800010c06041700350d1c160c060c040b23000036060d0001100900250608164b0d0d164b020a13"><span class="__cf_email__" data-cfemail="eca18988858f8d9e89bc84959f858f858d82aa8989bf8f848988998089ac8f819fc284849fc28b839a">[email protected]</span></a>, for
issues related to payment of skin substitutes.
Laura Kennedy, (410) 786-3377, Rebecca Ray, (667) 414-0879, and Jae
Ryu, (667) 414-0765 for issues related to Drugs and Biological Products
Paid Under Medicare Part B.
Lisa Parker, (410) 786-4949, or <a href="/cdn-cgi/l/email-protection#e6a0b7aea5cbb6b6b5a6858b95c88e8e95c8818990"><span class="__cf_email__" data-cfemail="f2b4a3bab1dfa2a2a1b2919f81dc9a9a81dc959d84">[email protected]</span></a>, Michele
Franklin, (410) 786-9226, or <a href="/cdn-cgi/l/email-protection#d3819b9093b0bea0fdbbbba0fdb4bca5"><span class="__cf_email__" data-cfemail="f0a2b8b3b0939d83de989883de979f86">[email protected]</span></a>, and Patrick Sartini,
(410) 786-9252 for issues related to FQHC and RHC payments.
Patrick Sartini, (410) 786-9252, or <a href="/cdn-cgi/l/email-protection#c5868983969a8cabb4b0acb7aca0b685a6a8b6ebadadb6eba2aab3"><span class="__cf_email__" data-cfemail="c4878882979b8daab5b1adb6ada1b784a7a9b7eaacacb7eaa3abb2">[email protected]</span></a> for
issues related to the Clinical Laboratory Fee Schedule.
Sabrina Ahmed, (410) 786-7499, or <a href="/cdn-cgi/l/email-protection#6e3d060f1c0b0a3d0f180700091d3e1c01091c0f032e0d031d4006061d40090118"><span class="__cf_email__" data-cfemail="481b20293a2d2c1b293e21262f3b183a272f3a2925082b253b6620203b662f273e">[email protected]</span></a>,
for issues related to the Medicare Shared Savings Program (Shared
Savings Program) quality performance standard and other quality
reporting requirements.
Kimberly Spalding Bush, (410) 786-3232, or
<a href="/cdn-cgi/l/email-protection#02516a637067665163746b6c657152706d6570636f42616f712c6a6a712c656d74"><span class="__cf_email__" data-cfemail="f9aa91988b9c9daa988f90979e8aa98b969e8b9894b99a948ad791918ad79e968f">[email protected]</span></a>, for issues related to the Shared
Savings Program certified electronic health record technology (CEHRT)
use requirements.
Janae James, (410) 786-0801, or <a href="/cdn-cgi/l/email-protection#edbe858c9f8889be8c9b84838a9ebd9f828a9f8c80ad8e809ec385859ec38a829b"><span class="__cf_email__" data-cfemail="3d6e555c4f58596e5c4b54535a4e6d4f525a4f5c507d5e504e1355554e135a524b">[email protected]</span></a>,
for issues related to Shared Savings Program beneficiary assignment and
financial methodology.
Lucy Bertocci, (443) 681-0762, or <a href="/cdn-cgi/l/email-protection#d685beb7a4b3b285b7a0bfb8b1a586a4b9b1a4b7bb96b5bba5f8bebea5f8b1b9a0"><span class="__cf_email__" data-cfemail="16457e776473724577607f7871654664797164777b56757b65387e7e6538717960">[email protected]</span></a>,
for issues related to reducing or eliminating Part B cost sharing,
prepaid shared savings, beneficiary notifications, advance investment
payments or identifying ACOs experienced with performance-based risk.
Elisabeth Daniel, (667) 290-8793, for issues related to the
Medicare Prescription Drug Inflation Rebate Program.
Benjamin Picillo or Genevieve Kehoe,
<a href="/cdn-cgi/l/email-protection#fbba96998e979a8f948982a88b9e98929a978f82b6949f9e97bb989688d5939388d59c948d"><span class="__cf_email__" data-cfemail="da9bb7b8afb6bbaeb5a8a389aabfb9b3bbb6aea397b5bebfb69ab9b7a9f4b2b2a9f4bdb5ac">[email protected]</span></a>, or 1-844-711-2664 (Option 4) for
issues related to the Ambulatory Specialty Model.
Amy Gruber, (410) 786-1542, for issues related to Ambulance Fee
Schedule.
Kati Moore, (410) 786-5471, for inquiries related to the Merit-
based Incentive Payment System (MIPS) track of the Quality Payment
Program (QPP).
Trevey Davis, (410) 786-6600, for inquiries related to the Advanced
Alternative Payment Models (APMs) track of QPP.
Jessica Warren, (410) 786-7519, and Lisa Marie Gomez, (410) 786-
1175, for inquiries related to the Medicare Promoting Interoperability
Program.
Steve Manning, (410) 786-1691, for inquiries related to limiting
Medicare coverage of certain individuals.
SUPPLEMENTARY INFORMATION:
Addenda Available Only Through the Internet on the CMS Website: The
PFS Addenda along with other supporting documents and tables referenced
in this final rule are available on the CMS website at <a href="https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html">https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html</a>. Click on the link on the left side of the
screen titled, ``PFS Federal Regulations Notices'' for a chronological
list of PFS Federal Register and other related documents. For the CY
2027 PFS final rule, refer to item CMS--1848-F. Readers with questions
related to accessing any of the Addenda or other supporting documents
referenced in this proposed rule and posted on the CMS website
identified above should contact
<a href="/cdn-cgi/l/email-protection#68250d0c010b091a0d3800111b010b0109062e0d0d3b0b000d0c1d040d280b051b4600001b460f071e"><span class="__cf_email__" data-cfemail="125f77767b71736077427a6b617b717b737c54777741717a7776677e7752717f613c7a7a613c757d64">[email protected]</span></a>.
CPT (Current Procedural Terminology) Copyright Notice: Throughout
this final rule, we use CPT codes and descriptions to refer to a
variety of services. We note that CPT
[[Page 70993]]
codes and descriptions are copyright 2020 American Medical Association.
All Rights Reserved. CPT is a registered trademark of the American
Medical Association (AMA). Applicable Federal Acquisition Regulations
(FAR) and Defense Federal Acquisition Regulations (DFAR) apply.
I. Executive Summary
A. Purpose
This major final rule revises payment policies under the Medicare
PFS and makes other policy changes, including to the implementation of
certain provisions of the Full-Year Continuing Appropriations and
Extensions Act, 2025 (Pub. L. 119-4, March 15, 2025), Further
Continuing Appropriations and Other Extensions Act of 2024 (Pub. L.
118-22, November 17, 2023), Consolidated Appropriations Act, 2023 (Pub.
L. 117-328, December 29, 2022), Inflation Reduction Act of 2022 (IRA)
(Pub. L. 117-169, August 16, 2022), Consolidated Appropriations Act,
2022 (Pub. L. 117-103, March 15, 2022), Consolidated Appropriations
Act, 2021 (CAA, 2021) (Pub. L. 116-260, December 27, 2020), Bipartisan
Budget Act of 2018 (BBA of 2018) (Pub. L. 115-123, February 9, 2018),
the Substance Use-Disorder Prevention that Promotes Opioid Recovery and
Treatment for Patients and Communities Act (SUPPORT Act) (Pub. L. 115-
271, October 24, 2018) and Consolidated Appropriations Act, 2026 (Pub.
L. 119-75, February 3, 2026), related to Medicare Part B payment. In
addition, this final rule includes other Medicare payment and
eligibility provisions described in sections III. and IV.
This final rule updates policies for the Medicare Prescription Drug
Inflation Rebate Program codified at 42 CFR parts 427 and 428
consistent with sections 1847A(i) and 1860D--14B of the Social Security
Act (the Act). For the Medicare Part B Drug Inflation Rebate Program,
this rule describes the identification of the Consumer Price Index for
all Urban Consumers (CPI-U) for the payment amount benchmark quarter
and the rebate period in certain instances when CPI-U survey data are
unavailable and the calculation of the Part B rebate amount in such
instances; clarifies the definition of ``first marketed date''; and
clarifies that certain skin substitutes would not be excluded from the
definition of a Part B rebatable drug. For the Medicare Part D Drug
Inflation Rebate Program, this rule describes the identification of the
CPI-U for the payment amount benchmark period and applicable period in
certain instances when CPI-U survey data are unavailable and the
calculation of the Part D rebate amount in such instances; modifies the
methodology finalized in the CY 2026 PFS final rule to account for
340B-eligible units for AIDS Drug Assistance Program (ADAP) clients for
the applicable period beginning October 1, 2025; and requires Medicare
providers and suppliers that are 340B covered entities to submit Part D
340B claims data to the Medicare Part D Claims Data 340B Repository
beginning in 2027.
This final rule modifies policies for the Shared Savings Program,
which is a voluntary program that started in 2012. The program allows
groups of providers and suppliers to form or participate in Accountable
Care Organizations (ACOs), and to be held accountable for the quality
and total cost of care for an assigned population of Medicare fee-for-
service (FFS) beneficiaries.
B. Summary of the Key Provisions
Section 1848 of the Act requires us to establish payments under the
PFS, based on national uniform relative value units (RVUs) that account
for the relative resources used in furnishing a service. The statute
requires that RVUs be established for three categories of resources:
work, practice expense (PE), and malpractice (MP) expense. In addition,
the statute requires that each year we establish, by regulation, the
payment amounts for physicians' services paid under the PFS, including
geographic adjustments to reflect the variations in the costs of
furnishing services in different geographic areas.
In this major final rule, we are finalizing RVUs for CY 2027 for
the PFS to ensure that our payment systems are updated to reflect
changes in medical practice and the relative value of services, as well
as changes in the statute. This final rule also includes discussions
and provisions regarding several other Medicare Part B payment
policies, and other policies regarding programs administered by CMS.
Specifically, this final rule addresses:
<bullet> Background (section II.A.)
<bullet> Determination of PE RVUs (section II.B.)
<bullet> Payment for Medicare Telehealth Services (section II.C.)
<bullet> Valuation of Specific Codes, Including Potentially Misvalued
Codes (PMVC) (section II.D.)
<bullet> Redesigning Primary Care to Make America Healthy Again
(section II.E.)
<bullet> Comprehensive Outpatient Rehabilitation Facility (CORF)
Services and KX Modifier Threshold, and Medical Review Threshold
(section II.F.)
<bullet> Supporting Beneficiaries Planning for Future Medical Decisions
(section II.G.)
<bullet> Current Procedural Terminology (CPT) Request for Information
(RFI) (section II.H.)
<bullet> Drugs and Biological Products Paid Under Medicare Part B:
Discarded Drugs (section III.A.)
<bullet> Rural Health Clinics (RHCs) and Federally Qualified Health
Centers (FQHCs) (section III.B.)
<bullet> Clinical Laboratory Fee Schedule (CLFS): CAA, 2026 (section
III.C.)
<bullet> Changes to the Ambulatory Specialty Model (ASM) (section
III.D.)
<bullet> Limiting Medicare Coverage of Certain Individuals (section
III.E.)
<bullet> Medicare Prescription Drug Inflation Rebate Program (section
III.F.)
<bullet> Medicare Shared Savings Program (section III.G.)
<bullet> Changes to the Regulations Associated with the Ambulance Fee
Schedule (section III.H.)
<bullet> Request for Information (RFI) on Duplicate Laboratory Testing,
Imaging, and Result Sharing and Interoperability (section III.I)
<bullet> CY2027 Modifications to the Quality Payment Program Reporting
and Data Submission (section IV.)
<bullet> Collection of Information Requirements (section V.)
<bullet> Regulatory Impact Analysis (section VI.)
C. Summary of Costs and Benefits
Based on our estimates, the Office of Information and Regulatory
Affairs in the Office of Management and Budget has determined that this
final rule is economically significant under section 3(f)(1) of
Executive Order 12866. As required by section 1848(d)(1)(A) of the Act,
beginning in 2026, there are two separate conversion factors (CFs): one
for items and services furnished by a qualifying APM participant (QP)
as defined in section 1833(z)(2) of the Act and 42 CFR 414.1305
(referred to as the qualifying APM conversion factor) and another for
items and services furnished by clinicians who are not QPs (referred to
as the nonqualifying APM conversion factor), equal to the respective
conversion factor for the previous year multiplied by the update
established under section 1848(d)(20) of the Act for such respective
conversion factor for such year. Under these provisions, the 2027
qualifying APM conversion factor represents a projected decrease of
$0.62 (-1.83 percent) from the current conversion factor of $33.5675.
Similarly, the 2027 nonqualifying APM conversion factor represents a
projected decrease of $0.77 (-2.31 percent) from the current conversion
factor of $33.4009.
[[Page 70994]]
For a detailed discussion of the economic impacts, see section VI.,
Regulatory Impact Analysis, of this final rule.
D. Public Comments in Response on the CY 2027 PFS Proposed Rule
We received approximately 43,100 timely pieces of correspondence on
the CY 2027 PFS proposed rule that appeared in the Federal Register on
July 14, 2026 (91 FR 43842 through 44557). We received comments from
individuals, providers and suppliers, practitioners, and advocacy
groups. We provide summaries of the public comments, and our responses
are set forth in the various sections of this final rule under the
appropriate headings. We note that we received some public comments
that were outside the scope of the CY 2027 PFS proposed rule.
II. Provisions of the Rule for the PFS
A. Background
In accordance with section 1848 of the Social Security Act (the
Act), CMS has paid for physicians' services under the Medicare
physician fee schedule (PFS) since January 1, 1992. The PFS relies on
national relative values that are established for work, practice
expense (PE), and malpractice (MP), which are adjusted for geographic
cost variations. These values are multiplied by a conversion factor
(CF) to convert the relative value units (RVUs) into payment rates. The
concepts and methodology underlying the PFS were enacted as part of the
Omnibus Budget Reconciliation Act of 1989 (OBRA '89) (Pub. L. 101-239,
December 19, 1989), and the Omnibus Budget Reconciliation Act of 1990
(OBRA '90) (Pub. L. 101-508, November 5, 1990). The final rule
published in the November 25, 1991 Federal Register (56 FR 59502) set
forth the first fee schedule used for Medicare payment for physicians'
services.
We note that throughout this final rule, unless otherwise noted,
the term ``practitioner'' is used to describe both physicians and
nonphysician practitioners (NPPs) who are permitted to bill Medicare
under the PFS for the services they furnish to Medicare beneficiaries.
B. Determination of PE RVUs
1. Overview
Practice expense (PE) is the portion of the resources used in
furnishing a service that reflects the general categories of physician
and practitioner expenses, such as office rent and personnel wages, but
excluding malpractice (MP) expenses, as specified in section
1848(c)(1)(B) of the Act. As required by section 1848(c)(2)(C)(ii) of
the Act, we use a resource-based system for determining PE RVUs for
each physicians' service. We develop PE RVUs by considering the direct
and indirect practice resources involved in furnishing each service.
Direct expense categories include clinical labor, medical supplies, and
medical equipment. Indirect expenses include administrative labor,
office expenses, and all other expenses. The sections that follow
provide more detailed information about the methodology for translating
the resources involved in furnishing each service into service specific
PE RVUs. We refer readers to the CY 2010 Physician Fee Schedule (PFS)
final rule with comment period (74 FR 61743 through 61748) for a more
detailed explanation of the PE methodology.
2. Practice Expense Methodology
a. Direct Practice Expense
We determine the direct PE for a specific service by adding the
costs of the direct resources (that is, the clinical staff, medical
supplies, and medical equipment) typically involved with furnishing
that service. The costs of the resources are calculated using the
refined direct PE inputs assigned to each CPT code in our PE database,
which are generally based on our review of recommendations received
from the American Medical Association (AMA)/Specialty Society Relative
Value Scale (RVS) Update Committee (referred to as the RUC) and those
provided in response to public comment periods. For a detailed
explanation of the direct PE methodology, including examples, we refer
readers to the 5-year review of work RVUs under the PFS and changes to
the PE methodology in the CY 2007 PFS proposed rule (71 FR 37242) and
the CY 2007 PFS final rule with comment period (71 FR 69629).
b. Indirect Practice Expense per Hour Data
We use survey data on indirect PEs incurred per hour (PE/HR) worked
to develop the indirect portion of the PE RVUs. Prior to CY 2010, we
primarily used the PE/HR by specialty obtained from the AMA's
Socioeconomic Monitoring System (SMS). The AMA administered a new
survey in CY 2007 and CY 2008, the Physician Practice Information
Survey (PPIS). The PPIS is a multispecialty, nationally representative,
PE survey of physicians and NPPs paid under the PFS using a survey
instrument and methods highly consistent with those used for the SMS
and the supplemental surveys. The PPIS gathered information from 3,656
respondents across 51 physician specialty and health care professional
groups. We have stated that we believe the PPIS is the most
comprehensive source of PE survey information available. We used the
PPIS data to update the PE/HR data for the CY 2010 PFS for almost all
of the Medicare-recognized specialties that participated in the survey.
When we began using the PPIS data in CY 2010, we did not change the
PE RVU methodology or how the PE/HR data are used. We only updated the
PE/HR data based on the new survey. Furthermore, as we explained in the
CY 2010 PFS final rule with comment period (74 FR 61751), because of
the magnitude of payment reductions for some specialties resulting from
the use of the PPIS data, we transitioned its use over a 4-year period
from the previous PE RVUs to the PE RVUs developed using the new PPIS
data. As provided in the CY 2010 PFS final rule with comment period (74
FR 61751), the transition to the PPIS data was complete for CY 2013.
Therefore, PE RVUs from CY 2013 forward are developed based entirely on
the PPIS data, except as noted in this section.
Section 1848(c)(2)(H)(i) of the Act requires us to use the medical
oncology supplemental survey data submitted in 2003 for oncology drug
administration services. Therefore, the PE/HR for medical oncology,
hematology, and hematology/oncology reflects the continued use of these
supplemental survey data.
Supplemental survey data on independent labs from the College of
American Pathologists were implemented for payments beginning in CY
2005. Supplemental survey data from the National Coalition of Quality
Diagnostic Imaging Services (NCQDIS), representing independent
diagnostic testing facilities (IDTFs), were blended with supplementary
survey data from the American College of Radiology (ACR) and
implemented for payments beginning in CY 2007. Neither IDTFs nor
independent labs participated in the PPIS. Therefore, we continue to
use the PE/HR that was developed from their supplemental survey data.
Consistent with our past practice, the previous indirect PE/HR
values from the supplemental surveys for these specialties were updated
to CY 2006 using the Medicare Economic Index (MEI) to put them on a
comparable basis with the PPIS data.
We also do not use the PPIS data for reproductive endocrinology and
spine surgery since these specialties are not separately recognized by
Medicare, nor
[[Page 70995]]
do we have a method to blend the PPIS data with Medicare-recognized
specialty data.
Previously, we established PE/HR values for various specialties
without SMS or supplemental survey data by crosswalking them to other
similar specialties to estimate a proxy PE/HR. For specialties that
were part of the PPIS for which we previously used a crosswalked PE/HR,
we instead used the PPIS based PE/HR. We use crosswalks for specialties
that did not participate in the PPIS. These crosswalks have been
generally established through notice and comment rulemaking and are
available in the file titled ``CY 2027 PFS Final Rule PE/HR'' on the
CMS website under downloads for the CY 2027 PFS final rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>.
c. Allocation of PE to Services
To establish PE RVUs for specific services, it is necessary to
establish the direct and indirect PE associated with each service.
(1) Direct Costs
The relative relationship between the direct cost portions of the
PE RVUs for any two services is determined by the relative relationship
between the sum of the direct cost resources (that is, the clinical
staff, medical supplies, and medical equipment) typically involved with
furnishing each of the services. The costs of these resources are
calculated from the refined direct PE inputs in our PE database. For
example, if one service has a direct cost sum of $400 from our PE
database and another service has a direct cost sum of $200, the direct
portion of the PE RVUs of the first service would be twice as much as
the direct portion of the PE RVUs for the second service.
(2) Indirect Costs
Under current policy, we allocate the indirect costs at the code
level based on the direct costs specifically associated with a code and
the greater of either the clinical labor costs or the work RVUs. We
also incorporate the survey data described earlier in the PE/HR
discussion. The general approach to developing the indirect portion of
the PE RVUs is as follows:
<bullet> For a given service, we use the direct portion of the PE
RVUs calculated as previously described and the average percentage that
direct costs represent of total costs (based on survey data) across the
specialties that furnish the service to determine an initial indirect
allocator. That is, the initial indirect allocator is calculated so
that the direct costs equal the average percentage of direct costs of
those specialties furnishing the service. For example, if the direct
portion of the PE RVUs for a given service is 2.00 and direct costs, on
average, represent 25 percent of total costs for the specialties that
furnish the service, the initial indirect allocator would be calculated
so that it equals 75 percent of the total PE RVUs. Thus, in this
example, the initial indirect allocator would equal 6.00, resulting in
a total PE RVU of 8.00 (2.00 is 25 percent of 8.00 and 6.00 is 75
percent of 8.00).
<bullet> Next, under current policy, we add the greater of the work
RVUs or clinical labor portion of the direct portion of the PE RVUs to
this initial indirect allocator. In our example, if this service had a
work RVU of 4.00 and the clinical labor portion of the direct PE RVU
was 1.50, we would add 4.00 (since the 4.00 work RVUs are greater than
the 1.50 clinical labor portion) to the initial indirect allocator of
6.00 to get an indirect allocator of 10.00. In the absence of any
further use of the survey data, the relative relationship between the
indirect cost portions of the PE RVUs for any two services would be
determined by the relative relationship between these indirect cost
allocators. For example, if one service had an indirect cost allocator
of 10.00 and another service had an indirect cost allocator of 5.00,
the indirect portion of the PE RVUs of the first service would be twice
as great as the indirect portion of the PE RVUs for the second service.
<bullet> Then, we incorporate the specialty specific indirect PE/HR
data into the calculation. In our example, if, based on the survey
data, the average indirect cost of the specialties furnishing the first
service with an allocator of 10.00 was half of the average indirect
cost of the specialties furnishing the second service with an indirect
allocator of 5.00, the indirect portion of the PE RVUs of the first
service would be equal to that of the second service.
In the CY 2007 PFS final rule with comment period, we implemented
the ``bottom up'' methodology for the development of PE RVUs (71 FR
69630-69643). We finalized the use of the work RVU or the clinical
labor portion of the direct PE RVU, whichever is greater, to allocate
indirect costs. We also finalized a modified formula for a global
service (that is, a service with a professional component (PC) and a
technical component (TC)) to utilize both the work RVU and the clinical
labor PE RVU to allocate indirect costs. As noted in the CY 2007 PFS
final rule with comment period, we do this to recognize that, for the
PC service, indirect PEs will be allocated using the work RVUs, and for
the TC service, indirect PEs will be allocated using the direct PE RVU
and the clinical labor PE RVU. This also allows the global component
RVUs to equal the sum of the PC and TC RVUs.
In recent years, as we have conducted analyses aimed at improving
the accuracy of payment under the PFS, we have re-examined this
longstanding policy that effectively allocates a larger share of
indirect PE RVUs to services that can be reported using technical,
professional, and global components than to those that cannot. We refer
the reader to a report by RAND Corporation, under contract with CMS,
which addresses several approaches to improving the accuracy of other
PFS services relative to services that have a professional and
technical component. This report is available at <a href="https://www.rand.org/pubs/research_reports/RRA4720-2.html">https://www.rand.org/pubs/research_reports/RRA4720-2.html</a>.
This longstanding policy inadvertently advantages services that can
be reported using technical, professional, and global components,
referred to as ``triplet services'' in the report by RAND Corporation,
because indirect PE RVUs are allocated on the sum, whereas services
that can only be reported as a global service, referred to as ``non-
triplet services'' in the report, depend on the maximum (rather than
sum) of clinical labor PE RVUs and physician work RVUs. This is an
unintended advantage of the arithmetic required for the global
component RVUs to equal the sum of the PC and TC RVUs. As we stated in
the proposed rule, we believe it would be more accurate than the
current PE methodology to use the same allocation methodology for all
PFS services. Therefore, we proposed to allocate indirect PE using both
the work RVU and the clinical labor RVU for all services, with the
exception of codes with 10- and 90-day global periods, instead of just
applying that methodology to those services that can be reported using
technical, professional, and global components (typically diagnostic
and imaging services). In the description of the calculation of the PE
methodology noted later in the section, we indicate the portion of the
methodology that would be calculated differently under this proposal.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Several commenters stated that CMS did not provide a
rationale for excluding 10- and 90-day global codes from the proposed
revised indirect PE
[[Page 70996]]
allocation in the proposed rule. Some commenters stated that the RAND
analysis published alongside the proposed rule did not exclude these
global codes, disagreed with CMS' exclusion of 10- and 90-day global
codes and requested that we finalize their inclusion in the proposal to
allocate indirect PE using both the work RVU and the clinical labor RVU
for all services. Some commenters supported the exclusion of the 10-
and 90-day global period codes from the proposal. They reiterated our
ongoing questions and concerns about the current valuation of work and
clinical labor RVUs for 10- and 90-day global period codes noted
elsewhere in section II.B. of this final rule, and said that the
proposed change should not be extended to those codes until the other
questions and concerns are addressed. Another commenter requested that
the exclusion of the 10- and 90-day global period codes does not
further delay the separate work needed to correct documented
misvaluation within global surgical payments.
Response: We appreciate the commenters' feedback and note that we
inadvertently omitted a specific rationale for their exclusion in the
proposed rule. We discussed difficulties and concerns with the global
period codes elsewhere in section II.B. of the proposed rule (91 FR
43861) and similarly excluded 10- and 90-day global surgery services
from the new ``CY 2027 PFS Proposed Rule Display Only TC PE RVUs''
public use file discussed in the proposed rule. Specifically, the use
of bundled payments for the 10- and 90-day global surgery services
results in aggregated valuation for all pre-operative, intra-operative,
and post-operative services furnished over a defined period (10-, or
90-day global periods), including services by both physician and
clinical staff and practice expense without clear visibility into how
each component contributes to the total bundled valuation. This is the
rationale referenced previously that was inadvertently omitted from the
proposed rule.
This unintended advantage of the arithmetic required for the global
component RVUs to equal the sum of the PC and TC RVUs has led to
concerns of incorrect relativities between PFS services. While the RAND
report recommends allocating indirect PE using the sum of work and
clinical labor as a default for all services (that is, not just those
with TC/PC splits), the report also notes that strategies CMS might
pursue to mitigate these concerns could interact with other aspects of
Medicare payment policy, leading to unintentional or undesired effects
or the need for special adjustments or other consideration for certain
PFS services.
Additionally, other RAND reports <SUP>1 2 3 4</SUP> and recent OIG
reports <SUP>5 6</SUP> have consistently found that substantially fewer
post-operative visits are typically provided to Medicare beneficiaries
as part of 10- and 90-day global periods compared to the number of
assumed post-operative visits considered in surgical procedure
valuation. Including the 10- and 90-day global surgery services in the
proposed revised indirect PE allocation would have significantly
increased the indirect PE allocated to these services and amplified the
payment distortions that result from including too many post-operative
visits in global packages because there is work and clinical labor
bundled into the valuation associated with the post-operative visits.
Similar to how we do not believe codes with technical, professional,
and global components should be advantaged over other services by the
indirect PE allocation using both the work RVU and clinical labor RVU,
we do not believe global period services should be advantaged by the
proposal because they have additional work & clinical labor RVUs
bundled into their post-operative periods.
---------------------------------------------------------------------------
\1\ <a href="https://www.rand.org/pubs/research_reports/RRA203-1.html">https://www.rand.org/pubs/research_reports/RRA203-1.html</a>.
\2\ <a href="https://www.rand.org/pubs/research_reports/RRA4720-1.html">https://www.rand.org/pubs/research_reports/RRA4720-1.html</a>.
\3\ <a href="https://www.rand.org/pubs/research_reports/RRA203-2.html">https://www.rand.org/pubs/research_reports/RRA203-2.html</a>.
\4\ <a href="https://www.rand.org/pubs/research_reports/RR2941.html">https://www.rand.org/pubs/research_reports/RR2941.html</a>.
\5\ <a href="https://oig.hhs.gov/reports/all/2025/cms-should-improve-its-methodology-for-collecting-medicare-postoperative-visit-data-on-global-surgeries/">https://oig.hhs.gov/reports/all/2025/cms-should-improve-its-methodology-for-collecting-medicare-postoperative-visit-data-on-global-surgeries/</a>.
\6\ <a href="https://oig.hhs.gov/reports/all/2025/cms-should-confirm-it-is-receiving-medicare-postoperative-visit-data-on-global-surgeries-when-reporting-is-required/">https://oig.hhs.gov/reports/all/2025/cms-should-confirm-it-is-receiving-medicare-postoperative-visit-data-on-global-surgeries-when-reporting-is-required/</a>.
---------------------------------------------------------------------------
Comment: A commenter expressed concern with the proposal, stating
that the proposal was aimed at addressing the assertion in RAND's
report that the current indirect PE methodology may contribute to
overutilization of imaging services. The commenter stated that, absent
evidence demonstrating that indirect PE allocation directly affects
ordering behavior or utilization patterns, they believe we should
proceed cautiously before implementing significant redistributions of
RVUs based on assumptions regarding imaging utilization.
Response: We appreciate the commenter's feedback. We note that, as
discussed in the proposed rule, this longstanding policy inadvertently
advantages services that can be reported using technical, professional,
and global components, and is an unintended advantage of the arithmetic
required for the global component RVUs to equal the sum of the PC and
TC RVUs. We note that we did not propose this change to address any
utilization patterns discussed in RAND's report, but rather, to address
the longstanding and unintended advantage because we believe it would
be more accurate than the current PE methodology to use the same
allocation methodology for all PFS services.
Comment: A commenter stated they could not determine whether CMS
incorporated this proposed modification into the calculation of PE RVUs
for the proposed rule. They stated that, in the separately published
Sample Calculation of PE RVUs under Methodology for Selected Codes
public use file, CMS indicated that the second component of the
indirect PE allocator for CPT code 99213 is based on the work RVU and
does not appear to incorporate the clinical labor as proposed.
Response: We appreciate the commenter's feedback and acknowledge
the concern. Because this was a proposed change, our methodology public
use files, such as the Sample Calculation of PE RVUs under Methodology
for Selected Codes and CY 2027 PFS Proposed Rule Practice Expense
Algorithm Technical Memo, displayed information regarding the
methodology in its current state for the proposed rule, so as to not
presume finalization of a proposal without notice and comment
rulemaking. We provided the public with Addendum B and CY 2027 PFS
Proposed Rule Fully Implemented PE RVUs for full transparency into
implementation of these proposals. We also acknowledge that the formula
displayed in step (20) of the published Sample Calculation of PE RVUs
under Methodology for Selected Codes public use file indicated that the
second part of the indirect PE allocator for CPT code 99213 is based on
the work RVU but we note that the calculated value displayed in step
(21) of the published file is correct. For the final rule, we note that
our methodology public use files reflect all finalized proposals.
After consideration of the public comments, we are finalizing our
proposal to allocate indirect PE using both the work RVU and the
clinical labor RVU for all services, with the exception of codes with
10- and 90-day global periods, instead of just applying that
methodology to those services that can be reported using technical,
professional, and global components.
[[Page 70997]]
(3) Facility and Non-Facility Costs
For procedures that can be furnished in a physician's office, as
well as in a facility setting, where Medicare makes a separate payment
to the facility for its costs in furnishing a service, we establish two
PE RVUs: facility and non-facility. The methodology for calculating PE
RVUs is generally the same for both the facility and non-facility RVUs
but is applied independently to yield two separate PE RVUs. In
calculating the PE RVUs for services furnished in a facility, we do not
include resources that would generally not be provided by physicians
when furnishing the service. For this reason, the facility PE RVUs are
generally lower than the non-facility PE RVUs. In the CY 2026 PFS final
rule (90 FR 49292 through 49296), we finalized a modification in the
allocation of indirect PE to reduce the portion of the facility PE RVUs
allocated based on work RVUs to half the amount allocated to non-
facility PE RVUs beginning in CY 2026.
(4) Services With Technical Components and Professional Components
Diagnostic services are generally comprised of two components: a
professional component (PC); and a technical component (TC). The PC and
TC may be furnished independently or by different healthcare providers,
or they may be furnished together as a global service. When services
have separately billable PC and TC components, the payment for the
global service equals the sum of the payment for the TC and PC. To
achieve this, we use a weighted average of the ratio of indirect to
direct costs across all the specialties that furnish the global
service, TCs, and PCs; that is, we apply the same weighted average
indirect percentage factor to allocate indirect expenses to the global
service, PCs, and TCs for a service. (The direct PE RVUs for the TC and
PC sum to the global direct PE RVUs.)
(5) PE RVU Methodology
For a more detailed description of the PE RVU methodology, we
direct readers to the CY 2010 PFS final rule with comment period (74 FR
61745 through 61746). We also direct readers to the file titled
``Calculation of PE RVUs under Methodology for Selected Codes'' which
is available on our website under downloads for the CY 2027 PFS final
rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>. This file contains a table that illustrates
the calculation of PE RVUs as described in this final rule for
individual codes.
(a) Setup File
First, we create a setup file for the PE methodology. The setup
file contains the direct cost inputs, the utilization for each
procedure code at the specialty and facility/non-facility place of
service level, and the specialty specific PE/HR data calculated from
the surveys.
(b) Calculate the Direct Cost PE RVUs
Sum the costs of each direct input.
Step 1: Sum the direct costs of the inputs for each service.
Step 2: Calculate the aggregate pool of direct PE costs for the
current year. We set the aggregate pool of PE costs equal to the
product of the ratio of the current aggregate PE RVUs to current
aggregate work RVUs and the projected aggregate work RVUs.
Step 3: Calculate the aggregate pool of direct PE costs for use in
ratesetting. This is the product of the aggregate direct costs for all
services from Step 1 and the utilization data for that service.
Step 4: Using the results of Step 2 and Step 3, use the CF to
calculate a direct PE scaling adjustment to ensure that the aggregate
pool of direct PE costs calculated in Step 3 does not vary from the
aggregate pool of direct PE costs for the current year. Apply the
scaling adjustment to the direct costs for each service (as calculated
in Step 1).
Step 5: Convert the results of Step 4 to an RVU scale for each
service. To do this, divide the results of Step 4 by the CF. Note that
the actual value of the CF used in this calculation does not influence
the final direct cost PE RVUs as long as the same CF is used in Step 4
and Step 5. Different CFs would result in different direct PE scaling
adjustments, but this has no effect on the final direct cost PE RVUs
since changes in the CFs and the associated direct scaling adjustments
offset one another.
(c) Create the Indirect Cost PE RVUs
Create indirect allocators.
Step 6: Based on the survey data, calculate direct and indirect PE
percentages for each physician specialty.
Step 7: Calculate direct and indirect PE percentages at the service
level by taking a weighted average of the results of Step 6 for the
specialties that furnish the service. Note that for services with TCs
and PCs, the direct and indirect percentages for a given service do not
vary by the PC, TC, and global service.
We generally use an average of the 3 most recent years of available
Medicare claims data to determine the specialty mix assigned to each
code. Codes with low Medicare service volume require special attention
since billing or enrollment irregularities for a given year can result
in significant changes in specialty mix assignment. We finalized a
policy in the CY 2018 PFS final rule (82 FR 52982 through 52983) to use
the most recent year of claims data to determine which codes are low
volume for the coming year (those that have fewer than 100 allowed
services in the Medicare claims data). For codes that fall into this
category, instead of assigning a specialty mix based on the specialties
of the practitioners reporting the services in the claims data, we use
the expected specialty that we identify on a list developed based on
medical review and input from expert interested parties. We display
this list of expected specialty assignments as part of the annual set
of data files we make available as part of notice and comment
rulemaking and consider recommendations from the RUC and other
interested parties on changes to this list annually. Services for which
the specialty is automatically assigned based on previously finalized
policies under our established methodology (for example, ``always
therapy'' services) are unaffected by the list of expected specialty
assignments. We also finalized in the CY 2018 PFS final rule (82 FR
52982 through 52983) a policy to apply these service-level overrides
for both PE and MP, rather than one or the other category.
In prior years, we reviewed information submitted during the
proposed rule comment period regarding potential additions to the list
of expected specialty assignments, to determine whether the specialty
assignments commenters recommended were appropriate for the services in
question. Our review process has been based on determining if the
recommended specialty matched the dominant specialty in the claims
data. However, we have long held reservations on whether this was the
most accurate method for implementing updates to the expected specialty
assignments list. Since these updates to the list were never formally
proposed in the proposed rule of each calendar year, there was never an
opportunity for interested parties to comment and provide feedback
before the assignments were finalized in the final rule. We believe
that it would provide greater transparency and more opportunities for
public comment if additions to the expected specialty assignments list
were instead proposed in each year's proposed rule.
[[Page 70998]]
Therefore, we did not finalize any additions to the expected
specialty assignments list in the CY 2026 PFS final rule (90 FR 49270).
We stated that we would instead review the list of approximately 75 low
volume HCPCS codes submitted by commenters and propose additions to the
list in this year's CY 2027 PFS proposed rule. We will also review any
submissions for inclusion to the expected specialty assignments list by
the same February 10th deadline that we have finalized in the past for
consideration of RUC recommendations and invoice-based updates to
supply and equipment pricing. We believe that synchronizing submissions
to the expected specialty assignments list for low volume services with
the same annual date used for RUC recommendations and invoice
submissions will help standardize the process, while also providing
more opportunities for feedback from interested parties by going
through the annual comment process.
During the comment period for the CY 2026 PFS rule, several
commenters stated that they had performed an analysis to identify all
codes that meet the criteria to receive a specialty override under this
CMS policy and drafted updated recommendations for codes that meet
these criteria. Commenters stated that the purpose of assigning a
specialty to these codes was to avoid the significant adverse impact on
MP RVUs that results from errors in specialty utilization data
magnified in representation (percentage) by small sample size. These
commenters submitted a list of approximately 75 low volume HCPCS codes
with recommended expected specialty assignments.
After reviewing the information provided by the commenters to
determine whether the specialty assignments they recommended were
appropriate for the services in question, based on determining if the
recommended specialty matches the dominant specialty in the claims
data, we proposed the additions to the list of expected specialty
assignments for low volume services identified in Table A-B1. We agree
with the commenters that, based on claims data, CPT codes 33277 through
33281 and 33287 through 33288 should be crosswalked to the Cardiac
Electrophysiology specialty and that CPT codes 93584 through 93588
should be crosswalked to the Interventional Cardiology specialty. We
also agree with commenters that CPT code 23077 should be crosswalked to
the Surgical Oncology specialty. However, we do not have PE/HR data for
these specialties as they were not part of the PPIS when it was
conducted in 2007; therefore, we are crosswalking these CPT codes to
the closest available specialties (Cardiology for the first two groups
of codes and All Physicians for CPT code 23077), as listed on Table A-
B1.
We disagree with the commenters on a series of additional suggested
assigned specialties. In each case, there was another specialty which
was reported more than twice as often in the claims data as the
specialty suggested by commenters and in some cases reported as much as
five times as often. Therefore, we proposed to crosswalk CPT codes
15135 and 41000 to the Otolaryngology specialty, CPT codes 26118 and
26650 to the Orthopedic Surgery specialty, CPT codes 93025 and 93150 to
the Cardiology specialty, and CPT codes 93152 and 93153 to the
Pulmonary Disease specialty as these were the dominant specialties in
the claims data. These crosswalks are included in Table A-B1.
BILLING CODE 4169-69-P
[[Page 70999]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.068
[[Page 71000]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.069
BILLING CODE 4169-69-C
Comment: Several commenters stated that they concurred with CMS
that synchronizing submissions to the expected specialty assignments
list for low volume services with the same annual date used for RUC
recommendations and invoice submissions will help standardize the
process, while also providing additional opportunities for feedback
through annual rulemaking. Commenters stated that they would submit
additional recommendations for CY 2028 rulemaking before the February
10, 2027 deadline.
Response: We appreciate the support for our proposed policy from
the commenters.
Comment: Several commenters disagreed with the CMS proposed
specialty assignment for the 21 codes where CMS diverged from the RUC's
recommended specialty. For CPT codes 15135, 26118, 26650, 93152, and
93153,
[[Page 71001]]
commenters stated that, based on the description of work, the list of
specialty societies that participated in the RUC survey process, and
with respect to the whole population of patients who might receive this
service, CMS should use the RUC's recommended specialty assignments
even though they were not the top reported specialty in 2024 Medicare
claims data.
Response: We disagree with the commenters and continue to believe
that the proposed specialty assignments are the more accurate choice
for these CPT codes. As we stated in the CY 2018 PFS final rule, we
agree that the use of service-level overrides for low volume services
would help mitigate annual fluctuations and provide greater stability
in the valuation of these services (82 FR 52982). We finalized the
creation of this list of assigned specialty for low volume services at
this time with the intention of minimizing these annual fluctuations in
valuation, not with the goal of matching each CPT code to its idealized
specialty. We believe that it is more accurate to assign specialties
based on the actual billing practices for each CPT code as reflected in
the claims data, not what might have been intended by the CPT Editorial
Panel at the time of the code's creation. All five of the CPT codes
listed by commenters were reported twice as often by the assigned
specialty that we proposed as compared with the RUC's recommended
specialty; in the case of CPT code 93152, Pulmonary Disease was
reported roughly five times more often than the recommended Cardiac
Electrophysiology. We therefore continue to believe that the proposed
specialty assignments are the most accurate choices for these codes.
Comment: Several commenters stated that for the approximately 15
CPT codes in Table A-B1 that did not have PE/HR data, CMS should use
the available MP premium data and crosswalk the assigned specialty for
these codes as recommended by the RUC for MP purposes. The commenters
stated that the proposed CMS crosswalks could still be used for PE
purposes due to the lack of PE/HR data. Commenters made this request
for CPT codes 23077, 33277-33281, 33287, 33288, 93025, 93150, and
93584-93588.
Response: We disagree with the commenters that CMS should establish
separate PE and MP crosswalks for the specialty assignment in these
cases where there is no PE/HR data available. We specifically finalized
this policy in the CY 2018 PFS final rule that we would apply these
service-level overrides for both PE and MP, rather than one or the
other category. We provided rationale at that time, stating that this
would simplify the implementation of service-level overrides for PE and
MP, and would continue to address stakeholder concerns about the year-
to-year variability for low volume services (82 FR 52982-52983). Our
rationale from the CY 2018 PFS final rule continues to apply, but we
will continue to address stakeholder concerns as they arise.
Comment: A commenter asked CMS to confirm that low-volume
echocardiographic services are assigned to cardiology or pediatric
cardiology rather than to a specialty with a materially different cost
structure. The commenter requested that CMS provide the underlying
utilization crosswalk for these assignments so societies can verify
them.
Response: As we noted in the proposed rule, the CPT codes
associated with the Cardiac Electrophysiology specialty were all
crosswalked to the Cardiology specialty due to a lack of PE/HR data.
All of the proposed and finalized expected specialty assignments are
included in the CY 2027 public use files associated with the PFS
proposed and final rules as detailed previously.
Comment: A commenter requested that CMS add several codes to the
expected specialty assignment for low volume services list as part of
CY 2028 rulemaking and assign thoracic surgery as their expected
specialty.
Response: We appreciate the feedback from the commenter, however we
will consider these additional codes for inclusion to the expected
specialty assignment list in next year's CY 2028 PFS proposed rule to
allow for public comment.
After consideration of the comments, we are finalizing the new
additions to the expected specialty assignment list as proposed in
Table A-B1.
As noted in the proposed rule, the full list of expected specialty
assignments is included in the CY 2027 public use files, which are
available on the CMS website under downloads for the CY 2027 PFS final
rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>.
Step 8: Calculate the service level allocators for the indirect PEs
based on the percentages calculated in Step 7. The indirect PEs are
allocated based on the three components: the direct PE RVUs; the
clinical labor PE RVUs; and the work RVUs.
Under current policy, for most services the indirect allocator is:
indirect PE percentage * (direct PE RVUs/direct percentage) + work
RVUs.
There are two situations where this formula is modified:
<bullet> If the service is a global service (that is, a service
with global, professional, and technical components), then the indirect
PE allocator is: indirect percentage (direct PE RVUs/direct percentage)
+ clinical labor PE RVUs + work RVUs.
<bullet> If the clinical labor PE RVUs exceed the work RVUs (and
the service is not a global service), then the indirect allocator is:
indirect PE percentage (direct PE RVUs/direct percentage) + clinical
labor PE RVUs.
(Note: Under current policy, for global services, the indirect PE
allocator is based on both the work RVUs and the clinical labor PE
RVUs. We do this to recognize that, for the PC service, indirect PEs
would be allocated using the work RVUs, and for the TC service,
indirect PEs would be allocated using the direct PE RVUs and the
clinical labor PE RVUs. This also allows the global component RVUs to
equal the sum of the PC and TC RVUs.)
For presentation purposes, in the examples in the download file
titled ``Calculation of PE RVUs under Methodology for Selected Codes'',
the formulas were divided into two parts for each service.
<bullet> The first part does not vary by service and is the
indirect percentage (direct PE RVUs/direct percentage).
<bullet> Under current policy, the second part is either the work
RVU, clinical labor PE RVU, or both depending on whether the service is
a global service and whether the clinical PE RVUs exceed the work RVUs
(as described earlier in this step).
We note that for CY 2026, we finalized a change to the methodology
so that when work RVUs are used to allocate indirect PE to the facility
RVUs, they are assigned at one-half the amount allocated to the non-
facility PE RVUs for that same service. These PE methodology changes
are discussed in greater detail in the CY 2026 PFS final rule (90 FR
49292 through 49296).
Proposed Step 8: Calculate the service level allocators for the
indirect PEs based on the percentages calculated in Step 7. The
indirect PEs are allocated based on the three components: the direct PE
RVUs; the clinical labor PE RVUs; and the work RVUs.
The proposed indirect allocator is: indirect PE percentage *(direct
PE RVUs/direct percentage) + work RVUs + clinical labor RVUs. The
proposed change, as detailed in the proposed rule (91 FR 43842 through
44557), is to include both the work RVUs and clinical labor RVUs in the
indirect allocator for all services, except for
[[Page 71002]]
codes with 10- and 90-day global periods, as opposed to including the
work RVUs and clinical labor RVUs only for global services.
We stated that, if this proposed policy were to be finalized, this
Proposed Step 8 would replace the Step 8 listed in the proposed rule
(91 FR 43842 through 44557). We note that step was also listed earlier
in this final rule. For presentation purposes, in the examples in the
download file titled ``Calculation of PE RVUs under Methodology for
Selected Codes,'' the formulas were divided into two parts for each
service.
<bullet> The first part is the indirect percentage (direct PE RVUs/
direct percentage).
<bullet> The second part is the sum of the work RVU and the
clinical labor PE RVU, including the methodology change finalized in CY
2026 for services performed in the facility setting (when work RVUs are
used to allocate indirect PE to the facility RVUs, they are assigned at
one-half the amount allocated to the non-facility PE RVUs for that same
service).
Apply a scaling adjustment to the indirect allocators.
Step 9: Calculate the current aggregate pool of indirect PE RVUs by
multiplying the result of step 8 by the average indirect PE percentage
from the survey data.
Step 10: Calculate an aggregate pool of indirect PE RVUs for all
PFS services by adding the product of the indirect PE allocators for a
service from Step 8 and the utilization data for that service.
Step 11: Using the results of Step 9 and Step 10, calculate an
indirect PE adjustment so that the aggregate indirect allocation does
not exceed the available aggregate indirect PE RVUs and apply it to
indirect allocators calculated in Step 8.
Under current policy, calculate the indirect practice cost index
(IPCI). We refer readers to the CY 2007 PFS final rule with comment
period (71 FR 69633) for more information about the establishment of
the IPCI.
Step 12: Using the results of Step 11, calculate aggregate pools of
specialty specific adjusted indirect PE allocators for all PFS services
for a specialty by adding the product of the adjusted indirect PE
allocator for each service and the utilization data for that service.
Step 13: Using the specialty specific indirect PE/HR data,
calculate specialty specific aggregate pools of indirect PE for all PFS
services for that specialty by adding the product of the indirect PE/HR
for the specialty, the work time for the service, and the specialty's
utilization for the service across all services furnished by the
specialty.
Step 14: Using the results of Step 12 as the denominator and Step
13 as the numerator, calculate the specialty specific indirect PE
scaling factors.
Step 15: Using the results of Step 14, calculate an indirect
practice cost index at the specialty level by dividing each specialty
specific indirect scaling factor by the average indirect scaling factor
for the entire PFS.
Step 16: Calculate the indirect practice cost index at the service
level to ensure the capture of all indirect costs. Calculate a weighted
average of the practice cost index values for the specialties that
furnish the service. (Note: For services with TCs and PCs, we calculate
the indirect practice cost index across the global service, PCs, and
TCs. Under this method, the indirect practice cost index for a given
service (for example, echocardiogram) does not vary by the PC, TC, and
global service.)
Step 17: Apply the service level indirect practice cost index
calculated in Step 16 to the service level adjusted indirect allocators
calculated in Step 11 to get the indirect PE RVUs.
Proposal regarding Steps 12 through 17: We develop the indirect
practice expense (PE) RVUs under the PFS to reflect the relative
resources involved in furnishing the services. Since the implementation
of the resource-based PE RVUs, we have assumed that aggregate specialty
level practice costs derived primarily from the 2007 PE/HR survey data
are a reasonable way to help establish the resource-based indirect PE
RVUs. We have historically used that data both to allocate indirect
costs to each code and to re-scale the resulting PE RVUs for each code
at the end of the established methodology to ensure that the overall
allocation of PE RVUs for each specialty across the PFS approximates
those expected based on the index derived from the PE/HR survey data.
Over time, however, we have identified various limitations of the
survey data, especially as the data we use has become increasingly
dated and are intrinsically limited to small, selective samples based
on pre-determined assumptions about where costs are likely to differ,
and, as we addressed in CY 2026 PFS rulemaking, have not been
adequately updated. (We refer readers to an extended discussion of our
concerns with and decision not to update this data in the CY 2026 PFS
final rule at 90 FR 49286 through 49292.) This has resulted in a PE
methodology that privileges the historic survey data over incorporation
of more recent data about specific services and produces unpredictable
and counterintuitive results that are not transparent to the public.
Because we have taken various steps to improve the data used in the
pricing inputs and the indirect allocation methodologies, we are
proposing to remove the steps of the current methodology that rely on
the indirect practice cost index (IPCI) from the calculation of the PE
RVUs. We proposed this change because the steps of the current
methodology that rely on the IPCI calculation effectively favor the
aggregate specialty-level survey data over the code level inputs and
allocators and consequently limit the influence of improvements to
inputs and allocation methodologies. We proposed to implement this
change over a 2-year transition period. Specifically, in the first
year, only half of the measured variation in the IPCI will be applied
to the indirect allocator. In the second year, CY 2028, the IPCI will
no longer be applied.
The steps of the current methodology that rely on the IPCI
calculation are steps 12 through 17. Thus, under this proposal, steps
12 through 17 would no longer be a part of the calculation, starting
for CY 2028, and the total PE RVU, prior to the calculation of final PE
RVUs described at Step 18, would be the sum of step 5 (Direct Cost PE
RVUs) and step 11 (Indirect Cost PE RVUs).
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Many commenters supported removing the IPCI from the PE
methodology and agreed with CMS that the underlying data are nearly two
decades old and no longer representative of current practice costs.
Several commenters agreed that eliminating the IPCI reduces unintended
and opaque effects on PE RVUs, and supported the 2-year transition as
an appropriate way to mitigate disruption while implementing a more
accurate methodology. Multiple commenters strongly supported removal,
explaining that the IPCI has historically amplified payment advantages
for specialties with higher aggregate indirect costs, such as those
tied to expensive equipment, while disadvantaging specialties whose
costs are driven primarily by clinical labor activities. A commenter
cited its own analysis of the CY 2026 facility-based payment change,
finding that specialties with very low facility utilization saw an
average 12.4 percent decrease in their IPCI values while specialties
with very high facility utilization saw an average 32.2 percent
increase. The commenter stated that some specialties experienced PE RVU
decreases as a result of how facility-based services were paid that
were
[[Page 71003]]
opposite of CMS's stated policy intentions and highlighted that the
counterintuitive and seemingly unintended decrease in PE RVUs for some
specialties as a result of the CY 2026 rule demonstrates that the IPCI
can create winners and losers based on unrelated policy changes, rather
than actual practice expenses. Other commenters expressed
disappointment that CMS did not instead update the underlying PPI
Survey data using more recent survey efforts, but supported removing
the IPCI in the absence of adoption of the updated survey data because
the current methodology privileges antiquated, aggregate specialty-
level survey data over code-level inputs and limits the influence of
improvements to those inputs.
The Medicare Payment Advisory Commission (MedPAC) also supported
eliminating the IPCI, citing its June 2025 report to Congress
recommending that CMS improve the accuracy of Medicare's relative
payment rates by using timely data that reflect the costs of delivering
care, and noting that the IPCI is calculated using PE/HR survey data
collected nearly two decades ago. MedPAC further encouraged CMS to seek
additional ways to reduce reliance on that survey data, observing that
even after IPCI removal, direct PE RVUs would still be multiplied by a
ratio of indirect-to-direct PE costs drawn from the specialties billing
a service, meaning indirect PE RVUs would remain adjusted based on
decades-old, specialty-reported data. MedPAC stated that forgoing
specialty-specific practice expense data has the potential to improve
payment accuracy and make routine updates more practicable, and cited
the AMA's updated PPI and CPI Survey efforts as examples of the
difficulty of collecting representative specialty-level data: low
response rates led to data based on a small number of practices for
some specialties, acceptance of practices that volunteered or were
recruited to report data, and inconsistent consolidation of specialty
categories. MedPAC stated that these concerns led them to support CMS's
decision not to incorporate that updated survey data into the
ratesetting process.
Response: We appreciate the commenters' support and feedback on the
proposal. We agree with the commenters that the CY 2026 facility
indirect PE example illustrates precisely the type of unexpected effect
that motivated CMS's proposal to remove the IPCI and believe that this
is one of many examples that support removing the IPCI rather than
preserving it. We also acknowledge that, while an updated survey may be
preferable in principle, the data quality concerns with the available
updated survey data support proceeding with removal of the IPCI now .
We thank MedPAC for its support and its analysis of the continued role
of PE/HR survey data in the indirect PE allocation. We agree with
MedPAC that removing the IPCI does not fully eliminate CMS's reliance
on this outdated survey data, as discussed further in the section. We
may consider, in future rulemaking, additional approaches to reduce
reliance on specialty-specific PE/HR data, consistent with the
direction of the policies we are finalizing this year.
Comment: Some commenters stated the belief that the IPCI was used
to allocate indirect PE and expressed concern that the specialty-
specific differences in indirect costs continue to exist, but noted
that CMS proposed to eliminate the IPCI without offering a reasonable,
empirically supported alternative. Some commenters stated that CMS
should not assume indirect costs are similar or equal across
specialties without supporting data, citing certain specialties that
have indirect costs exceeding what would be expected under a code-
level-only approach, and recommended that CMS instead conduct its own
updated survey of indirect costs rather than eliminate the IPCI.
Response: Some commenters seem to be confused that we proposed to
remove all specialty-specific PE/HR data and we want to clarify that is
not the case. As described previously, we still use the specialty-
specific data to allocate indirect PE, but removing the IPCI means we
would no longer re-scale the resulting PE RVUs to an index derived from
the outdated survey data. The IPCI functions to force changes that
would otherwise occur in indirect PE (that is payments for office
overhead such as administrative staff and rent that cannot be directly
attributed to individual services) back to the status quo, which is
currently based on the physician overhead contained in the 2007 AMA
Physician Practice Information (PPI) Survey. However, the continued use
of the IPCI has resulted in a PE methodology that privileges the
historic survey data over incorporation of more recent data about
specific services, limits the influence of improvements to inputs and
allocation methodologies, and produces unpredictable and
counterintuitive results that are not transparent to the public. We
proposed to remove the IPCI from our methodology for CY 2027 over a 2-
year transition period, though for now we would retain the use of the
survey data in other places in the methodology, as discussed
previously. We continue to believe this proposed change will improve
the transparency and stability of PE RVUs over time and better position
us to make necessary refinements to the PE methodology to improve the
accuracy of valuation of the PE portion of services paid under the PFS.
In the proposed rule, we acknowledged that the IPCI, because it is
rooted in static PE/HR data, effectively resulted in stabilizing year-
to-year changes in PE RVUs, especially due to changes in input
valuations and changes to allocation methodologies, which is why we
proposed the PE stabilization adjustment to further improve
predictability and reduce volatility within the PE RVUs. We note that
our proposal to eliminate the IPCI was not solely based on the age of
the survey data, but also based on the fact that the IPCI can result in
counter-intuitive payment outcomes and is a barrier to broader payment
changes.
We do not agree that CMS should instead conduct a new survey of
specialty-level indirect costs before removing the IPCI. As discussed
previously in connection with MedPAC's comment, recent efforts to
collect updated, representative specialty-level practice expense data
encountered low response rates, relied on practices that volunteered or
were recruited rather than being randomly sampled, and inconsistently
consolidated specialty categories. We do not believe commissioning
another specialty-level survey would resolve these structural
difficulties, and we do not believe it is appropriate to delay
improvements to the current methodology. We also do not agree that
removing the IPCI assumes indirect costs are identical across
specialties. Rather, our proposal reflects the conclusion that the IPCI
is not a reliable means of capturing any genuine specialty specific
variation in indirect costs that may exist, because it re-scales a
code's indirect PE based on the mix of specialties that happen to bill
it in claims data, not based on a direct measurement or acceptable
proxy for the indirect costs those specialties incur in furnishing that
specific service. We continue to believe that removing the IPCI results
in PE RVUs that more accurately reflect the indirect resources a
service requires.
Comment: Many commenters opposed removal of the IPCI or asked CMS
to delay finalizing the proposal. Several commenters asked CMS to
explain why a 2-year transition is sufficient given the scale of
redistribution among specialties, and asked CMS to compare
[[Page 71004]]
payment trajectories under 2-year and 4-year transitions, noting that
CMS has historically used four-year transitions for significant PE
methodology changes, including the CY 2007 transition to the bottom-up
PE methodology and the CY 2010 incorporation of Physician Practice
Information Survey data. A commenter, while not opposing removal of the
IPCI outright, stated that CMS should publish detailed impact analyses
and supporting data before finalizing the proposal, and that if CMS
proceeds, a stabilization mechanism is essential to prevent disruptions
in PE that could jeopardize practice stability and patient access to
care. Other commenters stated that CMS has not published code- and
specialty-level impact analyses of the IPCI removal in isolation from
the other proposed PE changes, making it difficult for stakeholders to
evaluate the proposal's actual effects, and requested that CMS delay
finalization until it demonstrates, through empirical validation and
transparent impact analyses, that removing the IPCI produces more
accurate resource-based relativity rather than assuming that
eliminating an older data source necessarily improves accuracy.
Response: We recognize that the aggregate specialty impact tables
published with the proposed rule do not isolate the effect of IPCI
removal from our other PE proposals because all three policies affect
PE RVUs concurrently. We agree with commenters that these proposals are
interconnected and interact with one another, and therefore, we could
not publish disaggregated specialty impact tables of each proposal
individually without misconstruing their combined impact when they are
implemented together. We note that, in the past, we have published
impact tables for different alternatives considered, but we do not
typically publish disaggregated policy impacts because of how these
policies may interact.
We note that we published code-level impacts in the CY 2027 PFS
Proposed Rule Fully Implemented PE RVUs public use file. While we have
used 4-year transitions in the past to temper impacts over time, the
proposed 5% PE stabilization adjustment proposed for CY 2027 already
functions to phase in the changes to the PE RVUs and temper impacts
over time. For example, for codes that experience large increases or
decreases as a result of our PE methodology proposals, and are not the
result of a revaluation, the PE stabilization adjustment effectively
serves to phase in those changes over many years, often exceeding the
4-year transition we have used in the past. We acknowledge that this
may not be the desired implementation for specialties that benefit from
the proposed PE methodology changes, but we believe this results in a
reasonable balance between safeguarding against significant, unintended
payment volatility while still allowing meaningful progress toward more
accurate PE valuations within a reasonable timeframe. We note that this
2-year transition, which phases in the removal of steps 12 through 17,
is a distinct mechanism from the PE stabilization adjustment discussed
later in the section, which separately caps the year-to-year change in
any code's PE RVU. The two mechanisms work together: the 2-year
transition sets the pace at which the IPCI's influence is phased out of
the methodology, while the PE stabilization adjustment independently
moderates how quickly any resulting change reaches a given code's final
PE RVU.
Comment: A commenter requested that CMS detail how we would treat
Non-Physician Practitioners (NPPs) under this new methodology. They
stated that NPPs' specialty is obscured in the claims data because they
are not able to be associated with their specialty when they enroll.
Response: As stated later in the section, to calculate the PE and
MP RVUs, we exclude certain specialties, such as NPPs paid at a
percentage of the PFS and low volume specialties, from the calculation.
However, these specialties are still included to calculate the BN
adjustment.
After consideration of public comments, we are finalizing the
proposal to remove steps 12 through 17 that rely on the IPCI from the
calculation of the PE RVUs over a 2-year transition period, as
proposed.
(d) Calculate the Final PE RVUs
Step 18: Under current policy, add the direct PE RVUs from Step 5
to the indirect PE RVUs from Step 17 and apply the final PE budget
neutrality (BN) adjustment. The final PE BN adjustment is calculated by
comparing the sum of steps 5 and 17 to the aggregate work RVUs scaled
by the ratio of current aggregate PE and work RVUs. This adjustment
ensures that all PE RVUs in the PFS account for the fact that certain
specialties are excluded from the calculation of PE RVUs but included
in maintaining overall PFS BN. (See ``Specialties excluded from
ratesetting calculation'' later in this final rule). Under the proposed
policy, add the direct cost PE RVUs from Step 5 to the indirect cost PE
RVUs from Step 11 and apply the final PE BN adjustment.
Proposed Step 19: Calculate and apply the PE stabilization
adjustment for each PE RVU by comparing the result of step 18 with the
results of the prior year's PE RVUs from step 18. As described in the
proposed rule, we proposed to remove the IPCI from the PE methodology,
which we believe will improve the transparency and stability of PE RVUs
over time. However, we recognize that the IPCI, because it is rooted in
static PE/HR data, effectively resulted in stabilizing year-to-year
changes in PE RVUs, especially due to changes in input valuations and
changes to allocation methodologies. We have long noted that extreme
volatility in PE RVUs can have unintended consequences and distortions.
To mitigate volatility that could otherwise occur, we proposed a PE
stabilization adjustment to further improve predictability and reduce
volatility within the PE RVUs. Specifically, we proposed that the PE
RVU calculated after the application of the cognitive services floor
and any adjustments that occur outside of the PE methodology will be
subject to a cap and will not increase or decrease by more than 5
percent each year. In the proposed Step 19 we would compare the PE RVU
after the application of the cognitive services floor and any code-
level adjustments in the current ratesetting year to the allocation
methodology from the prior year and then apply the 5 percent cap. We
note that the proposed PE stabilization adjustment in Proposed Step 19
will be applied prior to the statutory phase-in of significant RVU
reductions required by Section 1848(c)(7) of the Act, discussed in more
detail later in this section, which limits all codes that are not new
or revised to a 19 percent decrease in total RVU in an individual
calendar year. Therefore, a code may be impacted by both the PE
stabilization adjustment and the statutory phase-in, meaning a code's
PE RVU may ultimately differ by greater than the PE stabilization
adjustment detailed in proposed Step 19.
This proposed adjustment would not apply to new and revised codes
or codes formerly contractor priced that are newly nationally priced,
because it is not clear what the comparison PE RVU would be for those
codes. Because we believe the benefits of the PE stabilization
adjustment would ideally apply to new and revised codes and newly
nationally priced codes, we sought comment on an approach that would
allow us to expand the PE stabilization adjustment to these categories
of codes.
Additionally, the proposed PE stabilization adjustment would not
[[Page 71005]]
apply to revalued codes because we believe the statutory phase-in
sufficiently limits large reductions to individual codes undergoing
review and/or revaluation, and limits the amount of time a revalued
code would remain under or overvalued by being significantly
constrained from reductions found to be appropriate through
revaluation.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Many commenters stated that CMS should identify the codes
subject to the PE stabilization adjustment and the codes' final PE
RVUs, similar to our published public use file of codes subject to the
statutory phase-in of significant RVU reductions.
Response: We appreciate commenters' feedback and note that we are
publishing this list as a public use file with this final rule, which
can be found under the Downloads section for this rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>.
Comment: A commenter stated that they support the idea of adding a
PE stabilization adjustment to the PE RVU methodology to mitigate
volatility in PE RVUs and avoid unintended consequences. The commenter
requested further explanation of how the proposed adjustment would
operate and its relationship to the existing phase-in of significant
RVU reductions. Multiple commenters requested that we exempt increases
to direct PE inputs from the PE stabilization adjustment when supported
by higher supply or equipment prices validated through the invoice
submission process to ensure that direct PE resource costs are fully
reflected in PE RVUs. Another commenter supported the proposal to
establish a PE stabilization adjustment to safeguard against unintended
payment swings while allowing CMS to continue modernizing the PE
methodology, but stated that a 2 to 3 percent adjustment would be more
appropriate, particularly for CY 2027 because CMS proposed multiple
changes to the PE methodology. The commenter also supported CMS'
consideration of extending the PE stabilization adjustment to new and
revised codes and codes that are newly nationally priced and encouraged
CMS to develop an appropriate methodology for providing comparable
protection to newly established services without compromising the
accuracy of their initial valuations. Another commenter requested that
CMS extend the proposed PE stabilization adjustment to revalued codes,
or at a minimum, to codes revalued on a single direct PE input cost
change rather than a full RUC survey, and stated that the statutory
phase-in of significant RVU reductions is not a sufficient cushion.
Another commenter stated that we should modify the PE stabilization
adjustment to either have a fixed duration or larger percentage
because, as proposed, limiting annual changes to 5 percent would mean
that, for the commenter's most commonly billed codes, it would take
nearly a decade of phase-in before the RVUs fully reflected their
current, updated valuation. The commenter recommends a 4-year, 5
percent PE stabilization adjustment that allows providers to prepare
for the updated code values.
Response: We agree with the commenters that changes due to
revaluation, such as changes to a code's direct PE prices, should be
exempt from the PE stabilization adjustment. As noted previously, the
PE stabilization adjustment will not apply to revalued codes, such as
the commenter's example of PE input changes, because we believe the
statutory phase-in sufficiently limits large reductions in total RVUs
to individual codes undergoing review and/or revaluation. This
exemption also limits the amount of time a revalued code would remain
under- or overvalued by being significantly constrained from increases
or reductions found to be appropriate through revaluation. Although
revalued codes are excluded from the PE stabilization adjustment,
significant decreases in total RVUs are statutorily phased-in for codes
that are not new or revised. As the commenter mentioned, for CY 2027,
we proposed changes to the supply code SA119's price, which decreased
the PE RVU for CPT code 97610 (Low frequency, non-contact, non-thermal
ultrasound, including topical application(s), when performed, wound
assessment, and instruction(s) for ongoing care, per day). Because this
reduction was the result of revaluation of the code's supply input, CPT
code 97610 is exempt from the PE stabilization adjustment, but the
statutory phase-in of significant total RVU decreases does apply
because it is an existing code, not new or revised, whose total RVU
decrease is greater than 19 percent. We do not agree with the commenter
that we should apply the PE stabilization adjustment in these instances
because it would extend the amount of time that a code would remain
constrained from increases or reductions found to be appropriate
through revaluation. Conversely, the PE RVU for CPT code 99285
(Emergency department visit for the evaluation and management of a
patient, which requires a medically appropriate history and/or
examination and high level of medical decision making) will increase as
the result of our proposed PE methodology changes (that is, removal of
IPCI). It is not subject to the 19 percent statutory phase-in of
significant RVU decreases because it is an increase, but it is subject
to the 5 percent PE stabilization adjustment and the increase will be
effectively phased-in by that policy. We encourage interested parties
to review the additional public use file provided with this final rule
that details the codes subject to the PE stabilization adjustment.
We appreciate the commenters' request for further explanation of
how the PE stabilization adjustment interacts with the existing
statutory phase-in of significant RVU reductions. As illustrated by the
examples noted previously, the two policies operate independently and
apply to different sources of RVU change: the statutory phase-in
applies to a code's total RVU decrease, and is implemented on the PE
RVU, while the PE stabilization adjustment applies specifically to
changes in PE RVUs, typically resulting from methodological changes
rather than code-by-code changes (that is, the sum-based indirect PE
allocation and removal of the IPCI proposed for CY 2027), and does not
apply when the change results from revaluation. A code may therefore be
subject to one, both, or neither policy depending on the source and
magnitude of its RVU changes for a given year, although we note that it
is unlikely for a code to be subject to both since revalued codes are
exempt from the PE stabilization adjustment, which is the most likely
source of significant decreases in total RVUs greater than 19 percent.
The PE stabilization adjustment is primarily intended to mitigate
volatility and improve predictability of the PE RVUs that result from
changes to the PE methodology.
We appreciate the commenters' feedback about considering
alternative higher and lower percentages and a fixed duration of the PE
stabilization adjustment. However, as discussed previously, we believe
5 percent is a reasonable balance between safeguarding against
significant, unintended payment volatility while still allowing
meaningful progress toward more accurate PE valuations within a
reasonable timeframe, and we are finalizing the PE stabilization
adjustment at 5 percent as proposed. We are not extending the PE
stabilization adjustment to new, revised, or newly nationally priced
codes at this time
[[Page 71006]]
because it is not clear what the comparison PE RVU would be for those
codes. However, we remain interested in a methodology that would extend
the PE stabilization adjustment to these services and invite
stakeholders to share methodological approaches for us to consider in
future rulemaking.
After consideration of public comments, we are finalizing the
proposals to remove steps 12 through 17 that rely on the IPCI from the
calculation of the PE RVUs over a 2-year transition period, and to add
a new step to the PE methodology to apply a 5 percent PE stabilization
adjustment to the PE RVUs, as proposed.
Step 20: Apply the phase-in of significant RVU reductions and its
associated adjustment. Section 1848(c)(7) of the Act specifies that for
services that are not new or revised codes, if the total RVUs for a
service for a year would otherwise be decreased by an estimated 20
percent or more as compared to the total RVUs for the previous year,
the applicable adjustments in work, PE, and MP RVUs must be phased in
over a 2-year period. In implementing the phase-in, we consider a 19
percent reduction as the maximum 1-year reduction for any service not
described by a new or revised code. This approach limits the year 1
reduction for the service to the maximum allowed amount (that is, 19
percent) and then phases in the remainder of the reduction. To comply
with section 1848(c)(7) of the Act, we adjust the PE RVUs to ensure
that the total RVUs for all services that are not new or revised codes
decrease by no more than 19 percent, and then apply a relativity
adjustment to ensure that the total pool of aggregate PE RVUs remains
relative to the pool of work and MP RVUs. For a more detailed
description of the methodology for the phase-in of significant RVU
changes, we refer readers to the CY 2016 PFS final rule with comment
period (80 FR 70927 through 70931).
In summary, for CY 2027, we proposed, and have now finalized our
proposals to:
<bullet> Modify step 8 to calculate indirect PE based on both work
RVUs and clinical labor RVUs for all services except 10- and 90-day
global period codes;
<bullet> Remove steps 12 through 17 that rely on the IPCI from the
calculation of the PE RVUs over a 2-year transition period, and;
<bullet> Add a new step to apply a PE stabilization adjustment to
the PE RVUs (new step 19).
(e) Setup File Information
<bullet> Specialties excluded from ratesetting calculation: To
calculate the PE and MP RVUs, we exclude certain specialties, such as
NPPs paid at a percentage of the PFS and low volume specialties, from
the calculation. These specialties are included to calculate the BN
adjustment. They are displayed in Table A-B2.
BILLING CODE 4169-69-P
[[Page 71007]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.070
BILLING CODE 4169-69-C
<bullet> Crosswalk certain low volume physician specialties:
Crosswalk the utilization of certain specialties with relatively low
PFS utilization to the associated specialties.
<bullet> Physical therapy utilization: Crosswalk the utilization
associated with all physical therapy services to the specialty of
physical therapy.
<bullet> Identify professional and technical services not
identified under the usual technical component (TC) and professional
component (PC or 26) modifiers: Flag the services that are PC and TC
services but do not use TC and PC/26 modifiers (for example,
electrocardiograms). This flag associates the PC and TC with the
associated global code for use in creating the indirect PE RVUs. For
example, the professional service, CPT code 93010 (Electrocardiogram,
routine ECG with at least 12 leads; interpretation and report only), is
associated with the global service, CPT code 93000 (Electrocardiogram,
routine ECG with at least 12 leads; with interpretation and report).
<bullet> Payment modifiers: In the CY 2013 PFS final rule with
comment period (77 FR 68901), we introduced a more detailed methodology
for adjusting volume and time to account for payment modifiers and
other special payment rules, such as multiple procedure payment
reductions, in the utilization data. We proposed that, beginning in CY
2027, we would utilize a new approach to account for payment modifiers
and other special payment rules. For each paid claim line, we would
calculate the ratio of allowed charges to the national PFS payment
amount. This would account for differences resulting from payment
modifiers and other special payment rules, as well as differences in
geography. We proposed to use the same ratio to adjust time, rather
than a separate calculation under our current methodology, with the
exception of anesthesia, for which we calculate time using only
procedures with modifiers indicating they are personally
[[Page 71008]]
performed. These proposed changes will allow us to more accurately
capture any combination of modifiers and special payment rules and
automatically account for updates in modifiers and/or special payment
rules in future years. These proposed changes have a very minimal
impact on the resulting PE RVUs but will produce a more accurate
result. As under our current methodology, the adjusted volume will be
displayed in the utilization public use file that is posted in
conjunction with each PFS rule.
Comment: Several commenters identified large declines in the total
allowed charges displayed for certain specialties, such as Pathology
Independent Laboratories, and Physical and Occupational Therapy, in
Table D-B5 ``Estimated Impact on Total Allowed Charges by Specialty''
of the CY 2027 PFS proposed rule (91 FR 44244-44248). Commenters stated
that nothing in the PFS proposed rule appeared to explain declines of
this scale and the figures seemed inconsistent with the considerably
smaller percentage payment effects reported elsewhere in the table.
Commenters asked whether these estimates arose from a reporting error
or resulted from a change in data or methodology in the proposed rule.
Response: We appreciate commenters raising this issue. We
identified and corrected a minor technical error that impacted the
adjusted utilization of codes that are frequently furnished in multiple
MTUS (miles, time, units), such as codes reported in time or square
centimeter increments. This technical error in the adjusted utilization
resulted in erroneous decreased allowed charges in Table D-B5 of the
proposed rule for specialties that bill these types of codes like the
specialties that commenters raised concerns about. We appreciate the
feedback from interested parties in identifying this error, which has
been corrected in the adjusted utilization for the final rule.
Comment: Some commenters noted that CMS has published detailed
modifier-specific utilization data in the public use files with each
proposed and final PFS rule for decades. Commenters expressed concern
that CMS excluded all modifiers except for -26, -TC, and -53 in the
utilization data public use file for this proposed rule, which
commenters say is particularly challenging when CMS proposed changes to
modifier 25 and for HCPCS code G2211 to instead be reported with
modifiers. Commenters recommend that CMS change the ``CY 2027 2025
Utilization Data Crosswalked to 2027'' to include all modifiers to
maintain a sufficient level of transparency for interested parties.
Several commenters requested that CMS consider providing additional
supporting materials such as utilization crosswalk files between the
current and previous years. The commenters also requested the
restoration of utilization file fields (such as undiscounted allowed
services, PE, MP, and work discounted allowed services, and complete
modifier columns).
Response: We no longer display the work, PE, and MP adjusted
allowed services columns in the Utilization Data file because of our
proposed changes to the adjusted utilization process, described
previously. The proposed approach to calculate the ratio of allowed
charges to the national PFS payment amount to adjust utilization means
that all current payment modifiers, special payment rules, and
geographic adjustments are accounted for in column G of the utilization
data public use file. Additionally, the new columns H and I are
discussed in the proposed rule at 91 FR 44248. Because the modifier -25
(column H) and modifier B1 (referred to as MOD1 in the proposed rule)
and modifier B2 (referred to as MOD2 in the proposed rule) (column I)
proposals impact adjusted utilization, they are also accounted for in
the utilization data public use file, but we believed it would be best
to publish these new columns separately to help commenters understand
the impact of the proposals. As a result, Column J is the cumulative
adjusted utilization of columns G, H, and I that was used in CY 2027
PFS ratesetting, effectively accounting for our proposed new approach
to adjust utilization for current payment modifiers, geographic
adjustments, and special payment rules, plus our proposed changes to
modifier 25, modifier B1 (referred to as MOD1 in the proposed rule) and
modifier B2 (referred to as MOD2 in the proposed rule). As the
commenter mentioned, modifiers -26, -TC, and -53 (for select services)
remain in the utilization data file because codes with these modifiers
are listed with separate base RVUs in the payment files (that is,
Addendum B) before any modifiers are applied, which distinguishes them
from all other payment modifiers and geographic adjustments which
typically impact payment for a claim at the time of processing.
We appreciate the commenters' feedback about the additional
supporting materials that would be helpful for interested parties and
may consider for future rulemaking. In an effort to improve
transparency, we are including both allowed services and MTUS in the
file for the final rule. We note that, for the proposed rule, the
unadjusted and adjusted allowed services columns were inadvertently
mislabeled and actually represented unadjusted and adjusted MTUS. For
the purposes of ratesetting, for non-anesthesia services, MTUS
represent the unit for which PFS rates are established and are the
correct measure of service utilization. For the final rule, we have
added allowed services to the file for reference since it reflects the
number of times the service was provided, regardless of the number of
units reported for each service, although it is not used in
ratesetting. Anesthesia services do not have RVUs or payment amounts
listed in our payment files but are included in the total RVU pool used
to establish budget neutrality. To accomplish this, we use allowed
services and calculate RVUs based on average allowed charges by service
to capture anesthesia spending within the ratesetting process.
Therefore, the file does not report MTUS for anesthesia services, only
allowed services, which are reflected in the value in Column J of
adjusted utilization file, which is used in ratesetting.
Comment: A commenter did not support the proposed new approach to
account for payment modifiers and other special payment rules and
requested that CMS eliminate all geographic adjustments from the PFS
except for those designed to achieve a specific public policy goal (for
example, to encourage physicians to practice in underserved areas). To
the extent the proposed new approach to accounting for payment
modifiers and other special payment rules also accounts for and
potentially adjusts RVUs based on geography, the commenter opposed the
proposal and would, instead, recommend that CMS continue to use its
current approach or otherwise find an approach that does not further
geographically adjust Medicare payments.
Response: Section 1848(e)(1)(A) of the Act requires us to develop
Geographic Practice Cost Indices (GPCIs) to measure relative cost
differences among localities compared to the national average for each
of the three fee schedule components (that is, work, practice expense
(PE), and malpractice (MP)), therefore, we do not have the statutory
authority to eliminate all geographic adjustments from the PFS.
Additionally, utilization at the geographic level has always been used
in PFS ratesetting, but the new proposed approach allows us to more
accurately capture any combination of modifiers, geographic
adjustments, and special payment rules in the claims data that
underpins PFS ratesetting.
[[Page 71009]]
Comment: A commenter stated that, when CMS transitioned to the PE
methodology in CY 2007, utilization was assigned exclusively to
physical therapy, not to the previously combined ``physical and
occupational therapy practice expense pool.'' All prior crosswalks had
been to PT and OT, and no policy rationale was given for dropping OT
from the crosswalk in 2007. The commenter stated that this methodology
resulted in all therapy treatment codes where OT or speech language
pathology (SLP) account for the majority of billing volume, receiving
PT's IPCI, which is the lowest of the three therapy disciplines. The
commenter stated that even under the CY 2027 proposal to remove the
IPCI over 2 years, the crosswalk continues to matter during the
transition year as half the IPCI will still be applied, and the
utilization crosswalk ensures that it will be applied at PT's lower
index rather than the actual specialty blend, and requested for CMS to
remove the following step when establishing the final CY 2027 setup
file: ``Physical therapy utilization: Crosswalk the utilization
associated with all physical therapy services to the specialty of
physical therapy''.
Response: We did not propose to change how utilization is assigned
to the therapy specialties for IPCI purposes, a policy which was
finalized in CY 2007 rulemaking (71 FR 69635), and we are not
finalizing a change since CY 2027 will be the only transition year
before the elimination of the IPCI for CY 2028. We believe that this
issue identified by the commenter provides an example of the public
confusion and counterintuitive results associated with the IPCI which
is why we proposed to transition away from its use.
After consideration of the comments, we are finalizing the new
approach to account for payment modifiers and other special payment
rules, as proposed, with the minor technical error identified corrected
for the final rule.
<bullet> Work RVUs: The setup file contains the work RVUs from this
final rule.
(6) Equipment Cost Per Minute
The equipment cost per minute is calculated as:
(1/(minutes per year * usage)) * price * ((interest rate/( 1-(1/((1 +
interest rate) - life of equipment)))) + maintenance)
Where:
minutes per year = maximum minutes per year if usage were continuous
(that is, usage = 1); generally, 150,000 minutes.
usage = variable, see discussion later in this final rule.
price = price of the particular piece of equipment.
life of equipment = useful life of the particular piece of
equipment.
maintenance = factor for maintenance; 0.05.
interest rate = variable, see discussion later in this proposed
rule.
Usage: We currently use an equipment utilization rate assumption of
50 percent for most equipment, with the exception of expensive
diagnostic imaging equipment, for which we use a 90 percent assumption
as required by section 1848(b)(4)(C) of the Act.
Useful Life: In the CY 2005 PFS final rule we stated that we
updated the useful life for equipment items primarily based on the
AHA's ``Estimated Useful Lives of Depreciable Hospital Assets''
guidelines (69 FR 66246). The most recent edition of these guidelines
was published in 2018. This reference material provides an estimated
useful life for hundreds of different types of equipment, the vast
majority of which fall in the range of 5 to 10 years, and none of which
are lower than 2 years in duration. We believe that the updated
editions of this reference material remain the most accurate source for
estimating the useful life of depreciable medical equipment.
In the CY 2021 PFS final rule, (85 FR 84482 through 84483) we
finalized a proposal to treat equipment life durations of less than 1
year as having a duration of 1 year for the purpose of our equipment
price per minute formula. In the rare cases where items are replaced
every few months, we noted that we believe it is more accurate to treat
these items as disposable supplies with a fractional supply quantity as
opposed to equipment items with very short equipment life durations.
For a more detailed discussion of the methodology associated with very
short equipment life durations, we refer readers to the CY 2021 PFS
final rule (85 FR 84482 through 84483).
<bullet> Maintenance: We finalized the 5 percent factor for annual
maintenance in the CY 1998 PFS final rule with comment period (62 FR
33164). As we previously stated in the CY 2016 PFS final rule with
comment period (80 FR 70897), we do not believe the annual maintenance
factor for all equipment is precisely 5 percent, and we concur that the
current rate likely understates the true cost of maintaining some
equipment. We also noted that we believe it likely overstates the
maintenance costs for other equipment. When we solicited comments
regarding data sources containing equipment maintenance rates,
commenters could not identify an auditable, robust data source that CMS
could use on a wide scale. We noted that we did not believe voluntary
submissions regarding the maintenance costs of individual equipment
items would be an appropriate methodology for determining costs. As a
result, in the absence of publicly available datasets regarding
equipment maintenance costs or another systematic data collection
methodology for determining a different maintenance factor, in the
proposed rule, we did not propose a variable maintenance factor for
equipment cost per minute pricing as we did not believe that we have
sufficient information at present. We noted in the CY 2026 PFS proposed
rule (90 FR 32593) that we would continue to investigate potential
avenues for determining equipment maintenance costs across a broad
range of equipment items.
<bullet> Interest Rate: In the CY 2013 PFS final rule with comment
period (77 FR 68902), we updated the interest rates used in developing
an equipment cost per minute calculation (see 77 FR 68902 for a
thorough discussion of this issue). The interest rate was based on the
Small Business Administration (SBA) maximum interest rates for
different categories of loan size (equipment cost) and maturity (useful
life). The interest rates are listed in Table A-B3.
[[Page 71010]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.071
We did not propose and we are not finalizing any changes to the
equipment interest rates for CY 2027.
3. Adjusting RVUs To Match the PE Share of the Medicare Economic Index
(MEI)
We have long stated that we believe that the MEI is the best
measure available to determine the relative weights of the three
components in payments under the PFS--work, practice expense (PE), and
malpractice (MP). Accordingly, we believe that to ensure that the PFS
payments reflect the relative resources in each of these PFS components
as required by section 1848(c)(3) of the Act, the RVUs used in
developing rates should reflect the same weights in each component as
the cost share weights in the Medicare Economic Index (MEI).
Accordingly, we have finalized to accomplish this (78 FR 74241 through
74242) by holding the work RVUs constant and adjusting the PE RVUs, MP
RVUs, and conversion factor (CF) to produce the appropriate balance in
RVUs among the three PFS components and payment rates for individual
services, that is, that the total RVUs on the PFS are proportioned to
approximately 51 percent work RVUs, 45 percent PE RVUs, and 4 percent
MP RVUs. Historically, as the MEI cost shares are updated, we have
proposed to modify steps 3 and 10 to adjust the aggregate pools of PE
costs (direct PE in step 3 and indirect PE in step 10) in proportion to
the change in the PE share in the MEI cost share weights, and to
recalibrate the relativity adjustment that we apply in step 18 as
described in the CY 2023 PFS final rule (87 FR 69414 and 69415) and CY
2014 PFS final rule (78 FR 74236 and 74237). The most recent
recalibration was done for the CY 2014 RVUs.
However, due to overarching concerns with the data as described in
the CY 2026 PFS final rule (90 FR 49287 through 49293) and our
previously described policy goal to balance PFS payment stability and
predictability with incorporating new data through routine updates to
the MEI, we finalized our proposal to maintain the current PE/HR and
2006-based MEI cost shares (rather than transitioning to the 2017-based
MEI cost shares). Additionally, for CY 2027, we proposed to continue to
use the current PE/HR and 2006-based MEI cost shares for CY 2027 PFS
ratesetting. We received public comments on this proposal. The
following is a summary of the comments we received and our responses.
Comment: Few commenters requested that we implement the 2024 PPI
and CPI Survey PE/HR data and cost shares in PFS ratesetting for CY
2027. Several commenters requested that we update the cost shares to
the most currently available MEI. Several commenters supported our
proposal to continue using the current PE/HR and 2006-based MEI cost
shares for CY 2027 PFS ratesetting, or until the 2024 PPI Survey data
may be considered. Some commenters stated that we should not implement
the PPI and CPI Survey data until the issues discussed in the CY 2026
final rule have been addressed.
Response: We agree with commenters that we should continue using
the current PE/HR and 2006-based MEI cost shares for CY 2027 PFS
ratesetting, and may consider the commenters' feedback in future
rulemaking as we consider data to update the cost shares.
After consideration of the public comments, we are finalizing our
proposal to continue to use the current PE/HR and 2006-based MEI cost
shares for CY 2027 PFS ratesetting.
4. Changes to Direct PE Inputs for Specific Services
This section focuses on specific PE inputs. The direct PE inputs
are included in the CY 2027 direct PE input public use files, which are
available on the CMS website under downloads for the CY 2027 PFS final
rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>.
a. Standardization of Clinical Labor Tasks
As we noted in the CY 2015 PFS final rule with comment period (79
FR 67640 through 67641), we continue to make improvements to the direct
PE input database to provide the number of clinical labor minutes
assigned for each task for every code in the database instead of only
including the number of clinical labor minutes for the preservice,
service, and post service periods for each code. In addition to
increasing the transparency of the information used to set PE RVUs,
this level of detail would allow us to compare clinical labor times for
activities associated with services across the PFS, which we believe is
important to maintaining the relativity of the direct PE inputs. This
information would facilitate the identification of the usual numbers of
minutes for clinical labor tasks and the identification of exceptions
to the usual values. It would also allow for greater transparency and
consistency in the assignment of equipment minutes based on clinical
labor times. Finally, we believe that the detailed information can be
useful in maintaining standard times for particular clinical labor
tasks that can be applied consistently to many codes as they are valued
over several years, similar in principle to physician preservice time
packages. We believe that setting and maintaining such standards would
provide greater consistency among codes that share the same clinical
labor tasks and could improve the relativity of values among codes. For
example, as medical practice and technologies change over time,
standards could be updated simultaneously for all codes with the
applicable clinical labor tasks instead of waiting for individual codes
to be reviewed.
In the CY 2016 PFS final rule with comment period (80 FR 70901), we
solicited comments on the appropriate standard minutes for the clinical
labor tasks associated with services that use digital technology. After
consideration of comments received, we finalized standard times for
clinical labor tasks associated with digital imaging at 2 minutes for
``Availability of prior images confirmed'', 2 minutes for ``Patient
clinical information and questionnaire reviewed by technologist, order
from physician confirmed and
[[Page 71011]]
exam protocoled by radiologist'', 2 minutes for ``Review examination
with interpreting MD'', and 1 minute for ``Exam documents scanned into
PACS'' and ``Exam completed in RIS system to generate billing process
and to populate images into Radiologist work queue.'' In the CY 2017
PFS final rule (81 FR 80184 through 80186), we finalized a policy to
establish a range of appropriate standard minutes for the clinical
labor activity, ``Technologist QCs images in PACS, checking for all
images, reformats, and dose page.'' These standard minutes will be
applied to new and revised codes that make use of this clinical labor
activity when they are reviewed by us for valuation. We finalized a
policy to establish 2 minutes as the standard for the simple case, 3
minutes as the standard for the intermediate case, 4 minutes as the
standard for the complex case, and 5 minutes as the standard for the
highly complex case. These values were based upon a review of the
existing minutes assigned for this clinical labor activity; we
determined that 2 minutes is the duration for most services and a small
number of codes with more complex forms of digital imaging have higher
values. We also finalized standard times for a series of clinical labor
tasks associated with pathology services in the CY 2016 PFS final rule
with comment period (80 FR 70902). We do not believe these activities
would be dependent on the number of blocks or batch size, and we
believe that the finalized standard values accurately reflect the
typical time it takes to perform these clinical labor tasks.
In reviewing the RUC-recommended direct PE inputs for CY 2019, we
noticed that the 3 minutes of clinical labor time traditionally
assigned to the ``Prepare room, equipment and supplies'' (CA013)
clinical labor activity were split into 2 minutes for the ``Prepare
room, equipment and supplies'' activity and 1 minute for the ``Confirm
order, protocol exam'' (CA014) activity. We proposed to maintain the 3
minutes of clinical labor time for the ``Prepare room, equipment and
supplies'' activity and remove the clinical labor time for the
``Confirm order, protocol exam'' activity wherever we observed this
pattern in the RUC-recommended direct PE inputs. Commenters explained
in response that when the new version of the PE worksheet introduced
the activity codes for clinical labor, there was a need to translate
old clinical labor tasks into the new activity codes, and that a prior
clinical labor task was split into two of the new clinical labor
activity codes: CA007 (Review patient clinical extant information and
questionnaire) in the preservice period, and CA014 (Confirm order,
protocol exam) in the service period. Commenters stated that the same
clinical labor from the old PE worksheet was now divided into the CA007
and CA014 activity codes, with a standard of 1 minute for each
activity. We agreed with commenters that we would finalize the RUC-
recommended 2 minutes of clinical labor time for the CA007 activity
code and 1 minute for the CA014 activity code in situations where this
was the case. However, when reviewing the clinical labor for the
reviewed codes affected by this issue, we found that several of the
codes did not include this old clinical labor task, and we also noted
that several of the reviewed codes that contained the CA014 clinical
labor activity code did not contain any clinical labor for the CA007
activity. In these situations, we believe that the three total minutes
of clinical staff time would be more accurately described by the CA013
``Prepare room, equipment and supplies'' activity code, and we
finalized these clinical labor refinements. We direct readers to the
discussion in the CY 2019 PFS final rule (83 FR 59463 through 59464)
for additional details.
Following the publication of the CY 2020 PFS proposed rule, a
commenter expressed concern with the published list of common
refinements to equipment time. The commenter stated that these
refinements were the formulaic result of applying refinements to the
clinical labor time and did not constitute separate refinements; the
commenter requested that CMS no longer include these refinements in the
table published each year. In the CY 2020 PFS final rule, we agreed
with the commenter that these equipment time refinements did not
reflect errors in the equipment recommendations or policy discrepancies
with the RUC's equipment time recommendations. However, we believed it
was important to publish the specific equipment times that we were
proposing (or finalizing in the case of the final rule) when they
differed from the recommended values due to the effect these changes
can have on the direct costs associated with equipment time. Therefore,
we finalized the separation of the equipment time refinements
associated with changes in clinical labor into a separate table of
refinements. We direct readers to the discussion in the CY 2020 PFS
final rule (84 FR 62584) for additional details.
Historically, the RUC has submitted a ``PE worksheet'' that details
the recommended direct PE inputs for our use in developing PE RVUs. The
format of the PE worksheet has varied over time, and among the medical
specialties developing the recommendations. These variations have made
it difficult for the RUC's development and our review of code values
for individual codes. Beginning with its recommendations for CY 2019,
the RUC mandated the use of a new PE worksheet for its recommendation
development process that standardizes the clinical labor tasks and
assigns them a clinical labor activity code. We believe the RUC's use
of the new PE worksheet in developing and submitting recommendations
helps us simplify and standardize the hundreds of clinical labor tasks
currently listed in our direct PE database. To facilitate rulemaking
for CY 2027, we are displaying the Labor Task Detail public use file
that contains the current listing of clinical labor activity codes.
This file is available on the CMS website under downloads for the CY
2027 PFS final rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>.
b. Updates to Prices for Existing Direct PE Inputs
In the CY 2011 PFS final rule with comment period (75 FR 73205), we
finalized a process to act on public requests to update equipment and
supply price and equipment useful life inputs through annual
rulemaking, beginning with the CY 2012 PFS proposed rule. Beginning in
CY 2019 and continuing through CY 2022, we conducted a market-based
supply and equipment pricing update using information developed by our
contractor which updated pricing recommendations for approximately 1300
supplies and 750 equipment items currently used as direct PE inputs.
Given the potentially significant changes in payment that would occur,
in the CY 2019 PFS final rule, we finalized a policy to phase in our
use of the new direct PE input pricing over a 4-year period using a 25/
75 percent (CY PFS 2019), 50/50 percent (CY PFS 2020), 75/25 percent
(CY PFS 2021), and 100/0 percent (CY PFS 2022) split between new and
old pricing. We believe that implementing the proposed updated prices
with a 4-year phase-in would improve payment accuracy while maintaining
stability and allowing interested parties to address potential concerns
about changes in payment for particular items. This 4-year transition
period to update supply and equipment pricing concluded in CY 2022; for
a more detailed discussion, we refer readers to the CY 2019 PFS final
rule
[[Page 71012]]
with comment period (83 FR 59473 through 59480).
For CY 2027, we proposed to update the price of nine supplies and
two equipment items in response to the public submission of invoices
following the publication of the CY 2026 PFS final rule. These supply
and equipment items with updated prices are listed in the valuation of
specific codes section of the final rule under Table A-D9, CY 2027
Invoices Received for Existing Direct PE Inputs.
These proposed pricing updates included a request from the RUC to
update the pricing of the moderate sedation pack (SA044) to more
accurately reflect its components. The RUC determined that a sterile
gown is not needed as part of the moderate sedation pack, however, a
regular staff gown should be included to protect the sedation provider
from all body fluids, substance, and excretions. The RUC also requested
that a mask would be an appropriate addition in the sedation pack,
resulting in a price change from the current $19.20, minus the $5.13
sterile gown, plus the $1.19 staff gown and $0.43 mask, for a new total
price of $15.69. We proposed this $15.69 price for the SA044 moderate
sedation pack which is reflected in Table A-D9, CY 2027 Invoices
Received for Existing Direct PE Inputs.
Additionally, we received a potentially misvalued code (PMVC)
nomination for SA119 kit, low frequency ultrasound wound therapy (MIST)
and proposed an updated supply cost from $320.18 to $100 for SA119. We
refer readers to section II.D. of this final rule for more information
about this proposal.
Comment: Many commenters stated that they approved of the proposed
pricing changes included in the CY 2027 PFS proposed rule. Different
commenters stated their approval for the proposed change in pricing for
the aquatic therapy pool (EQ050), the liposorber system (EQ174), the
Universal Detection Kit (SA117), the Varithena admin pack (SA125), the
Varithena (foam) (SD324), the Dorsal SI Joint Arthrodesis Implant
(SD356), and the Esketamine (56 mg vial) (SH109) and Esketamine (84 mg
vial) (SH110) supplies.
Response: We appreciate the support for our proposed pricing from
the commenters.
Comment: A commenter stated that the existing supply cost for the
purified protein derivative (SH059) supply falls short of covering the
cost of the product, leading many pediatric practices to stop
purchasing the product and potentially reducing patient access to
tuberculosis skin testing. The commenter requested that CMS increase
the supply cost for the SH059 purified protein derivative supply to
better reflect the actual cost paid by practices and align payment with
current market pricing; to this effect, the commenter submitted five
invoices with updated pricing information.
Response: We appreciate the submission of these invoices from the
commenter to assist in updating the price of the SH059 supply. In
reviewing these invoices, we determined that they averaged out to a
price of $138.60 by selling 10 doses in 1 mL vials, a substantial
increase over the current $26.11 price for the SH059 supply. We were
able to find unit prices of $36.70 and $51.44 when the product was sold
in 50 doses of 5 mL vials which average together for a price of $44.07.
Since we believe it would be more typical to purchase the SH059 in
larger batch sizes given the considerable cost savings, we are
finalizing an update in the price at the averaged $44.07 rate, which we
note still constitutes a pricing increase of roughly 70% for the SH059
supply.
Comment: A commenter submitted invoices reflecting the costs
associated with furnishing the SleepioRx product, together with a
request to create a new direct PE supply code that refers to validated
pricing for SleepioRx. The commenter stated that there was a lack of
consistent contractor pricing for HCPCS code G0552 (Supply of digital
mental health treatment device and initial education and onboarding,
per course of treatment that augments a behavioral therapy plan) which
uses this supply item and therefore creates an access barrier to
Medicare beneficiaries with insomnia. The commenter urged CMS to
establish a direct PE input supply code for SleepioRx, based on the
submitted invoices and provide billing guidance to the Medicare
Administrative Contractors (MACs).
Response: We appreciate the submission of these invoices from the
commenter. We note that a supply code for this product was finalized
last year in the CY 2026 PFS final rule, using the name ``Digital
mental health device (insomnia)'' and using the supply code SD386 (90
FR 49460). This supply is currently not assigned to any CPT codes since
HCPCS code G0552 is contractor priced and therefore cannot include any
direct PE inputs; we did not propose to establish national pricing for
HCPCS code G0552 and we are not finalizing a change in its contractor
priced status at this time. However, we will update the price of the
SD386 supply based on the invoices submitted by the commenters at a new
price of $400.00. The SD386 supply is listed along with the other
updated supply and equipment prices under Table A-D9, CY 2027 Invoices
Received for Existing Direct PE Inputs.
Comment: A commenter requested that CMS establish new direct PE
supply and equipment codes for the TearCare System, a technology that
is used to perform the interventional procedure reported with CPT code
0563T (Evacuation of meibomian glands, using heat delivered through
wearable, open-eye eyelid treatment devices and manual gland
expression, bilateral) to treat dry eye disease (DED) due to meibomian
gland dysfunction (MGD). The commenter specified that they were not
requesting that CMS establish national pricing for CPT code 0563T,
instead stating that establishing supply and equipment codes for these
devices would provide greater transparency and consistency in
valuation, support more uniform reimbursement policies nationwide, and
better align payment with the resources associated with performing the
procedure among the Medicare Administrative Contractors (MACs). The
commenter submitted 16 invoices to support the establishment of these
new supply and equipment codes associated with the resources used to
furnish CPT code 0563T.
Response: We appreciate the submission of these invoices from the
commenter with additional pricing information. After reviewing the
invoices, we are finalizing the establishment of a new supply code for
Smart Lids (SD397) at a price of $1000 and a new equipment code for a
Smart Hub (EQ423) at a price of $6583.33 based on an average of the
submitted invoices. As the commenter noted, these new direct PE inputs
are currently not assigned to any CPT codes since CPT code 0563T is
contractor priced and therefore cannot include any direct PE inputs.
However, we have added them to the ratesetting database as requested by
the commenter and they will appear in Table A-D10: CY 2027 Invoices
Received for New Direct PE Inputs.
Comment: Several commenters submitted a series of invoices in
support of establishing nonfacility pricing for CPT code 66984
(Extracapsular cataract removal with insertion of intraocular lens
prosthesis (1 stage procedure), manual or mechanical technique (eg,
irrigation and aspiration or phacoemulsification); without endoscopic
cyclophotocoagulation) along with related CPT codes 65820, 66174,
66982, 66989, and 66991. Commenters stated that these invoices
substantiated the direct PE costs of
[[Page 71013]]
performing cataract surgery and requested that CMS use them to develop
nonfacility pricing for these codes.
Response: Although we appreciate the submission of these invoices
from the commenters, we did not propose to establish nonfacility
pricing for CPT code 66984 or any of the other related codes listed by
the commenters. The submitted invoices included pricing for several
dozen supply and equipment items, including some costs which are
considered to be indirect under the current PE methodology such as
building construction costs and service/licensing fees. It is unclear
whether these invoices were intended to update the pricing for current
supply and equipment items or establish new supply/equipment codes, as
well as which items were intended to be associated with cataract
surgery. We are not finalizing the creation of nonfacility pricing for
CPT code 66984 or any of the other related codes listed by the
commenters at this time; we remind interested parties that if they have
reason to believe that individually services are inaccurately priced,
we encourage them to submit a request under the potentially misvalued
code initiative discussed elsewhere in this rule.
(1) Invoice Submission
We remind readers that we routinely accept public submissions of
invoices as part of our process for developing payment rates for new,
revised, and potentially misvalued codes. Often, these invoices are
submitted in conjunction with the RUC-recommended values for the codes.
To be included in a given year's proposed rule, we generally need to
receive invoices by the same February 10th deadline we noted for
consideration of RUC recommendations. However, as noted in the proposed
rule we considered invoices submitted as public comments during the
comment period following the publication of the CY 2027 PFS proposed
rule and will consider any invoices received after February 10th or
outside of the public comment process as part of our established annual
process for requests to update supply and equipment prices. Interested
parties are encouraged to submit invoices with their public comments
or, if outside the notice and comment rulemaking process, via email at
<a href="/cdn-cgi/l/email-protection#94c4d1cbc4e6fdf7f1cbddfae4e1e0cbc1e4f0f5e0f1d4f7f9e7bafcfce7baf3fbe2"><span class="__cf_email__" data-cfemail="b6e6f3e9e6c4dfd5d3e9ffd8c6c3c2e9e3c6d2d7c2d3f6d5dbc598dedec598d1d9c0">[email protected]</span></a>.
(2) Supply Pack Pricing Update
Interested parties previously notified CMS that they identified
numerous discrepancies between the aggregated cost of some supply packs
and the individual item components contained within. The interested
parties indicated that CMS should rectify these mathematical errors as
soon as possible to ensure that the sum correctly matches the totals
from the individual items, and they recommended that we resolve these
pricing discrepancies in the supply packs during CY 2024 rule. The AMA
RUC convened a workgroup on this subject and submitted recommendations
to update pricing for a series of supply packs along with the RUC's
comment letter for the CY 2024 rule cycle.
We appreciated the additional information and RUC workgroup
recommendations regarding discrepancies in the aggregated cost of some
supply packs. However, due to the projected significant cost revisions
in the pricing of supply packs and because we did not propose to
address supply pack pricing in the CY 2024 proposed rule, we stated in
the CY 2024 final rule that this issue would be better addressed in
future rulemaking. For example, the cleaning and disinfecting endoscope
pack (SA042) is included as a supply input in more than 300 HCPCS
codes, which could have a sizable impact on the overall valuation of
these services, and which was not incorporated into the proposed RVUs
published for the CY 2024 proposed rule. We stated that interested
parties would be better served if we comprehensively addressed this
topic during future rulemaking in which commenters could provide
feedback in response to proposed pricing updates (88 FR 78833 through
78834).
For CY 2025, we proposed implementing the supply pack pricing
update and associated revisions as recommended by the RUC's workgroup
(89 FR 97726 through 97727). We proposed to update the pricing of the
``pack, cleaning and disinfecting, endoscope'' (SA042) supply from
$19.43 to $31.29, to update the pricing of the ``pack, drapes,
cystoscopy'' (SA045) supply from $17.33 to $14.99, to update the
pricing of the ``pack, ocular photodynamic therapy'' (SA049) supply
from $16.35 to $26.35, to update the pricing of the ``pack, urology
cystoscopy visit'' (SA058) supply from $113.70 to $37.63, and to update
the pricing of the ``pack, ophthalmology visit (w-dilation)'' (SA082)
supply from $3.91 to $2.33. As recommended by the RUC workgroup, we
also proposed to delete the ``pack, drapes, laparotomy (chest-
abdomen)'' (SA046) supply entirely. The updated prices for these supply
packs were listed in the valuation of specific codes section of this
rule under Table A-B5, CY 2025 Invoices Received for Existing Direct PE
Inputs (89 FR 97852).
In accordance with the RUC workgroup's recommendations, we also
proposed to create eight new supply codes, including components
contained within previously existing supply packs. Aside from the SB056
supply, which is a replacement in several HCPCS codes for the deleted
SA046 supply pack, all of these new supplies are not included as
standalone direct PE inputs in any current HCPCS codes, as they are,
again, components contained within previously existing supply packs. We
proposed to add:
<bullet> The kit, ocular photodynamic therapy (PDT) (SA137) supply
at a price of $26.00 as a component of the SA049 supply pack;
<bullet> The Abdominal Drape Laparotomy Drape Sterile (100 in x 72
in x 124 in) (SB056) supply at a price of $8.049 as a replacement for
the SA046 supply pack;
<bullet> The drape, surgical, legging (SB057) supply at a price of
$3.284 as a component of the SA045 supply pack;
<bullet> The drape, surgical, split, impervious, absorbent (SB058)
supply at a price of $8.424 as a component of the SA045 supply pack;
<bullet> The post-mydriatic spectacles (SB059) supply at a price of
$0.328 as a component of the SA082 supply pack;
<bullet> The y-adapter cap (SD367) supply at a price of $0.352 as a
component of the SA049 supply pack;
<bullet> The ortho-phthalaldehyde 0.55 percent (for example, Cidex
OPA) (SM030) supply at a price of $0.554 as a component of the SA042
supply pack; and
<bullet> The ortho-phthalaldehyde test strips (SM031) supply at a
price of $1.556 as a component of the SA042 supply pack.
The new supply pack component items were listed in the valuation of
specific codes section of the rule under Table A-B8, CY 2025 PFS (89 FR
97722) New Invoices (89 FR 97853).
We also proposed the following additional supply substitutions
based on the recommendations of the RUC workgroup. We proposed to
remove the deleted SA046 supply pack and replace it with the drape,
sterile, fenestrated 16in x 29in (SB011) supply for CPT codes 19020,
19101, 19110, 19112, 20101, and 20102. We proposed to remove the
deleted SA046 supply pack and replace it with two supplies--the drape,
sterile, three-quarter sheet (SB014) and the drape, towel, sterile 18in
x 26in (SB019)--for CPT codes 19000 and 60300. We proposed to remove
the deleted SA046 supply pack
[[Page 71014]]
and replace it with 2 supplies--the drape, towel, sterile 18in x 26in
(SB019) and the newly created Abdominal Drape Laparotomy Drape Sterile
(100 in x 72 in x 124 in) (SB056) supply--for CPT codes 22510, 22511,
22513, and 22514. We proposed to remove the deleted SA046 supply pack
without replacing it with anything for CPT code 22526; the RUC
workgroup did not make a recommendation on what to do with CPT code
27278, which also previously contained the SA046 supply pack.
Therefore, we also proposed not to replace the SA046 supply pack with
any supplies for this code. The RUC workgroup also recommended removing
the SA046 supply pack from CPT code 64595 with no replacement; however,
this code was recently reviewed at the April 2022 RUC meeting and it no
longer includes the SA046 supply.
In the comments on the CY 2025 PFS proposed rule (89 FR 97727),
several commenters supported the proposed supply pack pricing update as
recommended by the RUC workgroup, however they indicated concern over
the proposed decrease in the price of the urology cystoscopy visit pack
(SA058) from $113.70 to $37.63. The commenters stated that the proposed
pricing reduction in the SA058 supply could result in drastic payment
rate cuts for physicians performing cystoscopy services in the office
setting. The commenters requested that CMS either delay the pricing
update or phase-in the supply pack changes over a 4-year period like it
has done for other PE changes with significant redistributive effects,
allowing independent urology practices to better prepare for the
negative financial impact this change will have.
After considering these comments, we agreed that the use of a
phased-in transition period would be appropriate to allow practitioners
to adjust to the updated pricing of these supplies. During our previous
supply and equipment pricing update in the CY 2019 PFS final rule (83
FR 59475), we finalized a policy to phase in any updated pricing that
we established during the 4-year transition period for very commonly
used supplies and equipment, such as sterile gloves (SB024) or exam
tables (EF023), even if invoices were provided as part of the formal
review of a code family. Based on this previously established policy,
we finalized the use of a pricing transition for three supply packs in
Table A-B4.
[GRAPHIC] [TIFF OMITTED] TR09NO26.072
Following the same pattern as our previous supply/equipment and
clinical labor pricing updates, we finalized the implementation of this
pricing transition over 4 years such that one-quarter of the difference
between the current price and the fully phased-in price is implemented
for CY 2025 PFS (89 FR 97722), one-third of the difference between the
CY 2025 PFS (89 FR 97722) price and the final price is implemented for
CY 2026 PFS, and one-half of the difference between the CY 2026 price
and the final price is implemented for CY 2027, with the new direct PE
prices fully implemented for CY 2028. For the other proposed supply
packs, the cystoscopy drapes pack (SA045) is only included in seven
HCPCS codes and the ocular photodynamic therapy pack (SA049) is only
included in a single HCPCS code which do not meet these criteria
established in previous rulemaking and described previously in this
section. Therefore, we finalized each of them at their updated pricing
for CY 2025 PFS (89 FR 97722) as proposed in the proposed rule. We
believe that the use of this pricing transition will minimize any
potential disruptive effects during the 4-year transition period that
could be caused by other sudden shifts in RVUs due to the high number
of services that make use of these very common supply packs.
Several commenters also stated that although five incomplete packs
would have their pricing updated in the proposed rule, mathematical
errors still remained for a number of additional supply packs.
Commenters stated that only 3 of the 18 affirmed packs were priced
correctly to match their components and provided tables showing the
pricing of an additional 15 packs that needed mathematical correction
by deconstructing the packs to determine the correct price through
summing their individual components. Commenters requested that CMS
initiate a correction of the packs pricing such that the sum of the
individual components match the price of the corresponding pack as
detailed in Table A-B5.
[[Page 71015]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.073
While we shared the concerns of the commenters regarding the need
for accuracy in the pricing of these supply packs, we had reservations
about their potential for pricing disruptions. Ten of these supply
packs are included in the direct PE inputs for at least 100 HCPCS
codes, and three of the packs are included in more than 1000 HCPCS
codes. Many of these pricing updates would lead to drastic changes in
pricing for these supply packs which are included in hundreds of HCPCS
codes, such as the SA051 pelvic exam pack decreasing in price from
$20.16 to $2.81 (-86 percent) and the SA048 minimum multi-specialty
visit pack decreasing in price from $5.02 to $1.98 (-61 percent). We
were particularly concerned that these changes in supply pack pricing
could lead to significant shifts in the overall PE RVU for affected
HCPCS codes, without these proposed rates appearing in the proposed
rule or allowing any opportunity for public comment.
Therefore, we did not finalize pricing updates for these additional
15 supply packs as requested by commenters. We anticipated returning to
this subject in future rulemaking to allow any changes in associated
pricing for HCPCS codes to appear in the proposed rule and provide an
opportunity for the public to comment. Should these supply pack pricing
updates be proposed in future rulemaking, we anticipated that we might
propose the same pricing transition described previously due to the
number of potentially affected HCPCS codes. We finalized all of the
other supply pack pricing changes as proposed, with the exception of
the 4--year pricing transition for three supply packs as described
previously in this section.
For CY 2026, we proposed to continue implementing the supply pack
pricing update and associated revisions as previously recommended by
the RUC's workgroup. We proposed to update the price of the 15 supply
packs detailed in Table A-B5 which were received too late in CY 2025
PFS (89 FR 97722) to allow for proposed pricing or public comment. In
the case of the surgical instruments cleaning pack (SA043), the
moderate sedation pack (SA044) and the small ortho drapes pack (SA081),
the proposed pricing update is modest enough that we proposed these
supplies move immediately to their final prices for CY 2026.
For the 12 other supply packs, we proposed that they be
incorporated into the muti-year supply pack pricing transition
finalized in CY 2025 rulemaking. Rather than having two separate 4-year
pricing transitions associated with supply packs, we proposed that
these 12 additional supply packs fold into the previous pricing
transition using the same methodology, such that one-third of the
difference between the CY 2025 PFS (89 FR 97722) price and the final
price is implemented for CY 2026, and one-half of the difference
between the CY 2026 price and the final price is implemented for CY
2027, with the new direct PE prices fully implemented for CY 2028 (89
FR 97728). With the inclusion of the SA042, SA058, and SA082 supply
packs which began their pricing transition for CY 2025, we proposed the
total supply pack pricing update detailed in Table A-B6.
[[Page 71016]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.074
Table A-B6 also includes the hydrophilic guidewire (SD089) supply
which we proposed to transition in pricing over 3 years given its
inclusion in approximately 100 HCPCS codes. We continue to believe that
the use of this pricing transition will minimize any potential
disruptive effects during the transition period that could be caused by
other sudden shifts in RVUs due to the high number of services that
make use of these very common supply items. After consideration of the
public comments, we finalized our supply pack pricing policies as
proposed in the CY 2026 PFS final rule (90 FR 49284).
For CY 2027, as stated in the proposed rule, these supply packs
will continue with the third year of the previously finalized 4-year
transition process as detailed in Table A-B6. In the proposed rule we
noted that as is the case with other supply and equipment pricing, we
would consider invoices associated with these supply packs which were
submitted as public comments during the comment period following the
publication of the CY 2027 PFS proposed rule as part of our established
annual process for requests to update supply and equipment prices. We
also encouraged interested parties to submit invoices with their public
comments or, if outside the notice and comment rulemaking process, via
email at <a href="/cdn-cgi/l/email-protection#7a2a3f252a0813191f2533140a0f0e252f0a1e1b0e1f3a19170954121209541d150c"><span class="__cf_email__" data-cfemail="3a6a7f656a4853595f6573544a4f4e656f4a5e5b4e5f7a59574914525249145d554c">[email protected]</span></a>.
Comment: A commenter stated that they supported the continuing
phase-in transition of supply pack pricing, specifically mentioning the
SA041, SA042, SA048, SA052, SA053, and SA054 supply packs.
Response: We appreciate the support for our previously finalized
policy from the commenter.
Comment: Several commenters stated that CMS should stop the
continued pricing transition for the pelvic exam supply pack (SA051)
and the cystoscopy visit supply pack (SA058). Commenters stated that
these supply reductions were disconnected from actual practice costs
and reductions in payment could create access barriers and push
procedures into hospital outpatient departments where Medicare and
patients generally pay more. Commenters requested that CMS freeze the
price for these supply packs at their CY 2026 values and reconsider
documentation of invoice pricing for these supplies.
Response: We share the concerns of the commenters regarding the
large decreases in pricing associated with the SA051 and SA058 supply
packs, which is why we finalized the use of a phased-in transition
period in the CY 2025 PFS final rule (89 FR 97722). We note that the
pricing of these supply packs was already finalized in the CY 2025 PFS
final rule, with the four-year implementation continuing to take place
in CY 2027. However, we also believe in the importance of valuing
supply items at the most accurate market-based pricing available, and
therefore we cannot continue to price these supply packs at rates much
higher than the cost of the individual components that make up the
total packs. We welcome the submission of updated invoices and other
cost data associated with these supply packs for potential inclusion in
future rulemaking; we note that we did not receive any invoices from
commenters supporting different pricing for the SA051 and SA058 supply
packs.
c. Technical Corrections to Direct PE Input Database and Supporting
Files
Following the publication of the CY 2026 PFS final rule, the RUC
submitted a potential technical correction issue related to global
period assignment for approximately three dozen codes. The RUC stated
that these codes had long descriptors which indicated that they were
add-on codes ``(List separately in addition to code for primary
procedure)''; however, these codes were assigned the XXX global period
instead of the ZZZ global period. The RUC requested that CMS consider
assigning the ZZZ global period for these codes as a technical
correction.
We reviewed the list of codes submitted by the RUC and we agree
that there appears to be a technical error in the global period
assignment for these codes. Most of the affected codes have non-payable
status codes and no RVUs, while the handful of affected HCPCS codes
that do have RVUs specifically state in their descriptors that they
were intended to be add-on codes, such as CPT code 88332 (Pathology
consultation during surgery; each additional tissue block with frozen
section(s)). We therefore proposed to change the following codes to the
ZZZ global period:
[[Page 71017]]
[GRAPHIC] [TIFF OMITTED] TR09NO26.075
The RUC also requested assigning the ZZZ global period to three
anesthesia codes: CPT codes 01953, 01968, and 01969. However, currently
all anesthesia codes use the XXX global period, and it is unclear
whether the concept of an add-on global period would apply to
anesthesia coding given that they are valued using base units and time
units, unlike all other PFS services. As noted in the proposed rule, we
did not propose the ZZZ global period for these three codes at this
time. We solicited comments from interested parties regarding the
global period assignment for these three anesthesia codes, as well as
the other codes listed in Table A-B7.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters stated that they did not support
assigning a ZZZ global period to CPT codes 01953, 01968, and 01969 and
questioned the necessity and potential negative consequences of doing
so. The commenters stated that although they understood the RUC's
rationale for requesting a ZZZ global period assignment for CPT codes
01953, 01968, and 01969, they believed this would be an inappropriate
policy change that could have unintended negative consequences. The
commenters stated that the anesthesia code set does not currently
utilize global periods beyond the perceived global period defined by
the anesthesia start and stop times of an anesthesia service and
establishing any structure that would appear to assign an anesthesia
global period could lay the groundwork to establishing a defined
generic or average global period that could impact the unique
recognition and utilization of an actual case's unique start and stop
times. The commenters stated that the administrative burden of ensuring
that these downstream impacts would not occur would far outweigh any
perceived benefit of unnecessarily assigning a ZZZ global period to
these codes.
Response: We appreciate the feedback from the commenters; we agree
that there are unique aspects to the anesthesia codes and therefore
continue to believe that CPT codes 01953, 01968, and 01969 should
retain the same XXX global period used by all other anesthesia codes.
After consideration of public comments, we are finalizing the
change to a ZZZ global period for the codes listed in Table A-B7 as
proposed. We are not finalizing a change in the global period for
anesthesia CPT codes 01953, 01968, and 01969.
Comment: Several commenters, including the RUC, requested that CMS
separately identify and pay for high-cost
[[Page 71018]]
disposable supplies. Commenters highlighted the outsized impact that
high-cost disposable supplies have within the current practice expense
RVU methodology, which not only accounts for a large amount of direct
practice expense for these supplies but also allocates a large amount
of indirect practice expense into the PE RVU for the procedure codes
that include these supplies. Commenters stated that if high-cost
supplies were paid separately with appropriate HCPCS codes, the
disproportionate indirect expense would no longer be associated with
that service, with the result that indirect PE RVUs would be
redistributed throughout the specialty practice expense pool and the
practice expense for all other services. Commenters requested that CMS
separately identify and pay for high-cost disposable supplies priced
more than $500 using appropriate HCPCS codes. Commenters stated that
they had anticipated a response from CMS on this issue and argued that
the pricing of these supplies should be based on a transparent process
whereby items are reviewed and updated on an annual basis.
Response: We have received a number of prior requests from
interested parties, including the RUC, to implement these separately
billable alpha-numeric Level II HCPCS codes to allow practitioners to
be paid the cost of high cost disposable supplies per patient encounter
instead of per CPT code. We stated at the time, and we continue to
believe, that this option presents a series of potential problems that
we have addressed previously in the context of the broader challenges
regarding our ability to price high cost disposable supply items. We
did not propose and are not finalizing the implementation of standalone
Level II HCPCS codes for high cost disposable supplies at this time.
For further discussion of this issue, we direct the reader to our
discussion in the CY 2011 PFS final rule with comment period (75 FR
73251).
This is a subject that we may consider for future rulemaking
alongside other updates to the PE methodology. We appreciate the
continued feedback from commenters as we consider potential approaches
to this complicated topic.
d. Updates to Practice Expense (PE) Methodology--Site of Service
Payment Differential
We proposed a significant refinement to our PE methodology to
better reflect trends in physician practice settings in the CY 2026 PFS
final rule (90 FR 49292 through 49297). Under the finalized policy, we
allocate half the amount of indirect PE RVUs per work RVU for services
furnished in the facility setting compared to those allocated to
services furnished in the non-facility setting. We noted in the CY 2026
PFS proposed rule (90 FR 32374) that this change to the indirect cost
allocation methodology was intended to better recognize the relative
resources involved in furnishing services paid under the PFS in
facility and non-facility settings. We compared this change to our
current methodology prior to CY 2026, which functionally presumed
approximately equal indirect costs incurred by physicians across sites
of service. This presumption was initially made in the context of most
practitioners maintaining office practices independent of the
facilities in which they provided care, and as we discussed in the CY
2026 PFS proposed and final rules, appears to be inconsistent with
contemporary trends in physician practice where some significant
portion of services furnished in facility settings are performed by
medical practitioners who do not maintain fully independent practices
and are less likely to incur a comparable amount of indirect costs.
Since finalizing the proposal in the CY 2026 PFS final rule, we
have heard from interested parties that the implementation of this
policy resulted in an unintended, but significant, site of service
differential for physician visits in nursing facility settings based
solely on whether the beneficiary's stay is covered under Part A. For
purposes of PFS payment, a service furnished to a patient in a skilled
nursing facility during a Part A hospital stay (place of service 31) is
considered to be in the ``facility'' setting, while a service furnished
to a patient in a Part B stay (place of service 32) is considered to be
in the ``non-facility'' setting, per the Medicare Claims Processing
Manual (MCPM), Chapter 12, Section 20.4.2 at <a href="http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c12.pdf">http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c12.pdf</a>.
Prior to CY 2026, the payment rate for these E/M services furnished in
a skilled nursing facility (``facility'') and a nursing facility
(``non-facility'') were equal. As intended, the 50 percent reduction to
the allocation of indirect PE based on work RVUs that we finalized for
CY 2026 shifted PE RVUs from the facility setting to the non-facility
setting. However, for nursing facility and skilled nursing facility
visits, the current site of service differential is determined based on
the status of the beneficiary (that is, a Part A versus Part B stay) in
that setting, rather than in the setting of care itself. Given that the
resource costs for the professional involved in furnishing an E/M
service would not be expected to differ based on whether the patient is
in a Part A stay or not, we believe it is more accurate for these E/M
services to be paid the same amount without regard to the beneficiary's
Part A status.
Therefore, we proposed to address this anomaly for CY 2027 by
equalizing the rate for nursing facility visits without regard to the
beneficiary's status by setting the facility PE RVU equal to the non-
facility PE RVU for CPT codes 99304 (Initial nursing facility care, per
day, for the evaluation and management of a patient, which requires a
medically appropriate history and/or examination and straightforward or
low level of medical decision making. When using total time on the date
of the encounter for code selection, 25 minutes must be met or
exceeded.), 99305 (Initial nursing facility care, per day, for the
evaluation and management of a patient, which requires a medically
appropriate history and/or examination and moderate level of medical
decision making. When using total time on the date of the encounter for
code selection, 35 minutes must be met or exceeded.), 99306 (Initial
nursing facility care, per day, for the evaluation and management of a
patient, which requires a medically appropriate history and/or
examination and high level of medical decision making. When using total
time on the date of the encounter for code selection, 50 minutes must
be met or exceeded.), 99307 (Subsequent nursing facility care, per day,
for the evaluation and management of a patient, which requires a
medically appropriate history and/or examination and straightforward
medical decision making. When using total time on the date of the
encounter for code selection, 10 minutes must be met or exceeded.),
99308 (Subsequent nursing facility care, per day, for the evaluation
and management of a patient, which requires a medically appropriate
history and/or examination and low level of medical decision making.
When using total time on the date of the encounter for code selection,
20 minutes must be met or exceeded.), 99309 (Subsequent nursing
facility care, per day, for the evaluation and management of a patient,
which requires a medically appropriate history and/or examination and
moderate level of medical decision making. When using total time on the
date of the encounter for code selection, 30 minutes must be met or
exceeded.), 99310 (Subsequent nursing facility care, per day, for the
evaluation and management of a patient, which requires a medically
appropriate history and/or examination and high level of medical
decision
[[Page 71019]]
making. When using total time on the date of the encounter for code
selection, 45 minutes must be met or exceeded.), 99315 (Nursing
facility discharge management; 30 minutes or less total time on the
date of the encounter), and 99316 (Nursing facility discharge
management; more than 30 minutes total time on the date of the
encounter).
This particular situation illuminates ongoing concerns regarding
the current site of service differential. For example, interested
parties have suggested that the current binary of facility and non-
facility does not account for the range of employment models associated
with physician services that drive significant differences in actual
practice expenses. Interested parties have encouraged us to refine our
previously finalized policy to ensure it is more empirically grounded
and narrowly tailored to independent physicians, consistent with the
policy's original intent. Interested parties have also stated that the
facility PE reductions have had a disparate effect on hospital medicine
groups and hospitalists, particularly those that operate independently
from their hospital or health systems. Interested parties have stated
that independent hospital medicine groups account for approximately
one-third to one-half of the hospital medicine groups nationwide, and
they are unable to cut administrative and overhead costs enough to
absorb our CY 2026 facility PE reductions. As a result, some interested
parties have stated that the reductions are accelerating the insolvency
of independent physician practices and leading to an increase in
hospital consolidation. We note that we have heard no general consensus
among interested parties to this effect, and we have received feedback
that this policy supports independent practices.
In the CY 2026 PFS proposed rule, we sought comments on whether our
proposal to reduce the portion of the facility PE RVUs allocated based
on work RVUs to half the amount allocated to non-facility PE RVUs was
an appropriate reduction or whether we should consider a different
percentage reduction for CY 2026 or in future years. In finalizing the
proposal, we noted that, while our change to the methodology for CY
2026 represented a starting point to correcting historic distortions in
the allocation of indirect PE costs across settings of care, we
intended to further examine our methodology and consider additional
refinements based upon feedback received and any studies or data
sources identified.
For CY 2027, we remained open to more specific data that addresses
the variability, as well as feedback on how to update the valuation and
payment methodologies to better reflect the relative resources involved
in furnishing the services, both across settings of care, and within
the context of an evolving ecosystem of care models and business
arrangements. Historically, we have relied extensively on specialty-
specific PE/HR survey data and the binary site of service differential
to best reflect variable PE costs.
To better inform our consideration of how to account for practice
expenses under the PFS methodologies, including the current
differentials that are effectuated based on the binary facility/non-
facility settings of care, we sought comment on how PE costs vary for
physicians and other professionals, not only based on whether they
practice in part or exclusively in a facility setting but also based on
how their costs vary when they are employed by health systems,
hospitals, or other entities. We noted in the CY 2026 PFS final rule
that (90 FR 49292) that the AMA has stated that physician practices
maintain some indirect PE costs for physicians who are solely facility-
based such as coding, billing, and scheduling. That being said, we
generally agree with the concerns presented by MedPAC on the growth of
exclusively facility-based physicians and agree that potential
overpayments for indirect practice expense costs could be a driver of
clinician movement to higher cost settings without creating
commensurate clinical value. This is why we lowered indirect PE for
facility-based physician to 50 percent in the CY 2026 PFS final rule.
Moving forward, we remain interested in ensuring indirect PE RVUs
are appropriately accounting for indirect PE costs. As such, we sought
information that will help illuminate to what extent these costs are
truly incurred when the professionals are employed by the hospital and/
or practice primarily in the hospital and are not already accounted for
in the existing OPPS payments. For example, when a physician is
employed by and practicing in a hospital, what portion of the indirect
PE is associated with the PFS service, versus costs that are associated
with the payment to the hospital, such as those paid under the OPPS?
We sought comment on the amount of indirect PE hospital-employed
physicians incur when they furnish care within a facility. For these
physicians, is the 50 percent indirect PE allocation accurate or could
it possibly be less than 50 percent, such as 0 percent? In the case
that there are little to no indirect costs incurred by the physician or
other professionals, and these costs are borne by the hospital, we
believe that these costs are not appropriately accounted for under the
PFS and we may well be overestimating the relative resource costs
compared to other PFS services. In consideration of the accuracy of the
current 50 percent indirect PE allocation for services furnished in the
facility setting, we are also seeking comment on whether and how we
might, alternatively or additionally, define and identify physicians
and professionals who are employed by hospitals, health systems, or
other entities to ensure the services they furnish are not
inappropriately consuming PE RVUs that would be more appropriately
assigned to services furnished by professionals incurring comparatively
greater practice expenses. Specifically, we sought comment on whether a
new HCPCS modifier for employed physicians would be a reasonable way to
identify and reduce facility PE from the services they perform in the
facility setting, or whether there are other methods we could consider.
We sought comment on what are the primary variables we should
consider to continue to improve our data sources, allocation
methodologies, and payment rates across settings of care, to best
reflect the resources involved in furnishing PFS services by
professionals and suppliers operating in a complex marketplace, across
settings of care. We remain interested in objective data regarding
payment arrangements between hospitals, health systems, other employers
and physicians, including which costs are incurred and whether the full
range of costs are truly incurred by physicians and other professionals
in these kinds of employment relationships. This would help us
understand and improve how PE is allocated across settings of care,
both in general and for specific kinds of services.
We received public comments on this proposal and comment
solicitation. The following is a summary of the comments we received
and our responses.
Comment: Commenters were unanimously supportive of our proposal to
set the facility PE RVU equal to the non-facility PE RVU for nursing
facility E/M codes (CPT codes 99304 through 99310, 99315 and 99316). We
also received feedback in response to our comment solicitation on the
current site of service differential finalized in the CY 2026 PFS final
rule.
Response: We appreciate the commenters' support on our proposal. We
received many comments on our comment solicitation regarding the site
of service differential. Commenters agreed that using facility place-
of-
[[Page 71020]]
service as a proxy for physician employment is imprecise, though they
were divided on how to structure the differential going forward, with
some supporting refinements such as additional specialty-specific
adjustments and more detailed impact data. Most recommended replacing
or supplementing this proxy with a more direct method of identifying
hospital-employed physicians, with several suggesting independent
practices self-identify given their incentive to do so. However, many
commenters cautioned that employment status alone is not a reliable
indicator of who bears indirect costs, noting that practices often
continue to incur substantial administrative costs regardless of
employment or site of service, and that the variety of employment
arrangements makes any binary classification difficult to administer
and prone to disputes. Commenters broadly urged CMS to take a more
data-driven approach, including easing the impact on independent
practices and reconsidering the reduction until better evidence is
available. They also raised specialty-specific concerns and warned the
policy could accelerate practice consolidation into hospital employment
or acquisition by other entities. After consideration of public
comments, we are finalizing to set the facility PE RVU equal to the
non-facility PE RVU for nursing facility E/M codes (CPT codes 99304
through 99310, 99315 and 99316), as proposed. We may consider comments
about the site-of-service differential in future rulemaking.
6. Strategies To Improve Payment Transparency, Accuracy, and Congruency
Across Payment Systems
a. Professional and Technical Components
Because PFS services are paid across settings of care, and are the
primary way that Medicare pays medical professionals, understanding the
structure of PFS payment is a critical part of price transparency for
Medicare, other payers, and consumers. Likewise, misunderstanding or
confusion about what relative resources are incorporated in specific
PFS payment rates can be a significant obstacle for payers and
consumers navigating the health care market. For example, approximately
4,100 services paid as ``global surgical packages,'' (herein `globals')
are valued as bundled payments that aggregate multiple components of
care into a single payment amount, including post-operative visits that
are presumed to occur in particular settings (for example, inpatient
hospital, outpatient hospital, office) regardless of where the services
actually take place. Most PFS services are valued with a site of
service binary, where the non-facility setting is the aggregation of
all relative resources involved in furnishing the professional and
technical aspects of the service, and the facility setting, where the
rate generally excludes the facility costs involved in the service
since those costs are addressed through separately reported facility
fees. In contrast to these two constructs, there are other codes
(mainly describing diagnostic and imaging services) that may be billed
with professional component (PC, or modifier 26) and technical
component (TC) modifiers, or without modifiers (global codes) that are
paid for the complete global service. These differences in how payments
are constructed and displayed can make it difficult for interested
parties and CMS to evaluate relative payment rates, underlying resource
costs, and value across settings of care.
These challenges are further compounded by differences across
Medicare payment systems in how similar services are defined, bundled,
and paid. For example, some payment systems incorporate technical
inputs and facility resources into a single payment. This variation can
obscure meaningful comparisons across sites of care and may complicate
efforts to advance site-neutral payment policies aimed at reducing
incentives for hospitals to acquire physician practices and limit site-
of-care decisions based on financial considerations. As CMS continues
to consider approaches that remove obstacles from market competition
across settings of care, especially by improving transparency,
comparability of PFS payments is an important foundational step.
We noted in the proposed rule, to facilitate more consistent
comparisons across services and settings, we have developed a public
use file that displays, for services that are not currently billable
with TC/26 modifiers, RVUs amounts that reflect the relative resources
involved in furnishing professional and technical aspects of the
services, which is available on the CMS website under downloads for the
CY 2027 PFS proposed rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>. This file is intended
to improve transparency regarding how PFS payments may be conceptually
divided between physician professional and technical components of the
services, especially to illuminate the differences in fees between
technical aspects of PFS services compared to facility fees across
settings of care. We believe that making these components more visible,
where feasible, may help interested parties better understand the
structure of PFS payments and support more informed comparisons across
settings of care. We noted that we have excluded 10- and 90-day global
surgery services from display in this public use file since there are
numerous ways to consider how the structure of payment for those codes
may be best understood. The use of bundled payments for the 10- and 90-
day global surgery services results in aggregated valuation for all
pre-operative, intra-operative, and post-operative services furnished
over a defined period (0-, 10-, or 90-day global periods), including
services by both physician and clinical staff and practice expense
without clear visibility into how each component contributes to the
total bundled valuation. While we noted that the current structure of
global surgery services has effectively obscured how the components of
care are individually valued and limited our ability to disaggregate
them for purposes of this public use file, we sought comment on how to
address this problem, either in possible improvements to the global
surgery packages or, at least, in the best way to make their component
pieces transparent.
Additionally, we noted that there is a subset of additional
exclusions from this public use file, such as codes subject to the
cognitive services floor and the statutory phase-in of significant RVU
reductions, due to technical challenges with how these policies are
implemented that hinder the disaggregation of their component parts.
We emphasized in the proposed rule that we did not propose any
changes to existing payment or billing policies, including the use of
the 10- and 90-day globals. Rather, this effort is intended to improve
transparency and provide a foundation for future rulemaking. We believe
that greater visibility into how the professional and technical aspects
of PFS services are valued and paid, where feasible, may enhance the
ability of consumers, and payers (including CMS) to assess relativity
across services, may enhance CMS's efforts to improve valuation over
time, and support broader efforts to align payments across settings of
care. We sought comment on several aspects of this approach. First, we
sought comment on the utility of displaying RVUs associated with
professional and technical aspects of services that are not currently
billable with TC/26 modifiers, including how we may use this
information to assess payment differences across settings. Again, we
also sought comment on
[[Page 71021]]
potential approaches CMS could consider in future rulemaking to improve
transparency for services currently paid as globals. Specifically, we
were interested in feedback on how CMS could develop methodologies to
more clearly identify and, where appropriate, disaggregate the
underlying components of these services. We were also interested in
comments on how CMS could ``right-size'' payments for the globals over
time to ensure they remain aligned with current clinical practice and
resource costs, are more readily updated based on empirical data, and
do not obscure differences in cost and value across settings of care.
We received public comments on this comment solicitation. The
following is a summary of the comments we received and our responses.
Comment: Some commenters were supportive of the CMS goal of
improving transparency and developing more consistent information about
the resources used to furnish services across different settings, but
disagreed with our methodology of developing component-level values for
services that the commenters say were not designed or valued as
separately billable professional and technical components. Commenters
stated that the display-only file raises significant methodological and
policy questions, and that these values should not be treated as
directly comparable, or used to support future payment changes, until
CMS has completed further analysis and engaged affected interested
parties. Another commenter stated that the proposed approach to create
the file appears to be arbitrary and does not reflect allocations based
on a thorough review of each service, and discouraged us from advancing
future payment policy that relies on the public use file. The commenter
stated that there are often justifiable reasons for cost variation
between different sites of care and expressed concern that we intend to
use the file in future years to equalize rates across sites of care
that could result in hospitals being underpaid for care.
Response: We appreciate the commenters' support of our efforts to
make available transparent information about the resources required to
furnish services across settings. With respect to commenters who stated
that the file's methodology was arbitrary or lacked utility, we note
that estimating component-level resource use for display purposes does
not require that those components be separately billable, and we
believe such estimates can serve the transparency goals described in
the proposed rule. We are open to alternative approaches to advancing
comparisons across sites of care and may take any such suggestions into
account in future rulemaking. We did not propose to use the file for
payment comparisons in this rule. The display is intended only to begin
building a transparency foundation, as described in the comment
solicitation. We will consider commenters' methodological concerns
before any future proposal that relies on cross-setting comparisons.
Comment: Some commenters stated that the re-presentation is more
understandable to interested parties, but it would be more useful if
CMS confirmed the systemic approach used or explained in greater detail
how CMS developed the resource with sample calculations. Another
commenter stated that they strongly support the establishment of this
public use file because the AMA has historically been the gatekeeper of
the relevant information utilized when determining RVU amounts. The
commenter stated that the process is secretive and monetized access to
databases has prevented interested parties from accessing and
understanding the structure of PFS payments. Another commenter
requested the addition of the code descriptors to the file to improve
the readability and data analytics of the public use file.
Response: We appreciate the feedback from interested parties and
may consider expanding the scope of the file in future rulemaking.
Comment: A commenter suggested that this file allows the
opportunity for TC services under the MPFS to use the OPPS relativity
data (excluding the packaged services) to assess the PE RVUs, rather
than survey data. The commenter said that this would be similar to what
CMS proposed for radiation oncology and proton beam treatment delivery
services. They stated that they believe the public use file would
provide greater accuracy to tie the RVUs to the audited hospital cost
report data for the PE component, rather than survey data. The
commenter also requested that we consider publishing the direct and
indirect PE RVUs for facility and non-facility for all codes, and
stated that this information available across services would provide
valuable information and would increase transparency associated with
RVUs and the PFS.
Response: We appreciate the feedback from interested parties. We
may consider publishing the direct and indirect PE RVUs in future
rulemaking.
b. Global Surgical Packages
We finalized a policy in the CY 2015 PFS final rule (79 FR 67582
through 67591) to transition all 10-day and 90-day globals to 0-day
globals, allowing any post-operative visits furnished after the day of
the procedure to be billed as a standalone visit. CMS was prohibited
from implementing this policy through section 523(a) of the Medicare
Access and CHIP Reauthorization Act (MACRA) and was required to collect
data on how to best value globals. CMS did so through a research
contract with RAND and a data-collection process over several years to
develop data to improve the payment rates for these services. Data
collection has been based on reporting of CPT code 99024 (Postoperative
follow-up visit, normally included in the surgical package, to indicate
that an evaluation and management service was performed during a
postoperative period for a reason(s) related to the original
procedure), which is limited to practices with 10 practitioners or
more, limited to nine States, and is used solely for data collection so
it has no associated payment with reporting the code. In the CY 2019
PFS final rule (83 FR 59503), we released findings that only 4 percent
of reviewed 10-day globals and 67 percent of reviewed 90-day globals
had one or more post-operative visit which occurred during the global
period and sought comment on potential approaches for revaluing the
globals based on these findings (83 FR 59504). In the CY 2023 PFS
proposed rule (87 FR 45877 through 45880), CMS reviewed the prior work
and conversations around global valuations, solicited feedback from the
public, and has continued to explore ways over the years to address
valuation of the globals that would be minimally disruptive to the PFS.
Over the past several years, CMS has taken several iterative steps
to improve payment accuracy for the globals. In the CY 2025 PFS final
rule (89 FR 97964 through 97968), CMS expanded the applicability of the
transfer of care modifiers to address instances where separate
practitioners are billing for standalone E/M visits during the global
period more directly with mandatory reporting of payment modifiers in
clinical cases when there is both a formal or informal transfer of care
between practitioners furnishing distinct portions of a global service.
CMS also created a post-operative care services add-on code to more
appropriately reflect the time and resources involved for practitioners
who were not involved in furnishing the surgical procedure. CMS is
continuing to explore further steps to improve accountability and more
accurate
[[Page 71022]]
payment and what additional next steps CMS could take to improve the
payment rates for global services.
In keeping with the administration priorities and aligning spending
and value, we proposed to pause the data collection required by MACRA
based on RAND's findings over the past several years. We remain
interested in how best to use and collect this data going forward and
ways we might consider improving this data collection. We currently
have several years of data that have continued to illustrate what we
believe is the issue with the post-operative visits during the global
period and how these visits are not occurring, yet providers are still
being paid for these visits under the current global payment policy.
Additionally, we believe that the current data collection may be
causing undo burden to providers and we believe that pausing the data
collection will aid in burden reduction for practitioners. We do
however question whether a more robust data collection would be
appropriate and if we should have all providers report CPT code 99024.
We also sought comment on the question, as to whether CMS should
have all providers report CPT code 99024, and also other data sources
we might consider to more accurately value the globals.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Commenters were generally in support of the CMS proposal
to pause the data collection required by MACRA to report CPT code
99024. Most commenters were not in support of CMS using that data for
the revaluation process. Commenters were overall in agreement that
expanding the data collection would pose undo administrative burden to
providers and urged CMS to not expand the reporting. Commenters were
not in support of using the information presented in the Public Use
File (PUF), in particular the purely ``arithmetic approach'' to
understand the valuation of the services based on the data that was
analyzed. Many commenters were opposed to CMS using the reported data
in the process of revaluation. Commenters stated that the
underreporting of CPT code 99024 does not indicate or capture the post-
operative work that was furnished even though a visit was not actually
reported. Commenters noted that pausing the data collection allows for
opportunity to evaluate the data limitations and develop a more
accurate approach. Several commenters suggested CMS spend time
understanding post operative care, how it is organized, as well as non-
visit post-operative work that takes place even when a visit is not
furnished as care extends beyond the post-operative visits.
Response: We appreciate the commenters' feedback and support of
pausing the data collection of CPT code 99024. We understand the
commenters' concerns that data collection may impose administrative
burden and understand this concern with expanding the data collection
beyond the sample that was required. We believe that a pause in the
data collection allows CMS an opportunity to evaluate the data
limitations and further refine our approach to data collection on the
global surgical packages.
After consideration of public comments on our proposal, we are
finalizing pausing the data collection as proposed. CMS remains
interested in how to best capture post operative data to better inform
valuation of post-operative services under the PFS.
As noted in the proposed rule, we posted a public use file with the
proposed rule to display the imputed RVUs associated with both the 10-
and 90-day post-operative visits based on a purely arithmetic approach
to understand the valuation of the services based on the data that was
analyzed. The public use file shows the current work RVUs, the number
of post-operative visits that are reported to CMS using no-pay HCPCS
code 99024, and the work RVUs remaining if all post-operative visits
are removed. The public use file is available on the CMS website under
downloads for the CY 2027 PFS final rule at <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices">https://www.cms.gov/medicare/payment/fee-schedules/physician/federal-regulation-notices</a>. We
solicited comments on potential revaluation strategies that we may
consider through future rulemaking. We received public comments on
these proposals. The following is a summary of the comments we received
and our responses.
Comment: As stated previously, many commenters were not in support
of using the information in the public use file to help inform
revaluation of the global surgical packages. Other commenters thought
it was a good first step toward the revaluation process. A few
commenters supported aligning payment for global surgical services with
services actually furnished, while others noted the reporting of CPT
code 99024 did not specify the visit level or level of physician work.
Other commenters supported the publication of the imputed post-
operative visit RVU public use file while other commenters did not
think CMS should use missing postoperative visit claims as proof that
postoperative care is not being furnished.
Response: We thank the commenters for their feedback.
After consideration of public comments, we express appreciation for
the feedback from commenters and will take the comments into
consideration for possible future rulemaking.
C. Payment for Medicare Telehealth Services
As discussed in prior rulemaking, several conditions must be met
for Medicare to make payment for telehealth services under the PFS. See
further details and full discussion of the scope of Medicare telehealth
services in the CY 2018 PFS final rule (82 FR 53006), the CY 2021 PFS
final rule (85 FR 84502), the CY 2024 PFS final rule (88 FR 78861
through 78866), the CY 2026 PFS final rule (90 FR 49316 through 49320),
and in 42 CFR 410.78 and 414.65. Our current 3-step review process
reflects the stepwise method by which we consider requests to add
services to or remove services from the Medicare Telehealth Services
List, beginning with the CY 2026 Medicare Telehealth Services List:
Step 1. Determine whether the service is separately payable under
the PFS.
Step 2. Determine whether the service is subject to the provisions
of section 1834(m) of the Act.
Step 3. Review the elements of the service as described by the
HCPCS code and determine whether each of them is capable of being
furnished using an interactive telecommunications system as defined in
Sec. 410.78(a)(3).
1. Changes to the Medicare Telehealth Services List
a. Requests To Add Services to the Medicare Telehealth Services List
for CY 2027
We did not receive any requests to add or remove services from the
Medicare Telehealth Services List for CY 2027.
Consistent with the deadline for our receipt of code valuation
recommendations from the American Medical Association's Relative Value
Scale Update Committee (AMA RUC) and other interested parties
established in the CY 2019 PFS final rule (83 FR 59491) and with the
process set forth in prior calendar years, for CY 2027, requests to add
services to the Medicare Telehealth Services List must have been
submitted to and received by CMS by February 10, 2026. Consistent with
the deadline for our receipt of code
[[Page 71023]]
valuation recommendations from the AMA RUC and other interested parties
established in the CY 2019 PFS final rule (83 FR 59491) and with the
process set forth in prior calendar years, for CY 2028, requests to add
services to the Medicare Telehealth Services List must be submitted to
and received by CMS by February 10, 2027. Each request submitted by the
deadline to add a service to the Medicare Telehealth Services List must
include any supporting documentation the requester wishes CMS to
consider. Because we use the annual PFS rulemaking process to make
changes to the Medicare Telehealth Services List, requesters are
advised that any information submitted as part of a request is subject
to public disclosure for this purpose. For more information on
submitting a request to add services to the Medicare Telehealth
Services List, including where to send these requests, and to view the
current Medicare Telehealth Service List, see our website at <a href="https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html">https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html</a>.
We did not receive any requests to add or remove services from the
Medicare Telehealth Services List for CY 2027 by the February 10, 2026
deadline. However we received public comments on this topic from
interested parties. The following is a summary of the comments we
received and our responses.
Comment: We received comments requesting services to be added to
the Medicare Telehealth Services List during the public comment period
for the CY 2027 proposed rule.
Response: For consideration in the CY 2027 PFS rulemaking, requests
to add services to the Medicare Telehealth Services List for CY 2027
must have been received by February 10, 2026. For CY 2028, requests to
add services to the Medicare Telehealth Services List must be submitted
to and received by CMS by February 10, 2027.
Comment: Commenters highlighted that we did not align certain
services on the Medicare Telehealth List with services being deleted
for CY 2027. As discussed in section II.D under Adaptive Behavior
Services, at the September 2025 CPT Editorial Panel meeting, the CPT
Editorial Panel deleted CPT codes 0362T and 0373T. These codes are
being replaced with CPT codes 97148, 97149, 97159, 97160, and 97173. As
discussed in section II.D. under Speech-Language Pathology Services, at
the September 2025 CPT Editorial Panel meeting, CPT code 92507 was
replaced with 10 new codes (92654, 92655, 92656, 92657, 92658, 92659,
92660, 92661, 92662, and 92663).
Response: We thank commenters for this information. We
inadvertently maintained these codes on the Medicare Telehealth
Services List. We believe that these codes represent replacements for
the codes currently describing these services on the Medicare
Telehealth Services List. As such, we are finalizing the deletion of
CPT codes 92507, 0362T, and 0373T and the addition of CPT codes 97148,
97149, 97159, 97160, 97173, 92654, 92655, 92656, 92657, 92658, 92659,
92660, 92661, 92662, and 92663 to the Medicare Telehealth Services
List.
In accordance with our longstanding policy, requests to add
services to the Medicare Telehealth Services List must be submitted to
and received by CMS by February 10, 2026. We will not consider requests
to add services submitted during the public comment period for the CY
2027 proposed rule. That said, CPT codes 92507, 0362T, and 0373T will
be removed from the Medicare Telehealth Service List as they were
inadvertently maintained. We will be replacing deleted CPT code 92507
with CPT codes 92654, 92655, 92656, 92657, 92658, 92659, 92660, 92661,
92662, and 92663. We will be replacing deleted CPT codes 0362T and
0373T with 97148, 97149, 97159, 97160, and 97173.
b. CMS Requirement To Add New Codes to the List
In the CY 2027 PFS proposed rule, we proposed to add HCPCS G-codes
G0572 (Advance care planning including the explanation and discussion
of advance directives such as standard forms (with completion of such
forms, when performed), first 20 minutes of clinical staff time with
the patient, family member(s), directed by a treating physician or
other treating qualified health care professional), G0573 (Advance care
planning including the explanation and discussion of advance directives
such as standard forms (with completion of such forms, when performed),
each additional 20 minutes with the patient, family member(s), directed
by a treating physician or other treating qualified health care
professional (List separately in addition to code for primary
procedure)), G0686 (Voluntary, group-based medical session involving
multiple patients with common medical condition(s), receiving medical
care in a group setting; billed and led by a physician or qualified
nonphysician practitioner and may include services provided by other
qualified healthcare professionals, clinical staff, or auxiliary
personnel under the direction of the supervising physician or other
practitioner. Session integrates group education, counseling, and peer
support with individualized patient clinical assessment and care, 2-10
patients, billed once per patient, per
[…truncated; see source link]Indexed from Federal Register on November 9, 2026.
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