Medicare and Medicaid Programs; CY 2026 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

Certain policies, including both existing policies and the new policies adopted in this final rule, rely upon the authority granted in section 1899(i)(3) of the Act to use other payment models that the Secretary determines will improve the quality and efficiency of items and services furnished under the Medicare program, and that do not result in program expenditures greater than those that would result under the statutory payment model. The following policies require the use of our authority under section 1899(i) of the Act: changes to the requirements for ACOs' progression to performance-based risk under the program's participation options (described in section III.F.2. of this final rule); potentially applying an alternative loss recoupment limit, in conducting financial reconciliation for each performance year, for an ACO with fewer than 5,000 assigned beneficiaries in any BY, for agreement periods beginning on or after January 1, 2027 (described in section III.F.4.c. of this final rule); excluding ACOs that fall below 5,000 assigned beneficiaries in any BY from being eligible to benefit from the policies providing certain low revenue ACOs participating in the BASIC track with additional opportunities to share in savings, for agreement periods beginning on or after January 1, 2027 (described in section III.F.4.c. of this final rule); and mitigating shared losses for an ACO determined to be affected by an EUC due to a cyberattack, including ransomware/malware, as determined by the Quality Payment Program, for performance year 2025 and subsequent performance years (described in section III.F.7.c. of this final rule). When considered together, these changes to the Shared Savings Program's payment methodology are expected to improve the quality and efficiency of items and services furnished under the Medicare program by hastening the transition to performance-based risk while improving protections against excessive liabilities both for shared losses charged to participants and shared savings paid by the program. These changes are not expected to result in a situation in which the payment methodology under the Shared Savings Program, including all policies we have adopted under the authority of section 1899(i) of the Act, results in more spending under the program than would have resulted under the statutory payment methodology in section 1899(d) of the Act.

In the CY 2023 PFS final rule, we estimated that the projected impact of the payment methodology that incorporates all policies finalized by that final rule would result in $4.9 billion in greater program savings compared to a hypothetical baseline payment methodology that excluded the policies that we have enacted relying on section 1899(i)(3) of the Act as authority (see 87 FR 70195 and 70196). The marginal impact of the changes in the CY 2024 PFS final rule were estimated to lower net spending by $330 million over the subsequent 10- year period for all new policies combined, including the cap an ACO's regional service area risk score growth, the addition of a new third step to the beneficiary assignment methodology, and the revised approach to identify the assignable beneficiary population (88 FR 79496). The marginal impact of the changes in the CY 2025 PFS final rule were estimated to lower net spending by an additional $200 million in total through 2034 (89 FR 98527). The marginal impact of the changes in this final rule is estimated to be a $20 million reduction in net spending. The cumulative impact of all policies (including those in this final rule) is estimated to result in more than $4.9 billion in greater program savings compared to a hypothetical baseline payment methodology that excludes the policies we have enacted relying on section 1899(i)(3) of the Act as authority. Therefore, we estimate that program expenditures associated with the implementation of the provisions in this final rule, in combination with other policies associated with the statutory payment model and current policies we have adopted under the authority of section 1899(i)(3) of the Act, are expected to improve the quality and efficiency of items and services furnished under the Medicare program and would not be expected to increase program expenditures relative to those of the statutory payment model.

We will continue to reexamine this projection in the future to ensure that an alternative payment model does not result in additional program expenditures and so continues to satisfy the requirement under section 1899(i)(3)(B) of the Act. Additional Shared Savings Program data beginning to accumulate after the end of the PHE for COVID-19, along with emerging information on the characteristics of, and performance trends for, new entrants in the Shared Savings Program for agreement periods beginning on January 1, 2024, and January 1, 2025, are anticipated to gradually improve our ability to reevaluate program impacts in a comprehensive fashion. If we later determine that the payment model that includes policies established under section 1899(i)(3) of the Act no longer meets this requirement, we will undertake notice and comment rulemaking to adjust the payment model to ensure continued compliance with the statutory requirements.

We did not receive public comments on this section, and therefore, we are finalizing as proposed. 7. Changes to the Regulations Associated With the Ambulance Fee Schedule

As outlined in section III.G. of this final rule, section 3203 of the American

Relief Act of 2025 and most recently, section 2203 of the Full-Year Continuing Appropriations and Extensions Act, 2025 amended section 1834(l)(12)(A) and (l)(13) of the Act to extend the payment add-ons sets forth in those sections through September 30, 2025. The ambulance extender provisions are enacted through legislation that is self- implementing. We proposed to revise dates at Sec. 414.610(c)(1)(ii) and (c)(5)(ii) to conform the regulations to these self-implementing statutory requirements.

A plain reading of the statute requires only a ministerial application of the mandated rate increase and does not require any substantive exercise of discretion on the part of the Secretary. As a result, there are no policy proposals associated with these legislative provisions. We have estimated the cost of these provisions to be $20 million in FY 2025 and $10 million in FY 2026 and the Congressional Budget Office (CBO)'s estimated cost of these provisions was $36 million in FY 2025 and $27 million in FY 2025 to 2029 (https://www.cbo.gov/system/files/2025-03/hr1968.pdf, page 4).

We did not receive any public comments on the impacts of the ambulance extender provisions. Therefore, in this final rule, we are finalizing our proposals to codify our regulations at Sec. 414.610(c)(1)(ii) and (c)(5)(ii) to conform the regulations to these statutory requirements. 8. Updates to the Quality Payment Program

In this section of this final rule, we estimated the impacts of the Quality Payment Program policies. We estimated participation, final scores, and payment adjustments for eligible clinicians participating through MIPS, and the Advanced APMs, and MVPs. We also presented the impacts on the number of expected Qualified Participants (QPs) and associated APM Incentive Payments that result from our proposed policies, relative to a baseline model that reflects the status quo in the absence of any modifications to the previously finalized policies. a. Overall Impact Modeling Approach and Data Assessment (1) MIPS Impact Modeling Approach

For this final rule, we used a similar modeling approach as the CY 2025 PFS final rule (89 FR 97710 through 99057). We created two MIPS impact models: a baseline and a proposed policy model. Our baseline model includes previously finalized policies that are in effect for the CY 2025 performance period/2027 MIPS payment year and in the absence of any of the new policies in this final rule. Examples of previously finalized policies included in the baseline model are updated QP and partial QP thresholds and the previously finalized list of MVPs. Please refer to CY2025 PFS final rule for a comprehensive, detailed discussion of finalized policies (89 FR 97710).

The policies model builds on the baseline model and incorporates the new MIPS policies we are proposing for the CY 2026 performance period/2028 MIPS payment year included in this final rule. By comparing the baseline model to the proposed policies model, we are able to estimate the impact of the specific policies in this final rule.

Our modeling approach utilizes the same scoring engine that is used to determine MIPS payment adjustments. This approach enables our model to align as much as possible with actual MIPS scoring and minimize differences between our projections and actual policy implementation. Our model's limitations are outlined later in this impact analysis. (2) Data Used To Estimate Future MIPS Performance

In the CY 2025 PFS final rule (89 FR 98531), we explained our decision to use CY 2022 performance period submissions data. We noted that using CY 2022 performance data presents the most current data and aligns participation, final scoring, and payment adjustment analysis around the same common data set. For this final rule, CY 2023 performance data is the most recently available data for us to construct a model simulation for this final rule. b. APM Incentive Payments to QPs in Advanced APMs and Other Payer Advanced APMs

Beginning with QP Performance Period 2017 (payment year 2019), through the Medicare Option, eligible clinicians who are determined to have a sufficient percentage of their Medicare Part B payments for covered professional services or Medicare patients through Advanced APMs are QPs for the applicable QP performance period and the corresponding payment year. In payment years 2019 through 2024, these QPs received a lump-sum APM Incentive Payment equal to 5 percent of their estimated aggregate paid amounts for covered professional services furnished during the base year (the calendar year immediately preceding the payment year). In payment year 2025, eligible clinicians who attained QP status for QP Performance Period 2023 will receive a lump-sum APM Incentive Payment equal to 3.5 percent of their estimated aggregate paid amounts for covered professional services furnished during CY 2024. In payment year 2026, eligible clinicians who attained QP status in QP Performance Period 2024 will receive a lump-sum APM Incentive Payment equal to 1.88 percent of their estimated aggregate paid amounts for covered professional services furnished during CY 2025.

Beginning with QP Performance Period 2019 (payment year 2021), in addition to the Medicare Option, the All-Payer Combination Option also affords eligible clinicians an opportunity at QP status. The All-Payer Combination Option allows eligible clinicians to become QPs by assessing a combination of both Medicare Part B covered professional services furnished or patients through Advanced APMs and services furnished or patients through Other Payer Advanced APMs. Eligible clinicians who become QPs for a given QP Performance Period are not subject to MIPS reporting requirements and payment adjustments for the contemporaneous MIPS performance period/payment year. Eligible clinicians who do not become QPs but who meet a lower threshold requirement to become Partial QPs for the year may elect whether or not to report to MIPS. If they elect to report, they are scored in and receive a payment adjustment under MIPS. Partial QPs are not eligible to receive the APM Incentive Payment.

If an eligible clinician does not attain either QP or Partial QP status and is not excluded from MIPS on another basis, the eligible clinician will be subject to the MIPS reporting requirements and will receive the corresponding MIPS payment adjustment.

Separately from the APM Incentive Payment, beginning in payment year 2026, there are two separate PFS CFs--one for eligible clinicians who are QPs for the year (the qualifying APM CF), and the other for all non-QP eligible clinicians and other suppliers paid under the PFS (the non-qualifying APM CF). The update to the qualifying APM CF for a year is 0.75 percent, whereas the update to the non-qualifying APM CF for a year is 0.25 percent. For payment year 2026, under current law, both an APM Incentive Payment and the qualifying APM CF will apply. This means that eligible clinicians who attained QP status for QP Performance Period 2024 will receive a lump-sum payment of 1.88 percent of their 2025 covered professional services paid claims as described above, and

additionally their 2026 covered professional services claims will be paid using the physician fee schedule rates that are established for the qualifying APM CF.

The thresholds to achieve QP status in the 2026 QP Performance Period (2028 payment year) are set to 75 percent for the payment amount, and 50 percent for the patient count. Overall, we estimated that for the 2026 QP Performance Period, between 375,000 and 482,200 eligible clinicians will become QPs, and therefore will be excluded from MIPS reporting requirements and payment adjustments.

In section IV.A.4.m.(2) of the CY2026 PFS proposed rule, we proposed to modify the definition of “attribution-eligible beneficiary” to include any beneficiary who has received a covered professional service furnished by the eligible clinician (NPI) for whom we are making the QP determination. We are finalizing this proposal with modification to include a methodology that continues to use E/M services and a methodology using covered professional serv ices. Additionally, we are finalizing our proposal to add a QP determination at the individual level for all Advanced APM participants, beginning with the 2026 QP Performance Period.

We projected the number of eligible clinicians who will be QPs, and thus excluded from MIPS, using several sources of information. First, the projections are anchored in the most recently available public information on Advanced APMs. The projections reflect Advanced APMs that will be operating during the 2026 QP Performance Period, as well as some Advanced APMs anticipated to be operational during the 2026 QP Performance Period. The projections also reflect an estimated number of eligible clinicians who will attain QP status through the All-Payer Combination Option. The following APMs are expected to be Advanced APMs for the 2026 QP Performance Period:

ACO REACH Model (formerly Global and Professional Direct Contracting) Model;

States Advancing All-Payer Health Equity Approaches and Development (AHEAD) Model

Enhancing Oncology Model (EOM);

Kidney Care Choices Model (Comprehensive Kidney Care Contracting Options, Professional Option and Global Option);

Medicare Shared Savings Program (Level E of the BASIC Track and the ENHANCED Track); and

Transforming Episode Accountability Model (TEAM)

We used the Participation Lists and Affiliated Practitioner Lists, as applicable (see Sec. 414.1425(a) for information on the APM Participant Lists used for QP determinations) for the 2024 QP performance period third snapshot QP determination date to estimate the number of QPs for the 2026 QP Performance Period. For models starting in the 2026 QP Performance Period we estimated performance based on projected participation. We examined the extent to which Advanced APM participants will meet the QP Thresholds of having at least 75 percent of their Part B covered professional services or at least 50 percent of their Medicare beneficiaries were attribution eligible through the APM Entity. c. Estimated Number of MIPS Eligible Clinicians in the CY 2026 Performance Period/2028 MIPS Payment Year (1) Initial Population of Clinicians Included in the RIA Baseline and Proposed Policies Models

For this final rule, we applied the same assumptions as in the CY 2025 PFS final rule (89 FR 98532) to estimate our initial population of clinicians using 2023 performance data. Specifically, we used the CY 2023 final reconciled eligibility determination file, same as the 2022 file described in the CY 2025 PFS final rule (88 FR 79505). This file reconciles eligibility from two determination periods and aligns with the CY 2023 performance period submissions data on which we based this model. Our analysis included 1,889,733 clinicians with PFS claims in this initial population. This initial population of clinicians was used to determine eligibility using the methodology described in the following sections. (2) Estimated Number of MIPS Eligible Clinicians After Applying Eligibility Assumptions (a) Methods and Assumptions Used To Estimate Eligibility

After identifying the clinician population with PFS claims, we applied the same eligibility assumptions and determination process described in the CY 2025 PFS final rule (89 FR 97710). We did not proposed any modifications to MIPS eligibility requirements and the same eligibility assumptions apply to both the baseline and proposed policies model.

For our impact analysis model, we established the “required eligibility” category, which means the clinician exceeds the low- volume threshold in all 3 criteria (Sec. Sec. 414.1305 and 414.1310(b)(1)(iii)) and is subject to a MIPS payment adjustment. We based this estimate on the CY 2023 performance period data described in this section of this final rule, which includes the 3 low volume criteria. Within the eligible clinicians, we divided them into two groups-clinicians who report MIPS data and clinicians who do not report MIPS data.

Our next two eligibility assumptions concern clinicians in groups, who may voluntarily participate in MIPS, but are not required to participate. First, we estimate group eligibility. These are the clinicians who have a group submission, and their group exceeds the low-volume threshold in all 3 criteria. Next, we apply our opt-in eligibility assumptions. Individuals or groups who exceed the low- volume threshold in at least one criterion, but not all three, may elect to opt in. Based on the number of individuals who opted in to MIPS for the CY 2023 performance period/2025 MIPS payment year, our model estimates that these clinicians will continue to opt in to MIPS.

After applying the process outlined in this section of this final rule, we then estimate the number of “Potentially MIPS Eligible” clinicians. These clinicians are not included in our total number of MIPS eligible clinicians. These clinicians are potentially eligible; however, they do not choose to report to MIPS.

Finally, we estimated the number of clinicians who are neither MIPS eligible nor potentially MIPS eligible. First, we estimated the number of clinicians who are below all 3 low-volume criteria (both as an individual and as a group) using the CY 2023 performance data as outlined in this section of this final rule.

Next, we estimated the number of QPs (not MIPS eligible). Also in this final rule, we estimated a range of QPs. For the purposes of our impact analysis, we estimate a specific number of QPs because a specific number of clinicians is needed to simulate the impacts of our proposed policies on participation, final scores, and payment adjustments. Finally, we estimate the number of clinicians who are excluded for other reasons, for example, they are in a clinician type that is not MIPS eligible or newly enrolled in Medicare.

After applying these assumptions to our initial population, we estimate that there will be 607,419 MIPS eligible clinicians with ~$51.84 billion in allowed charges in CY2026. (b) MIPS Eligibility Estimates

For the impact analysis, we use the estimated population of 607,419 MIPS eligible clinicians described previously in this section of this final rule. Table

D-B14 summarizes our eligibility estimates for the policies model after applying our assumptions outlined in this section of this final rule. [GRAPHIC] [TIFF OMITTED] TR05NO25.184

We did not have proposals related to applying Eligibility Assumptions. d. Modeling Approach and Methods for MIPS Value Pathways (MVPs) and Traditional MIPS (1) Summary of Approach

In this final rule, we present several proposals that impact the measures and activities, the performance category scores, final scores, and MIPS payment adjustments for MIPS eligible clinicians. In section VII.I.5.d(3). of this final rule, we outline these changes in more detail and describe our methodology to estimate MIPS payment adjustments for the CY 2026 performance period/2028 MIPS payment year. We then present the impact of the policies in the CY 2026 performance period/2028 MIPS payment year and compare select metrics to the baseline model. By comparing model outputs in the baseline model to the proposed policies model, we are able to observe the impact of the policies for the CY 2026 performance period/2028 MIPS payment year.

MIPS eligible clinicians' final scores are calculated based on the clinicians'

performance on measures and activities specified under the four MIPS performance categories: quality, cost, improvement activities, and Promoting Interoperability. MIPS eligible clinicians can participate in the four MIPS performance categories as an individual, group, virtual group, APM Entity and via traditional MIPS, the APM Performance Pathway (APP), or MVP reporting options. MIPS APM participants can participate in the APP as an individual, group, virtual group, or APM Entity and are only scored on three MIPS performance categories: quality, improvement activities, and Promoting Interoperability. Our simulation applies the proposed and baseline policies to the existing MIPS scoring engine.

In the CY 2022 PFS final rule (86 FR 65394 through 65397), we finalized policies at Sec. 414.1365 for implementing MIPS Value Pathways beginning in the CY 2023 performance period/2025 MIPS payment year. (2) Methodology To Assess Impact for MIPS Value Pathways

At Sec. 414.1365(b), we require MVP Participants (which can be a group, individual, subgroup, or APM entity) to register prior to submitting an MVP. We assessed whether to use CY 2024 MVP registration data to estimate MVP participation and policy impact, but elected not to simulate the impact for MVP because we do not presently have sufficient MVP scoring data for modeling and simulation, as we only have 1 year of MVP data from the CY 2023 performance period/2025 MIPS payment year. Our model is based on CY 2023 performance data, which contains only 1 year of MVP scores, and this is insufficient for conducting reconciliation between multiple years, which introduces uncertainty and complexity into our model. As more MVP scoring data becomes available in the future, we will reassess our methodology for estimating MVP participation, final scores, and payment adjustments. (3) Methodology To Assess Impact for Traditional MIPS

To estimate the impact of the policies on MIPS eligible clinicians, we generally use the CY 2023 performance data, including data submitted or calculated for the quality, cost, improvement activities, and Promoting Interoperability performance categories.

We supplemented this information with the most recent data available for CAHPS for MIPS and CAHPS for ACOs, administrative claims data for the new quality performance category measures, and other data sets. We calculated a hypothetical final score for the CY 2026 performance period/2028 MIPS payment year for the baseline and policies scoring models for each MIPS eligible clinician using score estimates for quality, cost, improvement activities, and Promoting Interoperability performance categories, and the application of our final scoring policies. (a) Methodology To Estimate the Quality Performance Category Score

We used the CY 2025 PFS final rule final policies model as the starting point of our baseline model. Since there are no previously finalized policies impacting the quality performance category that were not already included in the CY 2024 PFS final rule policies model, we did not make any modifications to the quality performance category and the baseline model is identical to the CY 2025 PFS final rules policies model with respect to the quality category.

Our policies model incorporates the following policies from this final rule as outlined in section IV.B. of this final rule:

In section IV.B.1.a.(2)(a) of this final rule, to facilitate fairer scoring, we proposed to remove the scoring cap and change the benchmarking approach for certain topped out measures applicable to clinicians facing both limited measure choice and limited scoring opportunities. We did not simulate the addition of quality measures described in section IV.A.4.d.(1)(c)(i) of this final rule since we use existing quality measure data from the CY 2023 performance period, which does not include new measures. We did not simulate the removal of quality measures described in section IV.A.4.d.(1)(c)(ii) of this final rule since we cannot predict how clinician behavior and measure selection will change in response.

In section IV.B.1.a.(2(b)(3) of this final rule, we proposed to modify the methodology for scoring the administrative claims-based measures within the quality performance category. The proposed administrative claims-based quality measure scoring methodology will be based on the standard deviation, the median, and an achievement point value that is derived from the performance threshold. Specifically, for a MIPS eligible clinician whose performance rate under an administrative claims-based measure will be equal to the median performance rate for all MIPS eligible clinicians that are scored on that measure, we will assign an achievement point value equal to 10 percent of the performance threshold. For example, for the CY 2026 performance period/2028 MIPS payment year, the median would have an achievement point value of 7.5, based on a performance threshold of 75 points as proposed in section IV.B.2.b.(2) of this final rule. For each administrative claims-based quality measure, the cut-offs for benchmark ranges would be calculated based on standard deviations from the median. This policy is incorporated into our model based on the specifications explained in section IV.B.1.a.(2(b)(3) of this final rule. (b) Methodology To Estimate the Cost Performance Category Score

We estimated the cost performance category score using a methodology similar to the methodology described in the CY 2025 PFS final rule (89 FR 98531) for the baseline and the proposed policies RIA models with the modifications described later in this section.

For this final rule, the baseline policies RIA model used the same methodology as the final policies RIA model in the CY 2025 PFS final rule (89 FR 98530). The policies RIA model incorporated and implemented the following changes:

In section IV.A.4.(d).(2).(c). of this final rule, we proposed to modify the Total Per Capita Cost (TPCC) measure. We also proposed to update the operational list of care episodes and patient condition groups and codes to reflect coding changes identified through our annual maintenance process for MIPS cost measures. We incorporated measures test data with the specifications for the modified measures.

In section IV.A.4.(d).(2).(d). of this final rule, we proposed to adopt a 2-year informational-only feedback period for newly implemented MIPS cost measures, which we also proposed to codify at Sec. [thinsp]414.1380(b)(2). (c) Methodology To Estimate the Promoting Interoperability Performance Category Score

In section IV.A.4.d.(4). of this final rule, we proposed modifications to 2 measures and the adoption of one new optional bonus measure: Public Health Reporting Under TEFCA Measure. However, we did not estimate Promoting Interoperability performance category score impacts because, after conducting an assessment of the proposed policies, we determined that there is insufficient data to model the impact of adding a new, optional bonus measure on the Promoting Interoperability performance category

scores, and therefore, did not incorporate it into our model. (d) Methodology To Estimate the Improvement Activities Performance Category Score

For the baseline and policies model we used the same method to estimate the improvement activities performance category score as described in the CY 2025 PFS final rule (89 FR 79508) including alignment with the clarification provided regarding IA automatic weighting for APM participants (89 FR 79366).

In section IV.A.4.d.(3).(b). of this final rule, we proposed to amend at Sec. 414.1355(c)(7) by adding a new subcategory, “Advancing Health and Wellness” (AHW), to replace the “Achieving Health Equity” subcategory. We proposed adding three new Improvement Activities while removing eight existing ones. However, the 3 new measures were not included in the RIA model because we lack historical benchmark data to estimate their potential impact. Additionally, the 8 measures being removed were also excluded from the RIA model, as the models cannot predict how clinicians will alter their behavior once these measures are removed. (e) Methodology To Estimate the Complex Patient Bonus Points

This final rule does not include proposals to modify the complex patient bonus. Therefore, for the baseline and proposed policies RIA model, we used the previously established method to calculate the complex patient bonus as described in the CY 2022 PFS final rule (86 FR 64996). (f) Methodology To Estimate the Final Score

We did not propose any changes to how we calculate the MIPS final score. Our baseline and proposed policies models assigned a final score for each TIN/NPI by multiplying each estimated performance category score by the corresponding performance category weight, adding the products together, multiplying the sum by 100 points, adding the complex patient bonus, and capping at 100 points.

For both models, after adding any applicable complex patient bonus, we reset any final scores that exceeded 100 points to equal 100 points. For MIPS eligible clinicians who were assigned a weight of zero percent for any performance category, we redistributed the weights according to Sec. 414.1380(c).

For the purposes of this model, if a MIPS eligible clinician was approved for reweighting of one or more performance category to zero percent of their final score, and the category's weight redistributed to other performance category(ies), for the CY 2023 performance period/ 2025 MIPS payment year (which was the data source used in our model) in accordance with our reweighting policies under Sec. 414.1380(c)(2), then we continue to apply that reweighting in our model by assigning them a neutral score equal to the performance threshold if all categories were reweighted or assigning the applicable weights to the categories which were reweighted.

Although it is unlikely (but possible) that the exact same clinicians will apply for and receive reweighting in both the CY 2023 performance period/2025 MIPS payment year (which our data is based on) and the CY 2026 performance period/2028 MIPS payment year (which we are simulating), we believe that this assumption accurately reflects future clinician behavior for two reasons. First, while the exact same MIPS eligible clinicians may not receive reweighting in 2 different years, we believe that this assumption allows us to quantify the impact of the reweighting on a population level. In other words, even if the same clinicians do not apply for and receive reweighting in these 2 different years, the absolute number of reweighting and the characteristics of practices that receive reweighting are likely to remain similar. Secondly, if we were to not assign reweighting to those MIPS eligible clinicians, many of them would receive a very low final score because they did not submit data for one or more performance categories during the year in which they received reweighting. We do not believe that it is a realistic assumption that, in the absence of reweighting, those clinicians will continue not to submit data. For these reasons, we assume that clinicians who received reweighting in the CY 2023 performance period/2025 MIPS payment year are also approved for reweighting in the CY 2026 performance period/2028 MIPS payment year. These clinicians are assigned a score of the performance threshold (75) in our model because this corresponds with a neutral (0 percent) payment adjustment. (g) Methodology To Estimate the MIPS Payment Adjustment

For the baseline and proposed policies models, we applied the hierarchy as finalized in the CY 2023 PFS final rule (86 FR 65536 through 65537) to determine which final score should be used for the payment adjustment for each MIPS eligible clinician when more than one final score is available. We then calculate the parameters of an exchange function in accordance with the statutory requirements related to the linear sliding scale, budget neutrality, and minimum and maximum adjustment percentages.

For the baseline model, we apply the performance threshold of 75 points finalized in the CY 2025 PFS final rule. In section IV.B.2.b.(2) of this final rule, we proposed to again set the performance threshold at 75. Therefore, for both the baseline and proposed policies models we used a performance threshold of 75 to calculate the exchange function used for MIPS payment adjustments. We noted that the results of this exchange are not identical between the baseline and proposed policies models. This is due to the scaling factor used to determine positive adjustments is dependent on the total dollar amount of negative payment adjustments and those adjustments differ as final scores are not identical between both models.

For both the baseline and proposed policies models, we use these resulting parameters to estimate the positive or negative MIPS payment adjustment based on the estimated final score and the allowed charges for covered professional services furnished by the MIPS eligible clinician. (4) Simulation Results and Projected Impact to MIPS Eligible Clinicians

Based on the methodology described in section VII.I.5.d.(3). of the final rule, we create a baseline and proposed policies simulation. Using this simulation, we estimate the impact of the policies of this final rule. (a) Impact on Clinician Eligibility

In section VII.E.17.c.(2). of this final rule, we noted that we do not modify clinician eligibility and therefore there is no difference in the total number of MIPS eligible clinicians between our models. (b) Impact on Clinician's Final Scores

Table D-B15 shows the median final score by practice size and the percentage of MIPS eligible clinicians of each practice size with a positive, neutral, or negative adjustment.

[GRAPHIC] [TIFF OMITTED] TR05NO25.185

The overall median final score is 87.96 in our baseline model and 89.47 in our proposed policies model, a slight increase for all practice sizes. There is a slight increase in the percentage of clinicians receiving a positive payment adjustment. We project that, overall, 83.61 percent of MIPS eligible clinicians will receive a positive adjustment in our baseline model, and 84.04 percent of MIPS eligible clinicians will receive a positive adjustment in our policies model. This slight increase is largely due to our proposed policies in the quality category, including the change to the administrative claims based quality measure scoring methodology and the updated topped out measure policy discussed in section IV.B.1.a.(2). of this final rule. Table D-B16 shows the median quality category score for MIPS eligible clinicians who are scored on the quality performance category for our baseline and proposed policies model. There is a noticeable difference in median quality category scores between our two models. This is true across almost all practice sizes, except for solo practitioners. The overall median quality category score is 78.78 in our baseline model and 83.76 in our policies model.

[GRAPHIC] [TIFF OMITTED] TR05NO25.186

Figure D-B1 shows the distribution of final scores for all MIPS eligible clinicians. Note that there is a noticeable size of MIPS eligible clinicians with a final score of 75. MIPS eligible clinicians whom we approved for reweighting of all MIPS performance categories in accordance with our reweighting policies at Sec. 414.1380(c)(2) are assigned a final score of exactly the performance threshold (75). Overall, the distribution is left skewed, indicating that many more clinicians would receive final scores on the higher side. [GRAPHIC] [TIFF OMITTED] TR05NO25.187

(i) Impact to Small and Solo Practices

Solo practitioners account for 17,074 MIPS eligible clinicians or 2.81 percent of all MIPS eligible clinicians in both the baseline and proposed policies models. The median final score for all solo practitioners is exactly equal to the performance threshold (75) in both the baseline and proposed policies model. The portion of all solo practitioners receiving a positive adjustment are almost the same between the baseline and the proposed policies models (32.85 percent baseline vs 32.88 proposed policies).

Solo practitioners have a lower overall median final score than other practice sizes. This is largely due to the fact that many of these solo practitioners do not actively submit data to MIPS despite being MIPS eligible clinicians. Our 2022 analysis indicates that 49.12 percent of solo practitioners submit data to MIPS compared to 94.07 percent of all clinicians. For solo practitioners who submit data, the median final score is 87.63 in the baseline and 87.70 in the proposed policies model. In contrast, those who did not report data to MIPS

have a median final score of to 21.95 in the baseline model and 21.99 in the proposed model. These findings indicate that the lower final scores among solo practitioners are likely, and largely, due to not reporting data to MIPS.

Table D-B17 shows that, even among engaged solo practitioners, the percentage receiving a positive payment adjustment is lower than that of clinicians from medium or large practices, while being comparable to those from small practices. Similarly, even for engaged solo practitioners, a higher proportion of them face negative payment adjustments compared to those in other practice sizes. Figure D-B2 shows the distribution of final scores for solo practitioners. Both box plots show similar final score distributions, and both baseline and proposed policies models show a large distance between the lower and upper quartiles. Figure D-B3 shows the final score distribution for all MIPS eligible clinicians between the baseline and the proposed policies models. These models show similar final score distributions, with the proposed policies model showing slightly higher scores. The upper quartile of is 94.25 in the baseline model and 95.82 in the proposed policies model. The distance between lower and upper quartiles is substantially narrower for all MIPS eligible clinicians than it is for solo practitioners. Figure D-B4 shows the distribution of final scores for solo practitioners who actively submit data to MIPS. This distribution is similar to the distribution of final scores in all MIPS eligible clinicians.

Additionally, the upper quartile is at 95.86 in the baseline and at 96.07 in the proposed policies model, which are slightly higher than that for all MIPS eligible clinicians. This suggests that, while many solo practitioners do not submit data to MIPS, those who do submit MIPS data tend to perform comparably to all MIPS eligible clinicians. This further supports the idea that the primary reason for low final scores among solo practitioners is the high number of them who do not submit MIPS data. [GRAPHIC] [TIFF OMITTED] TR05NO25.188

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Small practices, defined at Sec. 414.1305 as groups with 2 to 15 clinicians, have a median final score of 87.21 in the baseline and 87.53 in the policies model. This is slightly lower than the overall median final scores of 87.96 in the baseline model and 89.47 in the proposed policies model. Among small practices that submit data (Table D-B17), the median final score is 91.67 in the proposed policies model and 91.23 in the baseline model. They are higher than the median final score for all MIPS eligible clinicians who submit data, which are 90.10 in the proposed policy model and 89 in the baseline model. This indicates that small practices that submit MIPS data perform slightly better than it is for all MIPS eligible clinicians. Table D-B17 shows the percentage of clinicians, by practice size, either do or do not submit data to MIPS and their corresponding median final scores. Note that, in the proposed policies model, the median final scores for medium and large practice clinicians who do not submit data are 75. This indicates that many medium or large practice clinicians who do not submit data to MIPS have been approved for reweighting of all of their MIPS performance categories under our policies at Sec. 414.1380(c)(2). In contrast, the median final scores for solo and small practice clinicians, who do not submit data are 21.99 and 27.65, respectively. This indicates that many of them are either not being eligible for or not applying for our reweighting policies. Over 90 percent of the medium and large practice clinicians submit data to MIPS. It is possible that the 10 percent or less MIPS eligible clinicians who do not submit data to MIPS are primarily those who have received reweighting under our policies at Sec. 414.1380(c)(2).

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(ii) Impact to Rural Providers

In our data we assign rural practitioners a special status. Impact assessment of this group of clinicians indicates that their final scores are similar to the overall MIPS eligible clinicians. Table D-B18 shows the median final score and the percentage of eligible clinicians with a positive, neutral, or negative adjustment by practice size for rural practitioners. [GRAPHIC] [TIFF OMITTED] TR05NO25.192

The overall median final score for rural practitioners is 86.42 in our baseline model and 87.80 in our policies model. This is slightly lower than the median final score for all MIPS eligible clinicians, which is 87.96 in our

baseline model and 89.47 in our policies model. According to the results from the proposed policies model, large practice rural clinicians (100+) have a slightly lower median final score (87.74) than it (89.89) is for all MIPS eligible clinicians practicing in large practices. (iii) Impact to Safety Net Providers (a) Updated Definition of Safety Net Providers

In the CY 2022 PFS final rule (87 FR 70094), we finalized our complex patient bonus methodology. This bonus is composed of two distinct calculations which are added together: Medical Complexity and Social Risk. Medical Complexity is determined based on a MIPS eligible clinicians Hierarchical Conditions Categories risk score and social risk is determined based on the proportion of a MIPS eligible clinicians Medicare patient population who are dually eligible for both Medicare and Medicaid.

In the 2024 PFS final rule (88 FR 79513), we compared the performance of clinicians who received the complex patient bonus with our overall population. As we further developed our model, we decided to adopt a more precise definition of safety net providers. We believe that by narrowing our definition of safety net providers to clinicians fall in the top 20 percentile for their percent share of patients who are dually eligible for Medicare and Medicaid, we can identify providers who care for a large proportion of socially vulnerable individuals.

Table D-B19 shows the final score estimates for safety net providers under this new definition. Safety net has higher median final scores (92.43 in the proposed model) than the overall population of MIPS eligible clinicians (89.47 in the proposed model). Safety net solo providers who submit data have a slightly higher median final score (89.66 in the proposed model) than that from the overall solo population who submit data (87.70 in the proposed model). However, only 42.89 percent of safety net solo and 71.14 percent of safety net small practice providers submit data compared to 47.62 percent and 79.31 percent of the overall solo and small practice providers, respectively. Table D-B19. [GRAPHIC] [TIFF OMITTED] TR05NO25.193

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(c) Impact to MIPS Eligible Clinicians' Payment Adjustments

We did not proposed to increase the performance threshold in this final rule and did proposed to set the performance threshold at 75 points for a period of 3 years. However, as we get consistent and more data as the program evolves, we will continue to gauge whether the performance threshold should be increased in future years.

Table D-B21 shows that the payment adjustments are very similar between the baseline and proposed policies model. This is because we have made minimal changes to our proposed policies. Although payment adjustments are slightly higher in the baseline model. In the baseline model, we project redistributing $464 million, and in the proposed policies model, we project redistributing $463 million. This decrease is due to the slightly higher proportions of clinicians receiving positive payment adjustments in the proposed policies model (84.05 percent) than it is in the baseline model (83.61 percent). As the proportion of MIPS eligible clinicians receiving a positive payment adjustment increases, the portion of clinicians receiving a negative payment adjustment decreases accordingly (11.92 percent in the proposed policies model vs. 12.33 percent in the baseline model). As the proportion of MIPS eligible clinicians receiving negative payment adjustments decreases, the budget neutral funds available for redistribution also decrease. [GRAPHIC] [TIFF OMITTED] TR05NO25.195

We also report on the median positive and negative payment adjustments by practice size in Table D-B21.

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The overall median negative payment adjustment in the proposed policies model is slightly lower than it is in the baseline model. That is because the proposed policies model has a higher mean final score than the baseline model (89.47 proposed vs. 87.96 baseline). In Table D-B22, we report the proportion of MIPS eligible clinicians who either did or did not submit data with the maximum negative adjustment (-9 percent). e. Additional Impacts From Outside Payment Adjustments (1) Burden Overall

In addition to policies affecting payment adjustments, we are finalizing several policies that will impact burden. In section V.B.5. of this final rule, we separately estimate the burden impacts of finalized policy provisions, and the associated updated data sources. In Table D-B22, we summarize the incremental burden of the finalized policy provisions for these ICRs by year and OMB control number.

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(2) Additional Impacts to Clinicians

We provide additional burden discussions for policy provisions that we are unable to quantify. (a) Modifications to the Improvement Activities Inventory

As discussed in section IV.A.4.d(3)(b)(ii) of this final rule, we are finalizing our proposed changes to the Improvement Activities Inventory beginning with the CY 2026 performance period/2028 MIPS payment year. We do not expect these changes to affect our burden estimates for the number of estimated respondents or response time, as most of the improvement activities in the Improvement Activities Inventory remain unchanged for the CY 2026 performance period/2028 MIPS payment year. We refer readers to section IV.A.4.d.(3).(b).(ii). of this final rule for details on the changes to the Improvement Activities Inventory.

(b) Qualifying Alternative Payment Model (APM) Participant (QP) Determinations

In section IV.B.5.b. of this final rule, we are finalizing our proposal to add a QP determination at the individual level for all Advanced APM participants. Additionally, we are finalizing with modification our proposal to update the definition of “attribution- eligible beneficiary” at Sec. 414.1305. We note that year-over-year participation changes have historically had outsized impacts on our projections. For example, ACOs frequently add or remove participants as part of their operations. These changes in participation make it difficult to project how these proposals will impact clinicians who are determined to be QPs, Partial QPs, or previously reported MIPS (at the individual, group, subgroup, or APM Entity level), if at all. Accordingly, we have not adjusted our estimates related to performance category submissions due to these policy provisions. For details on these policies, see section IV.B.5.b. of this final rule. Additionally, we are finalizing our proposal to remove the current 50 clinician limit from the Medical Home Model, the Aligned Other Payer Medical Home Model, and the Medicaid Medical Home model. Where there are no APMs meeting the definition of these three models in the CY 2026 performance period/2028 MIPS payment year, we do not anticipate any reporting impact for these provisions. For details on these policies, see section IV.B.5.c. of this final rule. (c) Ambulatory Specialty Model

In section III.D. of this final rule, the Innovation Center is finalizing to test a new mandatory model titled the Ambulatory Specialty Model (ASM). The ASM leverages a framework similar to the MVP framework and shares some quality and cost measures with those in the Advancing Care for Heart Disease MVP and the Rehabilitative Support for Musculoskeletal Care MVP. Review section III.D of this final rule for additional details on the finalized model requirements and correlation to the existing MVP framework, and impacts of the finalized ASM model. f. Assumptions & Limitations

In our MIPS eligible clinician assumptions, we assumed that clinicians who elected to opt-in for the CY 2023 Quality Payment Program and submitted data will continue to elect to opt-in for the CY 2026 performance period/2028 MIPS payment year.

As discussed in section V.B.8. of this final rule, we are unable to predict which specific MIPS eligible clinicians will receive reweighting for one or more performance categories under policies at Sec. 414.1380(c)(2) in the CY 2026 performance period/2028 MIPS payment rear. On this basis, we assumed that those MIPS eligible clinicians for whom we approved reweighting of one or more performance categories under our policies are representative of the number and attributes of MIPS eligible clinicians who will receive reweighting under these policies in the future.

In addition to the limitations described throughout the methodology sections, to the extent that there are year-to-year changes in the data submission, volume, and mix of services provided by MIPS eligible clinicians, the actual impact on total Medicare revenues will be different from those shown in Table D-B23.

This final rule contains a range of policies, including some provisions related to specific statutory provisions. The preceding preamble provides descriptions of the statutory provisions that are addressed, identifies those policies when we exercise agency discretion, presents rationale for our policies, and, where relevant, alternatives that were considered. For purposes of the payment impact on PFS services of the policies contained in this final rule, we presented above the estimated impact on total allowed charges by specialty. 1. Alternatives Considered Related to the Use of the Relationship Between OPPS APC Payment Rates To Establish PE RVUs for Radiation Oncology Treatment Delivery (CPT Codes 77387, 77402, 77407, 77412, and 77417) and Superficial Radiation Treatment (CPT Codes 77X05, 77X07, 77X08, and 77X09)

As we discuss in sections II.B and II.E. of this final rule, we proposed to utilize the relationship between OPPS APC payment rates to establish PE RVUs for Radiation Oncology Treatment Delivery and Superficial Radiation Treatment services. As we considered the most accurate approach to developing PE RVUs for these code families, an alternative we considered was the following approach:

Step 1: Estimate the share of direct costs for all services in the radiology-therapeutic cost center using the hospital cost reports.

Step 2: For each service in an APC, calculate the weighted geometric mean of the OPPS total costs. The weights are PFS non- facility volume.

Step 3: Multiply the result of step 2 by the result of step 1.

We did not select this alternative because the use of cost report data to calculate the share of direct costs may reflect an imprecise accounting of direct costs. In addition, the percentage of direct costs is imprecise for a particular service. Therefore, we are unable to confirm the precision of the estimate of the direct costs for these services, which is a necessary step in this calculation. We refer the reader to the RAND Corporation (“RAND”) report prepared for CMS, entitled Practice Expense Methodology and Data Collection Research and Analysis, available at https://www.rand.org/pubs/research_ \483\

\483\ Burgette, Lane F., Jodi L. Liu, Benjamin M. Miller, Barbara O. Wynn, Stephanie Dellva, Rosalie Malsberger, Katie Merrell, et al. “Practice Expense Methodology and Data Collection Research and Analysis.” RAND Corporation, April 11, 2018. https://www.rand.org/pubs/research_reports/RR2166.html.

2. Alternatives Considered Related to the Use of the Relationship Between OPPS APC Payment Rates To Establish PE RVUs for Radiation Oncology Treatment Delivery (CPT Codes 77387, 77402, 77407, 77412, and 77417) and Superficial Radiation Treatment (CPT Codes 77X05, 77X07, 77X08, and 77X09)

As we discuss in sections II.B. and II.E. of this final rule, we proposed to utilize the relationship between OPPS APC payment rates to establish PE RVUs for Radiation Oncology Treatment Delivery and Superficial Radiation Treatment services. As we considered the most accurate approach to developing PE RVUs for these code families, an alternative we considered was the following approach:

Step 1: Estimate the share of direct costs for all services in the radiology-therapeutic cost center using the hospital cost reports.

Step 2: For each service in an APC, calculate the weighted geometric mean of the OPPS total costs. The weights are PFS non- facility volume.

Step 3: Multiply the result of step 2 by the result of step 1.

We did not select this alternative because the use of cost report data to calculate the share of direct costs may reflect an imprecise accounting of direct costs. In addition, the percentage of direct costs is imprecise for a particular service. Therefore, we are unable to confirm the precision of the estimate of the direct costs for these services, which is a necessary step in this calculation. We refer the reader to the RAND Corporation (“RAND”) report prepared

for CMS, entitled Practice Expense Methodology and Data Collection Research and Analysis, available at https://www.rand.org/pubs/research_reports/RR2166.html.\484\

\484\ Burgette, Lane F., Jodi L. Liu, Benjamin M. Miller, Barbara O. Wynn, Stephanie Dellva, Rosalie Malsberger, Katie Merrell, et al. “Practice Expense Methodology and Data Collection Research and Analysis.” RAND Corporation, April 11, 2018. https://www.rand.org/pubs/research_reports/RR2166.html.

3. Alternatives Considered for Adjusting RVUs To Match PE Share in the American Medical Association's (AMA) Physician Practice Information (PPI) and Clinician Practice Information (CPI) Surveys

As discussed in section II.B. of this final rule, “(5) PE RVU Methodology,” Steps 3, 10, and 18, and “3. Adjusting RVUs To Match PE Share of the Medicare Economic Index (MEI)”, we hold the work RVUs constant and adjust the PE RVUs, MP RVUs, and CF to produce the appropriate balance in RVUs among the 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. As the Medicare Economic Index (MEI) cost shares are updated, we would typically proposed to modify steps 3 and 10 described in section II.B. of this final rule 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 updated MEI cost share weights, as previously described in the CY 2014 PFS final rule (78 FR 74236 and 74237), and to recalibrate the relativity adjustment that we apply in step 18 described in section II.B. of this final rule. The most recent recalibration was done for the CY 2014 RVUs. Of note, although we did not propose to for CY 2023, we considered using the rebased and revised 2017-based MEI cost share weights to adjust the aggregate pools of PE RVUs and the relativity adjustment to reflect more recent data, shifting over a 4-year transition to reach the proportions of work, PE, and MP. We refer readers to a detailed discussion of this alternative considered in sections II.B. and V.I. of the CY 2023 PFS final rule (87 FR 69414 through 69415 and 70212 through 70217) for awareness regarding potential future rulemaking.

As an alternative to adjusting the aggregate pools of direct and indirect PE costs and using a relativity adjustment based on the currently used 2006-based MEI, we considered three different alternatives related to the weights from the American Medical Association's (AMA) Physician Practice Information (PPI) and Clinician Practice Information (CPI) Surveys, as discussed in detail in section II.B. of this final rule, for purposes of adjusting the RVUs to match PE share from the surveys for CY 2026:

Full implementation of the updated PPI and CPI Survey PE/ HR data, while maintaining the current cost shares (2006-based MEI) (to allow for isolated comparison to the CY 2025 Final Rule impacts)

Full implementation of the updated shares, as reported by the AMA, while maintaining the current PE/HR data (to allow for isolated comparison to the CY 2025 final rule impacts)

Full implementation of updated shares, weighted by Medicare RVUs, while maintaining the current PE/HR data (to allow for isolated comparison to the CY 2025 final rule impacts)

Likely due in part to lower-than-expected response rates, more Medicare specialties were grouped together in the updated PPI and CPI Survey data than the original PPI Survey. The AMA and Mathematica's decision to group together more specialties is a consequential decision alone, therefore, we displayed the estimated specialty-level impacts that would result from mapping the current PE/HR data to the updated specialty groupings reported in the new PPI and CPI Surveys. To do so, we calculated direct and indirect PE/HR values using the existing data (which primarily comes from the 2007-08 PPI Survey) and volume-weighted averages of these existing PE/HR values within each of the new specialty groupings. While this is not an alternative we considered implementing, we believe it is important to display the redistributive impacts of mapping the old PE/HR information to the new specialty groupings for interested parties to consider.

For purposes of displaying impacts for these alternatives considered, we used the estimated impacts from the CY 2025 PFS final rule as a base and comparison rather than the proposed CY 2026 impacts due to the significant redistributive impacts of the policy proposals for CY 2026. We believe that displaying these alternatives considered relative to CY 2025 provides a more stable base to isolate changes related to the alternatives themselves and allows the public to meaningfully comment on the alternatives considered, as opposed to the interaction of these alternatives with the redistributions attributable to the CY 2026 policy proposals.

Table D-B23 illustrates the estimated specialty-specific impacts under each alternative considered, relative to the CY 2025 PFS final rule estimated impacts as a baseline. The following is an explanation of the information represented in Table D-B23.

Column A (Specialty): Identifies the specialty for which data are shown.

Column B (Setting): Identifies the facility or nonfacility setting for which data are shown.

Column C (Allowed Charges): The aggregate estimated PFS allowed charges for the specialty based on CY 2023 utilization and CY 2024 rates. Reminder: CY 2025 Estimated Impacts are used as a baseline for these alternatives considered, therefore, this column matches Column C of Table D-B23 in the CY 2025 PFS final rule (89 FR 98503 through 98507).

Column D (Combined Impact): This column shows the estimated CY 2025 combined impact on total allowed charges of all the changes finalized for CY 2025. Reminder: this column matches Column D of Table D-B23 in the CY 2025 PFS final rule (89 FR 98503 through 98507).

Column E (Combined Impact): This column shows the estimated CY 2025 combined impact on total allowed charges that would result from mapping the current PE/HR data to the updated specialty groupings reported in the new PPI and CPI Surveys.

Column F (Combined Impact): This column shows the estimated CY 2025 combined impact on total allowed charges that would result if we implemented the new PE/HR data from the new PPI and CPI Surveys. Because these changes are solely within practice expense, there would be no impact to the estimated conversion factor and would result only in the redistribution of PE RVUs.

Column G (Combined Impact): This column shows the estimated CY 2025 combined impact on total allowed charges that would result if we implemented updated cost share weights as reported by the AMA, to adjust the RVUs to match the PE share from the surveys, relative to the impacts for the CY 2025 PFS final rule, while maintaining the current PE/HR data. This results in changes to the work RVU pool, and therefore, yields a different estimated conversion factor.

Column H (Combined Impact): This column shows the estimated CY 2025 combined impact on total allowed charges that would result if we implemented updated cost share weights derived by CMS from the AMA's PPI and CPI Surveys, weighted by Medicare RVUs, to adjust the RVUs to match the PE share from the surveys, relative to the impacts for the CY 2025

PFS final rule, while maintaining the current PE/HR data. This results in changes to the work RVU pool, and therefore, yields a different estimated conversion factor. [GRAPHIC] [TIFF OMITTED] TR05NO25.198

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As stated previously, the AMA's new specialty groupings in the updated PPI and CPI Surveys result in consequential redistributions shown in Column E, with estimated specialty-level impacts ranging from -13 percent (facility-based Radiation Oncology and Radiation Therapy Centers) to +7 percent (Nurse Anesthetist, and non-facility Nephrology).

Relative to the CY 25 PFS final rule baseline, adopting the PE/HR data from the new PPI and CPI Surveys would result in large specialty- level impacts shown in Column F. New data such as these would typically be phased in over multiple years to reduce year-on-year changes. After fully phasing in the

changes, adopting the new PPI/CPI data would result in specialty-level impacts with negative impacts as low as -16 percent for facility-based.

Radiation Oncology and Radiation Therapy Centers and increases as large as +18% non-facility Oral/Maxillofacial Surgery. Of note, the AMA did not provide updated PE/HR data for the IDTF specialty, so this scenario retains the current PE/HR values for that specialty.

In addition to updated PE/HR data for PFS ratesetting, the information from the PPI and CPI Surveys could be used to develop new cost share weights to adjust the aggregate pools of PE RVUs and the relativity adjustment to reflect more recent data, to reach the proportions of work, PE, and MP reported in the new surveys. The AMA has reported work, PE, and MP shares of 60.8 percent, 37.0 percent, and 2.3 percent, respectively, in the new PPI Survey data.\485\ As discussed in detail in section II.B. of this final rule, we have numerous concerns with the cost shares as reported by the AMA in the PPI Survey data. It is our understanding that these PPI Survey cost shares ignore non-physician specialties that were surveyed in the CPI Survey, even though those specialties are included in PFS ratesetting, and therefore derive payment from the same pools of work, PE, and MP as the physician specialties included in the PPI Survey. Additionally, it seems that the AMA calculated specialty-level shares and averaged these shares across specialties, which is mathematically different than estimating the share of total work, PE, and MP across all specialties. (That is, the average of shares does not need to equal shares of the total.) This represents a change from how the cost shares are currently calculated by the MEI and we believe this methodology runs counter to the goal of adjusting the aggregate pools of PE RVUs and the relativity adjustment to reach the proportions of work, PE, and MP. Despite our concerns, we are displaying the specialty-level impacts of incorporating these new cost shares, as directly reported by the AMA, in column G, which would result in specialty impacts ranging from -7 percent (facility-setting Hand Surgery) to +18 percent (for facility- setting Clinical Social Worker).

\485\ https://www.ama-assn.org/system/files/table-1-results-from-ppi.pdf.

Due to our concerns with the AMA's methodology for reporting cost shares, we developed cost shares that account for both the PPI and CPI Survey data into an estimate of total shares across physician and non- physician specialties using weights from Medicare volumes. Using either PFS RVUs or physician time file time-weighted shares yields similar results, with an estimated 54.4 percent or 54.8 percent work share, respectively. To do this, we multiplied the specialty-level estimates of work, PE, and MP by, for example, total PFS RVUs for the specialty grouping, added these amounts across specialty groupings, and calculated the shares of these sums. As a result, we calculate cost shares of total work, PE, and MP to be 54.4 percent, 43.8 percent, and 1.7 percent, respectively, when using PFS RVUs to weight the specialty- level values reported in the PPI and CPI Surveys. We displayed the specialty-level impacts of using these cost shares derived by through this methodology, while retaining current PE/HR values results, in Column H, which range from -9 percent to 11 percent (for non-facility Interventional Radiology and facility-setting Clinical Social Worker specialties, respectively).

Because of the significant redistributive effects of all the alternatives considered, as well as the concerns with the underlying PPI and CPI Survey data, we proposed to delay these adjustments to allow public comments on the PPI and CPI Surveys discussed in section II.B. of this final rule, and to maintain use of the current 2006-based MEI cost share weights. Because there are significant concerns with the PPI and CPI Survey data, outlined in detail in section II.B. of this final rule, and significant time has elapsed since the last recalibration of the cost share weights, we believe it is important to allow public comment on the use of the PPI and CPI Survey data, as well as the updated 2017-based MEI, discussed in detail in the CY 2023 PFS final rule, before we incorporate any updated cost shares into PFS ratesetting. Of note, the 2017-based MEI cost shares, the PPI Survey cost shares as reported by the AMA, and the cost shares derived by CMS from the PPI and CPI Survey data result in drastically different PE shares, and the current 2006-based MEI cost shares fall in the middle of the them, therefore, we continued to believe that proposing to delay the implementation of any alternative cost share weights is consistent with our efforts to balance payment stability and predictability with incorporating new data through more routine updates. Similarly, we proposed to delay the implementation of any updated cost share weights for use in the practice expense (PE) Geographic Practice Cost Index (GPCI) for CY 2026 to solicited public comment on all considerations before we incorporate any updated cost share weights into the PE GPCIs. We refer readers to the section below, and section II.N. of this final rule for more discussion on alternatives considered regarding this proposal. 3. Alternatives Considered for the Practice Expense (PE) Geographic Practice Cost Index (GPCI)

As discussed in section II.N. of this final rule, we use the MEI cost share weights to weight the four components of the PE GPCI: employee wages, office rent, purchased services, and medical equipment, supplies, and other miscellaneous expenses. As the MEI cost shares are updated, we have historically updated the GPCI cost share weights to make them consistent with the most recent update to the MEI. Due to the concurrent GPCI update and rebasing and revision of the MEI for CY 2023, we proposed to maintain the use of the current 2006-based MEI cost share weights for the CY 2023 GPCIs instead of the updated 2017- based MEI, to allow interested parties the opportunity to review and comment on the rebased and revised MEI cost share weights. Similarly, we proposed to delay the implementation of any updated cost share weights for the CY 2026 GPCIs due to the consideration of the AMA's PPI and CPI Survey data.

Additionally, we received data from the AMA's PPI and CPI Surveys, however, these data lack the specific breakdown of practice expense that we would need to consider its use to weight the four components of the PE GPCI for CY 2026, including Office Rent and Purchased Services, which are not explicitly described in the PPI and CPI Survey data. Because the Survey data lacks constituent components of the PE GPCI, we considered possible derivations of weights from the PPI and CPI Survey for use in the PE GPCI for consideration in possible future rulemaking. Because the derivation of these weights required mapping and methodology proposals discussed below, we did not consider their use in the CY 2026 PE GPCI update and did not develop CY 2026 PE GPCIs based on these weights for display purposes but are displaying the derived weights for possible consideration in future rulemaking. We did not believe it would be beneficial to display the resulting CY 2026 PE GPCIs from these derived weights because the PE GPCI values would inevitably look different if/when we proposed to update the weights due to the underlying updated data.

For the derived weights, we started with a possible mapping of the PPI and

CPI Survey direct (labor, supplies and equipment) and indirect PE (administrative, overhead, information technology and other) data to the four components of the PE GPCI based, as shown below in Table D- B24. [GRAPHIC] [TIFF OMITTED] TR05NO25.202

Secondly, we combined the PPI and CPI Survey data and weighted the data by RVUs to develop a combined PPI and CPI Survey “All” line, analogous to the AMA's PPI Survey results “All” line,\486\ which was not provided for the CPI Survey data.\487\ We then used the calculated direct and indirect totals from the PPI and CPI Survey data (weighted them by total RVUs) for each PE GPCI element based on the proposed mapping for the 4 PE GPCI components above to derive new weights for each of the 4 PE GPCI components, as shown below in Table D-B25.

\486\ https://www.ama-assn.org/system/files/table-1-results-from-ppi.pdf.

\487\ https://www.ama-assn.org/system/files/table-1-results-from-cpi-final.pdf. [GRAPHIC] [TIFF OMITTED] TR05NO25.203

We solicited comments on the weights displayed in Table D-B25, and any alternative methodologies to weight and or map the PPI and CPI Survey data to derive weights used to weight the four components of the PE GPCI for possible consideration in future rulemaking. Because any alternative derivation or weighting methodology for the PPI and CPI Survey data will result in different shares than displayed above, we do not believe that displaying the resulting CY 2026 PE GPCI based on these shares would be beneficial until we provide opportunity for the public to comment on this methodology. Additionally, because CY 2026 is a GPCI update, there would be a confounding effect of these updated shares due to the implementation of updated data required for a triennial GPCI update. 4. Alternatives Considered for Changes Related to Medicare Part B Payment for Skin Substitutes When Used During a Covered Application Procedure in the Non-Facility Setting

As discussed in detail in section II.K.D. of this final rule, starting January 1, 2026, we proposed to pay for the provision of certain groups of skin substitute products used during a covered application procedure (CPT codes 15271 through 15278) as supplies. These skin substitutes will be paid as incident-to supplies under the PFS in the non-facility setting in accordance with section 1861(s)(2)(A) of the Act. While costs associated with supplies are usually bundled into the PE RVUs for particular services in non- facility settings, these products have been paid separately for many years in the non-facility setting, where the majority of these products are currently used.

CMS considered several alternative approaches to calculate changes in spending. Each alternative relies on the same underlying data on skin substitute product volume--2024 volume measured in billing units for skin product HCPCS codes included in analysis as described above. The alternatives and corresponding

spending change estimates vary in terms of the rate(s) applied to this fixed volume. Each alternative results in a corresponding saving estimate relative to the status quo spending at 2024 volumes and payment rates of $10.3B.

All alternatives considered by CMS share some common features. Quarterly 2024 rates start with the ASP for skin substitute product HCPCS codes included in the October 2024 ASP pricing file or, for other codes, the OPPS geometric mean cost for the HCPCS code prior to OPPS packaging rules or, for all other codes, the average payment per billing unit in calendar year 2024 professional claims. These values were then applied to volume shares calculated in different ways to calculate annual rates.

We estimate that under this proposal, which assumes a single rate of approximately $125.38, there would be an estimated savings of $9.4 billion. The first alternative, which assumes a single rate of $65.85 calculated using outpatient facility volume shares, yields savings of $9.79 billion, or a 95 percent reduction from the status quo. Finally, another approach applies the PMA-based rate ($259.47) and another rate, $125.38, calculated using data from HCT/P products and outpatient facility volume shares only, to HCT/P and 510(k) products. Savings under this approach were $9.29 billion, a 90 percent reduction in spending relative to the status quo. 5. Alternatives Considered for the Quality Payment Program

For purposes of the payment impact on the Quality Payment Program, we view the performance threshold as a critical factor affecting the distribution of payment adjustments. In section IV.A.4.g.(2).(c). of this final rule, we proposed to set the performance threshold to 75 points for the CY 2026 MIPS performance period/CY 2028 MIPS payment year through CY 2028 MIPS performance period/CY 2030 MIPS payment. We refer readers to section IV.B.2.b.(2). of this final rule for discussion of this policy and alternatives considered. 6. Alternatives Considered Related to the Ambulatory Specialty Model

In section III.D of this final rule, we discussed the proposed mandatory ASM. As proposed, we would test whether ASM leads to improved chronic condition management, higher quality care, and reduced costs by incentivizing ASM participants with the opportunity for positive payments adjustments to Medicare Part B covered professional services payments based on their performance on data reported on quality, cost, improvement activities, and CEHRT interoperability.

Throughout this final rule, we have identified our proposed policies and alternatives that we have considered and provided information as to the effects of these alternatives and the rationale for each of the proposed policies. This final rule provides descriptions of the requirements that we would mandate, identifies the payment methodology to be tested, and presents rationales for our decisions and, where relevant, alternatives that we considered. For example, we considered defining an ASM participant as a subgroup within a TIN comprised of NPIs that individually meet the proposed ASM participant eligibility criteria for a given ASM performance year and will report the required measures and activities as a subgroup within the TIN. Another example is that we considered an alternative scoring approach where each of the four proposed ASM performance categories would be weighted to produce a final score, instead of the proposed negative scoring adjustments to the final score computed from quality and cost ASM performance category scores based on performance within the improvement activities and Promoting Interoperability ASM performance categories.

We noted that the impact estimates summarized in this section of this final rule are based on the proposed policies identified throughout the rule.

We solicited comments on our proposals and on the alternatives that we have identified in this rule.

As noted previously in the CY 2025 PFS final rule (89 FR 98551), the health equity benchmark adjustment finalized in that rule (in this rule being renamed the “population adjustment”) will mainly provide upwards adjustments to benchmarks for--and likely draw increased participation from--new ACOs with particular focus on coordinating care for beneficiaries in underserved communities. New ACOs of this type are therefore projected to ultimately increase assignment to Shared Savings Program ACOs by roughly 500,000 beneficiaries per year, ranging from 50,000 to 1.0 million at the low and high ends of this projection range. Beyond retaining this impact via the “population adjustment,” the renaming of the benchmark adjustment being finalized in this rule is not expected to have a material net impact on overall program participation or the number of beneficiaries receiving care management from ACOs.

ACOs have been found to perform better on certain patient- experience and performance measures than physician groups participating in MIPS (as shown in Table D-B26). In performance year 2024, ACOs scored better than comparable MIPS groups \488\ on all three eCQMs in the APP quality measure set, and the difference was statistically significant for Quality ID: 134 Preventive Care and Screening: Screening for Depression and Follow-Up Plan (p https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average reading speed, we estimate that it would take approximately 8.0 hours for the staff to review half of this final rule. For each facility that reviews the rule, the estimated cost is $907.36 (8.0 hours x $113.42). Therefore, we estimated that the total cost of reviewing this regulation is $12,239,821 ($907.36 x 13,549 reviewers on this year's proposed rule).

In the absence of an appropriation for CY 2026 or a Continuing Resolution, there was a lapse in funding, which began on October 1, 2025, and is ongoing at the time of drafting this final rule. During that time, only excepted operations have continued. Accordingly, most of the work on this final rule was not completed in accordance with our usual schedule for final CY payment rules, which aims for an issuance date of November 1 followed by an effective date of January 1 to ensure that the policies are effective at the start of the calendar year to which they apply.

We ordinarily provide a 60-day delay in the effective date of final rules after the date they are issued. The 60-day delay in effective date can be waived, however, if the agency finds for good cause that the delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued. We believe it would be contrary to the public interest to delay the effective date of the MPFS portions of this final rule. In accordance with section 1848(b)(1) of the statute, the MPFS is a calendar-year payment system. We typically issue the final rule by November 1 of each year to comply with section 1848(b)(1) of the statute and to ensure that the payment policies for the system are effective on January 1, the first day of the calendar year to which the policies are intended to apply. If the effective date of this final rule is delayed by 60 days, the MPFS for CY 2026 adopted in this final rule will not be effective at of the beginning of the payment year. In this final rule, we review and revise values for specific services, and adopt or revise other policies that relate to the MPFS for CY 2026 or future years. Section 1848(c)(2)(B)(ii)(II) of the Act requires that adjustments to relative values under the MPFS be made in a budget neutral manner. We believe that, in order to preserve budget neutrality as required by statute and to promote an orderly transition to a new payment year, it is in the public interest for all of these MPFS policies to take effect in conjunction with the statutory update to the CF for CY 2026, and we find that it would be contrary to the public interest to do otherwise. We are finalizing the MPFS in this CY 2026 final rule and, in order to adhere to the statutory requirements that an adjusted CF apply to services furnished on or after January 1, 2026, and that budget neutrality be maintained, this final rule must be effective on that date.

Therefore, we find good cause to waive the 60-day delay in the effective date for this final rule as explained above. We note that our waiver of the delayed effective date only applies to the provisions noted above that are being adopted in this final rule.

Mehmet Oz, Administrator of the Centers for Medicare & Medicaid Services, approved this document on October 31, 2025.