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

In recent years, there have been rapid developments in the use of software-based technologies to support clinical decision-making in the outpatient and physician office settings, some of which may be devices requiring FDA, clearance, approval, or authorization. We refer to these software-based technologies as software as a service (SaaS). As the data used in our PE methodology has aged, and more services have begun to include innovative technology such as software algorithms and AI, these innovative applications are not well accounted for in our PE methodology. As described in section II.B of this final rule, PE resources typically involved in furnishing services are characterized as either direct or indirect costs. Direct costs involved in furnishing a service are estimated for each code and include clinical labor, medical supplies, and medical equipment. Indirect costs include administrative labor, office expenses, and all other expenses. Indirect PE is allocated to each service based on physician work, direct costs, and a specialty-specific indirect percentage. The source of the specialty specific indirect percentage was the Physician Practice Information (PPI) Survey, last administered in 2007 and 2008, when emerging technologies that rely primarily on software, licensing, and analysis fees, with minimal costs in equipment and hardware, may not have been typically used in furnishing services at that time. Thus, these costs are not well accounted for in the PE methodology. While we have received updated PPI survey data from the AMA that did incorporate information on the practice costs associated with SaaS and AI services, this information would only reflect the impact of SaaS and AI on the PE/hr associated with a given medical specialty, rather than providing insight into the direct costs associated with use of this technology.

Furthermore, as described in section II.B.5. of this final rule, due to several limitations with the data, we did not propose to implement the PE/HR data or cost shares from the AMA's PPI Survey data for CY 2026 ratesetting. Consistent with our PE methodology and as we

have stated in past PFS rulemaking (83 FR 59557), we have considered most computer software and associated analysis and licensing fees to be indirect costs tied to costs for associated hardware that is considered to be medical equipment. However, beginning with payment for Fractional Flow Reserve Computed Tomography (Heartflow) in the CY 2022 PFS final rule (86 FR 65041) CMS has made intermediate, service-specific policies to allow for PFS payment of SaaS and AI applications in certain circumstances. CMS has made intermediate, service-specific policies to allow for PFS payment of SaaS and AI applications in certain circumstances.

We consider several distinct issues when evaluating SaaS technologies. First, we have observed wide variations in the purported costs of clinically similar SaaS technologies. The various costs that manufacturers consider when pricing their technologies, including research and development and software maintenance, are often not publicly verifiable. Additionally, due to the novel and evolving nature of these technologies, there are rarely existing medical items or services that can be utilized for comparison purposes to determine clinical and resource similarity. Finally, while there has been a rapid increase in the development and coding of services incorporating these technologies in recent years, there is a very limited amount of Medicare claims data for these services.

As this technology has continued to evolve and diversify, interested parties have stated that the lack of a consistent payment policy for SaaS and AI devices is an impediment to patient access when these devices are otherwise cleared, approved, or authorized by the FDA. Interested parties have requested that CMS consider the development of a payment policy for these devices that is stable and consistent across settings of care, payment systems, and types of services incorporating SaaS and AI devices. Additionally, as we are interested in paying accurately for the management of chronic disease and primary care services, we sought to understand how the use of SaaS and AI technology affects those services and how to incorporate these costs into our current strategy for paying for evolving models of care delivery, such as Advanced Primary Care Management and risk-based payment arrangements generally. Therefore, we solicited public comments on how we should consider paying for SaaS under the PFS, including:

What factors should we consider when paying for SaaS?

What has the experience been of risk-based payment arrangement participants with incorporating SaaS under their payment arrangements?

Have risk-based payment arrangements reflected the underlying value of SaaS to the practice of medicine?

Given the limitations of the PE methodology to account for this kind of technology, what alternative pricing strategies should CMS use to accurately pay for SaaS and AI devices under the PFS? For example, should CMS continue its current practice, as referenced in section II.E.23. of this final rule, of crosswalking values from the OPPS established payment amounts for the technical components of services incorporating SaaS and AI? Or should we integrate OPPS geometric mean costs for these devices into our ratesetting methodology as we proposed to do in this final rule for RPM and RTM services, or set payment rates relative to OPPS rates as we are proposing to do for radiation oncology services? See sections II.E.24. and 30. this final rule.

How should CMS value the physician work associated with utilizing and interpreting the clinical outputs associated with SaaS and AI devices?

Is there an alternative data source outside of the limited Medicare claims data currently available and hospital invoices provided by manufacturers, which may not fully depict total hospital acquisition costs, that can accurately reflect the costs of the SaaS?

How are these technologies used in the treatment of chronic disease?

How may CMS best evaluate the quality and efficacy of SaaS and AI technologies?

We welcomed input in the proposed rule from interested parties on these questions as well as any additional suggestions that would enhance our ability to provide accurate and consistent payment for procedures incorporating SaaS. We noted that there is a comment solicitation in the CY 2026 OPPS proposed rule regarding SaaS devices furnished in hospital outpatient departments and ASCs.

We received public comments on this comment solicitation on how we should consider paying for SaaS under the PFS.

After consideration of public comments, we express appreciation for the feedback from commenters and may consider them for possible future rulemaking. 2. Prevention and Management of Chronic Disease--Request for Information

Six in ten Americans have at least one chronic disease, and four in ten have two or more chronic diseases. Many preventable chronic diseases are caused by a short list of risk behaviors, including smoking, poor nutrition, physical inactivity, and excessive alcohol use.\85\ In 2023, among adults aged 18 or older, 22.8 percent (or 58.7 million people) had any mental illness (AMI) in the past year.\86\ Although Medicare Part B covers many preventive services,\87\ as defined in section 1861(ddd)(3) of the Act, Medicare preventive services have some restrictions.\88\

\85\ Centers for Disease Control. “Chronic diseases in America.” Available from: https://www.cdc.gov/chronic-disease/ about/index.html#:~:text=Six%20in%2010%20Americans%20have,inactivity% 2C%20and%20excessive%20alcohol%20use.

\86\ Highlights for the 2023 National Survey on Drug Use and Heath, https://www.samhsa.gov/data/sites/default/files/NSDUH%202023%20Annual%20Release/2023-nsduh-main-highlights.pdf.

\87\ https://www.medicare.gov/coverage/preventive-screening-services.

\88\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c18pdf.pdf.

Per the Trump Administration Executive Order, “Establishing the President's Make America Healthy Again Commission,” \89\ the Administration is directing our focus towards understanding and drastically lowering chronic disease rates, including thinking on nutrition, physical activity, healthy lifestyles, over-reliance on medication and treatments, the effects of new technological habits, environmental impacts, and food and drug quality and safety. Furthermore, the Executive Order directs that agencies must ensure the availability of expanded treatment options and the flexibility for health insurance coverage to provide benefits to support beneficial lifestyle changes and disease prevention. As such, focusing on the prevention and management of chronic disease is a top priority for us.

\89\ https://www.whitehouse.gov/presidential-actions/2025/02/establishing-the-presidents-make-america-healthy-again-commission/.

We sought feedback to help us better understand how we could enhance our support management for prevention and management of chronic disease. Specifically, we sought commenters consider the following information:

How could we better support prevention and management, including self-management, of chronic disease?

Are there certain services that address the root causes of disease, chronic disease management, or prevention, where the time and resources to perform the services are not adequately captured by the current

physician fee schedule code set? If so, please provide specific examples.

Are there current services being performed to address social isolation and loneliness of persons with Medicare, where the time and resources to perform the services are not adequately captured by the current physician fee schedule code set? If so, what evidence has supported these services, and what do these services entail? What services have been delivered by Medicare providers or community-based organizations, including area agencies on aging and other local aging and disability organizations? What has been the impact?

Are there current services being performed that improve physical activity, where the time and resources to perform the services are not adequately captured by the current physician fee schedule code set? How should CMS consider provider assessment of physical activity, exercise prescription, supervised exercise programs, and referral, given the accelerating use of wearable devices and advances in remote monitoring technology?

Should CMS consider creating separate coding and payment for intensive lifestyle interventions, where the time and resources to perform the services are not adequately captured by the current physician fee schedule code set, and how should these interventions be prioritized? If so, what evidence has supported these services, and what do the services entail? How would additional coding and payment be substantively different from coding and payment for Intensive Behavioral Therapy?

Should CMS consider creating separate coding and payment for medically-tailored meals, as an incident-to service performed under general supervision of a billing practitioner? If so, what would be the appropriate description of such a service, and under what patient circumstances (that is, after discharge from a hospital)? Do community- based organizations providing medically tailored meals currently employ a physician, nurse practitioner, physician assistant, or other practitioner who could both bill Medicare and supervise a medically- tailored meal service? Should CMS consider allowing billing providers to refer to community-based organizations to deliver and ensure quality of medically-tailored meals while under general supervision (please see Sec. 410.26(a)(3) for further information about general supervision) of the referring billing provider? If CMS were to create separate coding and payment for medically-tailored meals, how should CMS ensure integrity of the service being delivered?

Please provide information on whether we should consider creating separate coding and payment for FDA-cleared digital therapeutics that treat or manage the symptoms of chronic diseases an incident-to service performed under the general supervision of a billing practitioner. Please see the CY 2025 PFS final rule (89 FR 97923 through 97928) for reference as to how we created new coding and payment for FDA-cleared digital mental health treatments (DMHTs).

Are there technical solutions that would enhance the uptake of the annual wellness visit (AWV), or the improving accessibility, impact, and usefulness of the AWV? How can CMS better support practitioners and beneficiaries related to the AWV? Should CMS consider moving some of the required components of the AWV to optional add-on codes of the AWV instead, with the intent of decreasing burden, improving uptake, and allowing practitioners to select additional AWV elements that may be more relevant to particular patients?

The Administration for Community Living (ACL) has defined evidence-based programs,\90\ which have demonstrated impact in effectively treating chronic disease, preventing disease, and helping older adults and people with disabilities to adopt healthy behaviors, improve their health status, reduce disability and injury, and reduce their use of hospital services and emergency room visits. In addition to programs impacting chronic disease management and prevention, there are evidence-based health programs that address older adult falls, mental health, physical activity, and more. Fifty-six State units on aging that work with over 600 area agencies on aging (AAAs) and their networks of service providers receive formula grants from ACL to administer programs, but the need exceeds available federal funding. Are there certain existing or new Physician Fee Schedule codes and payment, or Innovation Center Models, that could better support practitioner provision of successful interventions through partnerships between health care entities, AAAs, community care hubs, and other local aging and disability organizations? If so, please provide specific examples.

\90\ Administration for Community Living. “Health Promotion.” https://acl.gov/programs/health-wellness/disease-prevention.

In consideration that there are significantly more types of coding and payment that describe procedures in the physician fee schedule, please provide feedback regarding whether this detracts from the codes describing services that address underlying health behaviors, chronic disease management, and prevention.

Aligning with this initiative to focus on the prevention and management of chronic disease, we are considering whether to create additional coding and payment for motivational interviewing. Motivational interviewing is a collaborative, goal-oriented style of communication with particular attention to the language of change. It is designed to strengthen personal motivation for and commitment to a specific health goal and exploring the person's own reasons for change within an atmosphere of acceptance and compassion.\91\ Compared to traditional advice-giving, motivational interviewing is more successful at improving a patient's underlying health behaviors that contribute to chronic disease, including but not limited to smoking, substance use, physical activity, nutrition, and adherence to medication and other treatments. Multiple meta-analyses have demonstrated that motivational interviewing has demonstrated statistically significant improvements in reduction of alcohol consumption, reduction in substance use in people with dependency or addiction, increased physical activity participation,\92\ increased weight loss, and reduction in blood pressure.\93\ Motivational interviewing has been adapted and integrated into many settings, including primary care facilities, emergency departments, behavioral health centers, and criminal justice and social service agencies.\94\ We considered whether to develop separate coding and payment for motivational interviewing, which could also be performed under general supervision of the billing practitioner, in order to better account for the time and resources

involved in furnishing this care. Furthermore, we understand that in many practices, health coaches can help support the provision of motivational interviewing services. We noted that the Category III CPT codes (0591T, 0592T, and 0593T) for health coaching are currently contractor-priced, and have a January 2030 sunset date. However, health coaches do not have a Medicare benefit category and therefore cannot bill Medicare directly (a new benefit category requires statutory change) but could potentially operate as clinical staff under general supervision incident-to a physician service if new coding and payment were constructed in this way.

\91\ Miller, W.R. & Rollnick, S. (2013) Motivational Interviewing: Helping people to change (3rd Edition). Guilford Press.

\92\ Frost, Helen et al. “Effectiveness of Motivational Interviewing on Adult Behaviour Change in Health and Social Care Settings: a Systematic Review of Reviews.” Available from: https://pubmed.ncbi.nlm.nih.gov/30335780/.

\93\ VanBuskirk, Katherine, Julie Loebach Wetherell. “Motivational interviewing with primary care populations: a systematic review and meta-analysis.” Available from: https://pubmed.ncbi.nlm.nih.gov/23934180/.

\94\ SAMHSA, Treatment Improvement Protocol 35: Enhancing Motivation for Change in Substance Abuse Treatment Updated 2019, https://library.samhsa.gov/sites/default/files/tip-35-pep19-02-01-003.pdf.

We solicited comments from the public regarding motivational interviewing and health coaches. Specifically, we requested that commenters consider the following information:

Please provide information on whether we should create separate coding and payment for motivational interviewing, or whether the resources involved in furnishing these services are appropriately recognized in current coding and payment.

What is the best definition and description of motivational interviewing?

What types of clinical staff should be able to perform motivational interviewing under the general supervision of a billing practitioner?

How long does a session of motivational interviewing typically last? If we were to create coding and payment for motivational interviewing, what should the time-based requirements of the code be?

We heard from interested parties that in many clinics, health coaches perform services under general supervision, and that there may be substantive overlap with motivational interviewing. To what extent are the services performed by health coaches encompassed by motivational interviewing?

What training is required to effectively perform motivational interviewing? Are there agreed upon national training or certification standards for health coaches? If so, what are they? Do states have separate training or certification standards for health coaches?

To what extent would health coaches be able to perform motivational interviewing incident-to billing practitioners under general supervision? Please see Sec. 410.26(a)(3) for further information about general supervision.

In what clinical situations are motivational interviewing and health coaching most commonly performed? What are the clinical characteristics of a patient where motivational interviewing and health coaching would be medically reasonable and necessary?

Can motivational interviewing and health coaching appropriately be performed via audiovisual or audio-only synchronous telecommunication?

What has been the experience of providers and payers utilizing the codes 0591T (Health and well-being coaching: face-to- face, individual initial assessment), 0592T (Individual follow-up session, at least 30 minutes), and 0593T (Group session, two or more individuals, at least 30 minutes)? If the CPT committee were to create permanent codes with staff able to operate under the general supervision of a billing practitioner, would this capture the time and resources to perform health coaching?

To what extent would new coding for motivational interviewing or health coaching better support some of the evidence- based programs funded and overseen by ACL that effectively manage or prevent chronic disease?

We welcomed feedback from interested parties and the public on how we could better support management of chronic disease and prevention, including whether we should create separate coding and payment for motivational interviewing, along with overlap between motivational interviewing and health coaches for consideration for future rulemaking.

We received public comments on this comment solicitation on how we could better support management of chronic disease and prevention, including whether we should create separate coding and payment for motivational interviewing, along with overlap between motivational interviewing and health coaches for consideration for future rulemaking.

After consideration of public comments, we express appreciation for the feedback from commenters and will take the comments into consideration for possible future rulemaking. 3. Community Health Integration and Principal Illness Navigation for Behavioral Health a. Practitioner Types

In the CY 2024 PFS final rule (88 FR 78920), we finalized G-codes to reflect new coding and payment for services describing Community Health Integration (CHI) services (HCPCS codes G0019 (Community health integration services performed by certified or trained auxiliary personnel, including a community health worker, under the direction of a physician or other practitioner; 60 minutes per calendar month) and G0022 (Community health integration services, each additional 30 minutes per calendar month)), provided by certified or trained auxiliary personnel, including a community health worker, under the direction of a physician or other practitioner. We also finalized Principal Illness Navigation (PIN) services (HCPCS codes G0023 (Principal Illness Navigation services by certified or trained auxiliary personnel under the direction of a physician or other practitioner, including a patient navigator or certified peer specialist; 60 minutes per calendar month) and G0024 (Principal Illness Navigation services, additional 30 minutes per calendar month); G0140 (Principal Illness Navigation--Peer Support by certified or trained auxiliary personnel under the direction of a physician or other practitioner, including a certified peer specialist; 60 minutes per calendar month) and G0146 (Principal Illness Navigation--Peer Support, additional 30 minutes per calendar month)), provided by certified or trained auxiliary personnel under the direction of a physician or other practitioner, including a patient navigator or certified peer specialist. In the CY 2025 PFS final rule (89 FR 97822), we clarified that when we refer to “certified or trained auxiliary personnel” in the following codes: G0019, G0022, G0023, G0024, G0140, G0146, this also includes clinical social workers (CSWs).

Marriage and family therapists (MFTs) and mental health counselors (MHCs) have a similar statutory benefit category as CSWs and may also connect individuals with community-based resources to address unmet social needs that affect the diagnosis and treatment of medical problems. Like CSWs, MFTs and MHCs can bill Medicare directly for services they personally perform for the diagnosis or treatment of mental illness and substance use disorders, but are not authorized by statute to bill under the PFS for services that are provided by auxiliary personnel incident to their professional services. CHI and PIN services are typically provided by auxiliary personnel supervised by the billing practitioner, and MFTs and MHCs could serve as auxiliary personnel, as the codes do not limit the types of auxiliary personnel that can perform CHI and PIN services incident to the billing practitioner's professional services, so long as they meet the requirements to provide all elements of the service included in the code, consistent with the definition of auxiliary personnel at Sec. [thinsp]410.26(a)(1). MFTs and MHCs could not directly bill

Medicare under the PFS for CHI and PIN services if they were provided by auxiliary personnel, as they are not authorized to supervise, bill, and be paid directly by Medicare for services that are provided by auxiliary personnel incident to their professional services. As we stated previously in the CY 2024 PFS final rule (88 FR 78926), the codes do not limit the types of other health care professionals, such as registered nurses and social workers, that can perform CHI services (and PIN services, as we discuss in the next section) incident to the billing practitioner's professional services, so long as they meet the requirements to provide all elements of the service included in the code, consistent with the definition of auxiliary personnel at Sec. [thinsp]410.26(a)(1). We are clarifying that when we refer to “certified or trained auxiliary personnel” in the following HCPCS codes: G0019, G0022, G0023, G0024, G0140, G0146, this also includes MFT and MHCs. We are clarifying that, like CSWs, MFTs and MHCs can bill Medicare directly for CHI and PIN services they personally perform for the diagnosis or treatment of mental illness. Additionally, CMS required for auxiliary personnel performing CHI and PIN under general supervision, that in the absence of state level certification or training requirements, CMS required training to perform the services. We further clarified that if CSWs, MFTs, and MHCs are performing the services as auxiliary personnel under the general supervision of a billing practitioner, in the absence of state-level requirements, that they meet the certification or training requirements to perform all CHI and PIN service elements. This is relevant in the cases where a CSW, MFT, or MHC are performing CHI and PIN under the general supervision of a billing practitioner for a medical problem that is not considered a mental illness. For CHI and PIN services, as with all incidents to services, it is the billing practitioner's responsibility to ensure that all payment rules and applicable State requirements are met including licensure, certification, and/or training. This does not mean that the billing practitioners are required to provide the licensure, certification, and/or training themselves, but rather that they must ensure that the Medicare criteria for billing and payment of CHI and PIN services are met.

Individuals who personally furnish or serve as auxiliary personnel for CHI and PIN services must meet all other service requirements associated with these codes. We solicited comments on this clarification.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Several commenters supported our clarification, stating that behavioral health practitioners, including CSWs, MFTs, and MHCs, meet the necessary certification and training to deliver all CHI and PIN service elements. The commenters informed us that this clarification is a meaningful step toward expanding workforce capacity that may assist in reducing care bottlenecks and enhancing patient access to much needed support.

Response: We appreciate the commenters for their feedback.

Comment: Some commenters requested that we further broaden the scope of auxiliary personnel to include other professionals that were not explicitly named in this clarification.

Response: As we stated previously in the CY 2024 PFS final rule (88 FR 78926), the codes do not limit the types of other health care professionals, such as registered nurses and social workers, that can perform CHI services (and PIN services, as we discuss in the next section) incident to the billing practitioner's professional services, so long as they meet the requirements to provide all elements of the service included in the code, consistent with the definition of auxiliary personnel at Sec. [thinsp]410.26(a)(1).

After consideration of public comments, we are finalizing as proposed. b. Initiating Visits

In the CY 2024 PFS final rule (88 FR 78923), we finalized allowing E/M services (other than a low-level E/M visit done by clinical staff), including an E/M service that is part of a transitional care management (TCM) service and an annual wellness visit (AWV) service to serve as the initiating visit for CHI services. We received comments requesting for CPT codes 90791 (Psychiatric diagnostic evaluation) and 96156 (Health behavior assessment, or re-assessment (that is, health-focused clinical interview, behavioral observations, clinical decision making)) to be allowed to serve as initiating visits, but we determined at the time that these services would be better captured and better serve the needs being addressed with the PIN service elements. We have continued to analyze the uptake of CHI services and believe that these services may fit the need for additional initiating CHI visits, as utilization data is showing that CHI services are being used to address SDOH need(s) that significantly limit the practitioner's ability to diagnose or treat mental illness.

For CSWs, MFTs, and MHCs to bill Medicare directly for CHI services personally performed for the diagnosis or treatment of mental illness, we proposed in the CY 2026 PFS proposed rule to allow for CPT code 90791 (Psychiatric diagnostic evaluation) or the Health Behavior Assessment and Intervention (HBAI) services that CPT codes 96156, 96158, 96159, 96164, 96165, 96167, and 96168 (and any subsequent HBAI codes) to serve as initiating visits for CHI, as we believe these codes are the most analogous codes to the E/M codes that are currently used as initiating visits for CHI that are utilized by practitioners in a specialty whose covered services are limited by statute to services for the diagnosis and treatment of mental illness. All other policies for CHI initiating visits also apply to CHI services furnished by CSWs, MFTs, and MHCs. Please see the 2024 PFS final rule (88 FR 78921 through 78932) and 2025 PFS final rule (89 FR 97821 through 97824) for additional information regarding CHI services and CHI initiating visits.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Several commenters generally supported our proposal to allow for CPT code 90791 (Psychiatric diagnostic evaluation) or the Health Behavior Assessment and Intervention (HBAI) services described by CPT codes 96156, 96158, 96159, 96164, 96165, 96167, and 96168 (and any subsequent HBAI codes) to serve as initiating visits for CHI, as this proposal allows behavioral health practitioners to conduct critical initiating assessments for CHI, leveraging their training in behavioral health, psychosocial evaluation, and patient navigation. The commenters stated that these initiating visits are well-matched to the training of non-physician mental health practitioners and may encourage stronger care coordination, earlier intervention, and improved patient experience through improved access and efficiency. The commenters requested that we allow all psychotherapy services to serve as initiating visits for CHI (for example, CPT codes 90791-90853).

Response: We appreciate commenters for their support for our proposal. Also, we appreciate the additional suggestions and information regarding the inclusion of all psychotherapy services as CHI initiating visits, however, we continue

to believe that CPT code 90791 (Psychiatric diagnostic evaluation) and the Health Behavior Assessment and Intervention (HBAI) services described by CPT codes 96156, 96158, 96159, 96164, 96165, 96167, and 96168 are most analogous to E/M services.

After consideration of public comments, we are finalizing our proposal to allow CPT code 90791 (Psychiatric diagnostic evaluation) or the Health Behavior Assessment and Intervention (HBAI) services described by CPT codes 96156, 96158, 96159, 96164, 96165, 96167, and 96168 (and any subsequent HBAI codes) to serve as initiating visits for CHI. 4. Technical Refinements To Revise Terminology for Services Related to Upstream Drivers of Health a. Policies To Improve Care for Chronic Illness and Behavioral Health Needs (1) Social Determinants of Health Risk Assessment (HCPCS Code G0136)

In the CY 2024 PFS final rule (88 FR 78932 through 78937), we finalized coding and payment for HCPCS code G0136 (Administration of a standardized, evidence-based social determinants of health risk assessment tool, 5 to 15 minutes, not more often than every 6 months). After further review of utilization information, we stated in the proposed rule that we had come to believe that the resource costs described by HCPCS code G0136 are already accounted for in existing codes, including but not limited to E/M visits. Therefore, we proposed deleting this code for CY 2026. Accordingly, we proposed to remove this code from the Medicare Telehealth Services list.

Additionally, we proposed conforming regulation text updates at 42 CFR 410.15. We proposed to revise Sec. 410.15(a) as follows: in paragraph (a), by revising the definition of First annual wellness visit providing personalized prevention plan services by removing paragraph (xiii) and redesignating paragraph (xiv) as (xiii); and, in revising the definition of Subsequent annual wellness visit providing personalized prevention plan services by removing paragraph (xi) and redesignating paragraph (xii) as (xi).

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Many commenters did not support our proposal to delete HCPCS code G0136. Commenters identified that this service may have low utilization since it is still fairly new, and increased uptake for codes often takes a few years. The commenters stated that early low utilization is not evidence of lack of value, but rather, may reflect a more typical billing pattern for a new code.

The commenters did not agree that associated resource costs are accounted for in existing codes, including but not limited to E/M visits. The commenters stated that E/M services focus only on the known needs of patients and that the SDOH risk assessment is a time-consuming service that often prompts many questions and discussions that exceed the scope of a routine office visit. Commenters stated that the time and resources involved in a SDOH risk assessment are separate from the services performed as part of E/M visits. Commenters cited that 25 percent or more of primary care activities may already go without reimbursement, and this would be adding additional activities to those that are not reimbursed. The commenters stated that removing reimbursement for this work and assuming the work of HCPCS code G0136 occurs in an E/M visit undervalues the work of whole-person care and places the most vulnerable beneficiaries at risk.

Some commenters believe that the deletion of HCPCS code G0136 would result in practitioners no longer providing this service if CMS payment is no longer made. Commenters stated that this could result in providers being unaware of barriers to care, resulting in medical care, care plans, and patient outcomes being hindered with little understanding of the cause. The commenters were also concerned about the continuity of data from patients who have received the SDOH risk assessment in the past and may need a follow-up assessment, noting this would not allow data comparisons over time to be accurate and valid. The commenters believe that the deletion of this code may negatively impact patient care, since many patients do not report every relevant symptom or SDOH risk factor without first being prompted by a physician. They stated that this may be due to patients feeling reluctant, fearful, and distrustful about disclosing the risks they face, whereas the SDOH risk assessment may mitigate these factors.

The commenters additionally noted that elements of SDOH risk assessment may align with the Administration's efforts to combat chronic disease. Many commenters cited HCPCS code G0136 as a tool used for supporting the prevention and management of chronic disease in response to the RFI on improving care for chronic illness in the CY 2026 PFS proposed rule. The commenters also believe that the removal of this code may hinder efforts to address the root causes of chronic illness and recognize the comprehensive approach required for holistic health care. The commenters believe the removal of this service may make prevention and treatment of chronic disease more difficult, as health behaviors and social determinants of health are inextricably intertwined. The commenters also stated that HCPCS code G0136 assists in the identification of environmental impacts, which may allow for early interventions that prevent or mitigate chronic disease.

The commenters stated that the removal of this code may result in increased costs to the Medicare Trust Fund, noting their review of evaluation findings for a previous CMS Innovation Center model, Accountable Health Communities (AHC), which integrated a social determinants of health risk assessment and which showed an 8 percent reduction in emergency department visits for patients on Traditional Medicare, as well as demonstrating lower total expenditures and fewer inpatient admissions and unplanned readmissions (for conditions like uncontrolled diabetes or hypertension). We are summarizing commenters' discussion of this evidence, which indicates SDOH factors can be predictors of health outcomes, health care utilization, and cost.

The commenters stated the deletion of this code conflicts with CMS' statutory obligation to make payment for the resource costs involved in furnishing physician services. Since this is a service that physicians (and non-physician practitioners) are currently performing, commenters did not agree that CMS would meet its statutory obligation to establish payment amounts for all physician services that reflect the resources used in furnishing the service if the code were deleted. The commenters stated that CMS removing payment for this service would result in practitioners no longer providing this service, which may negatively impact chronic disease treatment. The commenters believe that by identifying high-risk patients and conducting risk assessments under HCPCS code G0136, practitioners can prioritize and streamline assessments, resulting in less waste.

Some commenters who did not support the deletion of this service requested that, to resolve some of the issues we identified with this code in the proposed rule, we make the code a stand-alone code as opposed to an add-on code. Some commenters also suggested we recharacterize the code to align with the Administration's efforts to address the root causes of chronic illness.

A few commenters supported our proposal to delete this code, stating that patients' 'upstream drivers' or `social determinants of health' are already identified via routine screening, and that the deletion of HCPCS code G0136 would alleviate the unnecessary administrative burden of capturing SDOH assessments. A few commenters also supported deleting this code, as the CPT E/M guidelines were revised in 2021 to reflect that SDOH factors can influence the level of medical decision-making when selecting the most appropriate level E/M visit.

Response: We appreciate the commenters for their feedback on our proposal to remove HCPCS code G0136. We recognize commenters wish to utilize future versions of HCPCS code G0136 to address root causes of disease. While the root causes of chronic disease are often multi- factorial and holistic, tailored interventions may be optimal, and assessing risk related to the root causes of many chronic conditions begins with assessing essential, common behaviors such as physical activity levels and nutrition (that is, diet composition). These two essential areas both support disease prevention, and improvement in these areas are the first step in chronic disease management (for example, hypertension and diabetes). We agree with the commenters' suggestions to recharacterize the code to align with the Administration's efforts to address the root causes of chronic illness. As such, we are finalizing retaining HCPCS code G0136 and revising the code descriptor to read “Administration of a standardized, evidence- based assessment of physical activity and nutrition, 5-15 minutes, not more often than every 6 months.”

While there may be some overlap between the previous version of the SDOH risk assessment in that they are addressing areas relevant to an individual's health, we believe this change reflects a return to more clinically salient areas of risk assessment. Physical activity and nutrition risk assessment refers to a review of the individual's identified risk factors related to physical activity and/or nutrition that influence the diagnosis and treatment of medical conditions. Beginning in CY 2026, we are finalizing that the purpose of HCPCS code G0136 is to identify and value the work involved in the administering of a physical activity and/or nutrition risk assessment as part of a comprehensive medical history when medically reasonable and necessary in relation to the associated E/M or behavioral health visit. HCPCS code G0136 may be reasonable and necessary when used to inform the patient's diagnosis or treatment and the treatment plan established during the associated E/M or behavioral health visit. We expect that the practitioner furnishing HCPCS code G0136 would, at a minimum, refer the patient to relevant resources and take into account the results of the assessment in their medical decision-making, or diagnosis and treatment plan for the visit. Physical activity and nutrition risk assessment, through a standardized, evidence-based tool, can more effectively and consistently identify unmet physical activity and/or nutrition needs and enable comparisons across populations. The administration of a standardized, evidence-based physical activity and/ or nutrition risk assessment tool must be tested and validated through research. Examples of evidence-based tools to assess nutrition include, but are not limited to, the Mini-EAT tool,\95\ the Starting the Conversation: Diet tool,\96\ and Short Dietary Assessment Instruments.\97\ Examples of evidence-based tools to assess physical activity include, but are not limited to, the Physical Activity Vital Sign tool,\98\ the CHAMPS Physical Activity Questionnaire for Older Adults,\99\ and the Rapid Assessment of Physical Activity (RAPA) or Telephone Assessment of Physical Activity (TAPA).\100\ HCPCS code G0136 is payable when both a physical activity and nutrition risk assessment are performed, or when either a physical activity or risk assessment is performed if there is a clinical scenario where only one is reasonable and necessary. For example, if a beneficiary has recently started a new diet but their physical activity levels have not been assessed, only a physical activity risk assessment may be reasonable and necessary.

\95\ Lara[hyphen]Breitinger, K.M., Medina Inojosa, J.R., Li, Z., Kunzova, S., Lerman, A., Kopecky, S.L., & Lopez[hyphen]Jimenez, F. (2022). Validation of a brief dietary questionnaire for use in clinical practice: Mini[hyphen]eat (eating assessment tool). Journal of the American Heart Association, 12(1). https://doi.org/10.1161/jaha.121.025064.

\96\ Paxton, A.E., Strycker, L.A., Toobert, D.J., Ammerman, A.S., & Glasgow, R.E. (2011). Starting the conversation. American Journal of Preventive Medicine, 40(1), 67-71. https://doi.org/10.1016/j.amepre.2010.10.009.

\97\ EGRP/DCCPS/NCI/NIH Short dietary assessment instruments. Short Dietary Assessment Instruments. https://epi.grants.cancer.gov/diet/screeners/.

\98\ Exercise is Medicine. Physical Activity Vital Sign Sheet. https://www.exerciseismedicine.org/wp-content/uploads/2021/04/EIM-Physical-Activity-Vital-Sign.pdf.

\99\ Stewart, A.L., Mills, K.M., King, A.C., Haskell, W.L., Gillis, D., & Ritter, P.L. (2001). CHAMPS physical activity questionnaire for older adults: outcomes for interventions. Medicine and science in sports and exercise, 33(7), 1126-1141. https://doi.org/10.1097/00005768-200107000-00010.

\100\ University of Washington Health Promotion Research Center. (2006). Rapid Assessment of Physical Activity (RAPA). https://depts.washington.edu/hprc/programs-tools/tools-guides/rapa/.

All billing rules for HCPCS code G0136 will remain the same, including that in addition to an outpatient E/M visit (other than a level 1 visit by clinical staff), HCPCS code G0136 can also be furnished with CPT code 90791 (Psychiatric diagnostic evaluation) and the Health Behavior Assessment and Intervention (HBAI) services, described by CPT codes 96156, 96158, 96159, 96164, 96165, 96167, and 96168. HCPCS code G0136 also remains an optional, additional element of the Annual Wellness Visit (AWV) with an additional payment and no applicable beneficiary cost sharing.

We reiterate, as stated in the CY 2024 PFS final rule (88 FR 78936), that HCPCS code G0136, when performed in conjunction with an E/ M or behavioral health visit is not intended to be a routine screening at standard intervals or every visit, but rather tied to one or more known or suspected physical activity and/or nutrition needs that may interfere with the practitioners' diagnosis or treatment of the patient. Although it is not required for the risk assessment to be performed on the same date as the associated E/M or behavioral health visit for the operational ease of practitioners, we continue to believe that in most cases, HCPCS code G0136 would not be performed in advance of the associated E/M or behavioral health visit. We are retaining the limitation on payment for HCPCS code G0136 of once every 6 months per practitioner per beneficiary.

We are also retaining the current valuation for HCPCS code G0136, which is assigned a work RVU of 0.18. HCPCS code G0136 will also remain on the Medicare Telehealth Services List. We may consider information from interested parties for future rulemaking.

For Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) the payment policy for HCPCS code G0136 remains as stated in the CY 2024 PFS final rule. When the assessment, as described by HCPCS code G0136, is furnished as an optional element of the AWV, only one visit is paid, that is, it will be paid under the AIR or the lesser of charges or the PPS rate with the AWV adjustment. Beneficiary cost sharing is not applicable when this assessment is furnished as an optional element of the AWV. Consequently, when this assessment is furnished with a billable visit (other than an AWV) on the same day in an RHC, only the visit will be paid under the AIR and coinsurance and deductible will be applied. For FQHCs,

this assessment is not considered a qualifying visit. When the assessment is furnished in conjunction with a qualifying visit (other than an AWV) on the same day in a FQHC, only the visit will be paid under the FQHC PPS and coinsurance will be applicable (88 FR 79073 through 79076). (2) Community Health Integration Services (HCPCS Codes G0019)

In response to the CY 2024 PFS proposed rule, we received several comments requesting that CMS revise some of the language used in the Community Health Integration (CHI) (HCPCS codes G0019) code descriptor to better fit the purpose of CHI services. Some of the examples that commenters provided as an alternative to “social determinants of health” included: “social drivers of health, drivers of health, or health-related social needs.” Many of these commenters noted that other CMS programs use the term social drivers of health and requested that CMS use consistent naming conventions (88 FR 78933). After further consideration of the code descriptors, we proposed to replace the term “social determinants of health (SDOH)” with the term “upstream driver(s)”. We have determined that the term “upstream driver(s)” is more comprehensive and includes a variety of factors that can impact the health of Medicare beneficiaries. The term “upstream driver(s)” encompasses a wider range of root causes of the problems that practitioners are addressing through CHI services. This type of whole- person care can better address the upstream drivers that affect patient behaviors (such as smoking, poor nutrition, low physical activity, substance misuse, etc.) or potential dietary, behavioral, medical, and environmental drivers to lessen the impacts of the problem(s) addressed in the initiating visit.

We proposed the following changes to HCPCS codes G0019, and proposed conforming revisions to codes describing similar services to reflect the updated terminology, including services furnished by RHCs, FQHCs, and OTPs.

G0019--Community health integration services performed by certified or trained auxiliary personnel, including a community health worker, under the direction of a physician or other practitioner; 60 minutes per calendar month, in the following activities to address upstream driver(s) that are significantly limiting ability to diagnose or treat problem(s) addressed in an initiating E/M visit:

Person-centered assessment, performed to better understand the individualized context of the intersection between the upstream driver(s) and the problem(s) addressed in the initiating E/M visit.

++ Conducting a person-centered assessment to understand patient's life story, strengths, needs, goals, preferences and desired outcomes, including understanding cultural and linguistic factors.

++ Facilitating patient-driven goal-setting and establishing an action plan.

++ Providing tailored support to the patient as needed to accomplish the practitioner's treatment plan.

Practitioner, Home-, and Community-Based Care Coordination.

++ Coordinating receipt of needed services from healthcare practitioners, providers, and facilities; and from home- and community- based service providers, social service providers, and caregiver (if applicable).

++ Communication with practitioners, home- and community-based service providers, hospitals, and skilled nursing facilities (or other health care facilities) regarding the patient's psychosocial strengths and needs, functional deficits, goals, preferences, and desired outcomes, including cultural and linguistic factors.

++ Coordination of care transitions between and among health care practitioners and settings, including transitions involving referral to other clinicians; follow-up after an emergency department visit; or follow-up after discharges from hospitals, skilled nursing facilities or other health care facilities.

++ Facilitating access to community-based social services to address upstream driver(s).

Health education--Helping the patient contextualize health education provided by the patient's treatment team with the patient's individual needs, goals, and preferences, in the context of the upstream driver(s), and educating the patient on how to best participate in medical decision-making.

Building patient self-advocacy skills, so that the patient can interact with members of the health care team and related community-based services addressing the upstream driver(s), in ways that are more likely to promote personalized and effective diagnosis or treatment.

Health care access/health system navigation.

++ Helping the patient access healthcare, including identifying appropriate practitioners or providers for clinical care and helping secure appointments with them.

Facilitating behavioral change as necessary for meeting diagnosis and treatment goals, including promoting patient motivation to participate in care and reach person-centered diagnosis or treatment goals.

Facilitating and providing social and emotional support to help the patient cope with the problem(s) addressed in the initiating visit, the upstream driver(s), and adjust daily routines to better meet diagnosis and treatment goals.

Leveraging lived experience when applicable to provide support, mentorship, or inspiration to meet treatment goals.

We received public comments on these proposals. The following is a summary of the comments we received and our responses.

Comment: Some commenters agreed that the term “upstream drivers” encompasses a wider range of root causes of the problems that practitioners are addressing through CHI services, such as potential dietary, behavioral, medical, and environmental drivers to lessen the impacts of the problem(s) addressed in the initiating visit.

Other commenters did not support our proposal, as the term “upstream drivers” is not as widely used in healthcare or coding contexts as the terms “social determinants of health” or “social drivers of health.” The commenters thought that this language change may create ambiguity or disruption in documentation, billing, data collection, reporting, and care planning. Some commenters stated that current literature on the term “upstream drivers” describes approaches or interventions to improve patient health that may be impacted by social determinants of health and does not generally include patient behaviors. Other commenters were concerned that this language change could result in emphasis being placed on individual behavioral change, without sufficient attention to social, economic, and structural barriers that prevent the diagnosis or treatment of illness or injury. Many commenters supported retaining the term “social determinants of health” or changing the language to “social drivers” as opposed to “upstream drivers.”

Response: We appreciate commenters for their feedback. At this time, we continue to believe that the term “upstream driver(s)” is more comprehensive and includes a variety of factors that can impact the health of Medicare beneficiaries, such as smoking, poor nutrition, low physical activity, substance misuse, or potential dietary, behavioral, medical, and environmental drivers that when addressed, may lessen the impacts of

the problem(s) addressed in the initiating visit.

Comment: Several commenters requested that we remove the term “E/ M” from the CHI code descriptor to conform with our revisions proposed and finalized in this final rule to allow for CPT code 90791 (Psychiatric diagnostic evaluation) or the Health Behavior Assessment and Intervention (HBAI) services described by CPT codes 96156, 96158, 96159, 96164, 96165, 96167, and 96168 (and any subsequent HBAI codes) to serve as initiating visits for CHI.

Response: We appreciate the commenters' recommendation for revision. We agree that the term “E/M” should be removed when describing CHI initiating visits to align with all initiating visits.

After consideration of public comments, we are finalizing the code descriptor for HCPCS code G0019 as follows:

G0019--Community health integration services performed by certified or trained auxiliary personnel, including a community health worker, under the direction of a physician or other practitioner; 60 minutes per calendar month, in the following activities to address upstream driver(s) that are significantly limiting ability to diagnose or treat problem(s) addressed in an initiating visit:

Person-centered assessment, performed to better understand the individualized context of the intersection between the upstream driver(s) and the problem(s) addressed in the initiating visit.

++ Conducting a person-centered assessment to understand patient's life story, strengths, needs, goals, preferences and desired outcomes, including understanding cultural and linguistic factors.

++ Facilitating patient-driven goal-setting and establishing an action plan.

++ Providing tailored support to the patient as needed to accomplish the practitioner's treatment plan.

Practitioner, Home-, and Community-Based Care Coordination.

++ Coordinating receipt of needed services from healthcare practitioners, providers, and facilities; and from home- and community- based service providers, social service providers, and caregiver (if applicable).

++ Communication with practitioners, home- and community-based service providers, hospitals, and skilled nursing facilities (or other health care facilities) regarding the patient's psychosocial strengths and needs, functional deficits, goals, preferences, and desired outcomes, including cultural and linguistic factors.

++ Coordination of care transitions between and among health care practitioners and settings, including transitions involving referral to other clinicians; follow-up after an emergency department visit; or follow-up after discharges from hospitals, skilled nursing facilities or other health care facilities.

++ Facilitating access to community-based social services to address upstream driver(s).

Health education--Helping the patient contextualize health education provided by the patient's treatment team with the patient's individual needs, goals, and preferences, in the context of the upstream driver(s), and educating the patient on how to best participate in medical decision-making.

Building patient self-advocacy skills, so that the patient can interact with members of the health care team and related community-based services addressing the upstream driver(s), in ways that are more likely to promote personalized and effective diagnosis or treatment.

Health care access/health system navigation.

++ Helping the patient access healthcare, including identifying appropriate practitioners or providers for clinical care and helping secure appointments with them.

Facilitating behavioral change as necessary for meeting diagnosis and treatment goals, including promoting patient motivation to participate in care and reach person-centered diagnosis or treatment goals.

Facilitating and providing social and emotional support to help the patient cope with the problem(s) addressed in the initiating visit, the upstream driver(s), and adjust daily routines to better meet diagnosis and treatment goals.

Leveraging lived experience when applicable to provide support, mentorship, or inspiration to meet treatment goals.

1. Medicare Payment for Dental Services a. Overview

Section 1862(a)(12) of the Act generally precludes payment under Medicare Parts A or B for any expenses incurred for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth. (Collectively here, we will refer to “the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth” as “dental services.”) That section of the statute also includes an exception to allow payment to be made for inpatient hospital services in connection with the provision of such dental services if the individual, because of their underlying medical condition and clinical status or because of the severity of the dental procedure, requires hospitalization in connection with the provision of such services. Regulation at Sec. 411.15(i) similarly excludes payment for dental services except for inpatient hospital services in connection with dental services when hospitalization is required because of: (1) the individual's underlying medical condition and clinical status; or (2) the severity of the dental procedure.

Fee for service (FFS) Medicare Parts A and B also make payment for certain dental services in circumstances where the services are not considered to be in connection with dental services within the meaning of section 1862(a)(12) of the Act. In the CY 2023 PFS final rule (87 FR 69663 through 69688), we clarified and codified at Sec. 411.15(i)(3) that Medicare payment under Parts A and B could be made when dental services are furnished in either the inpatient or outpatient setting when the dental services are inextricably linked to, and substantially related and integral to the clinical success of, other covered services. We also added several examples of clinical scenarios that are considered to meet that standard under Sec. 411.15(i)(3) and amended that regulation to add more examples in the CY 2024 PFS final rule (88 FR 79022 through 79029) and in the CY 2025 PFS final rule (89 FR 97936 through 97945). b. Submissions Received Through Public Submission Process

In the CY 2023 PFS final rule, we established a process whereby we accept and consider submissions from the public (the “public submission process”) to assist us to identify additional dental services that are inextricably linked to, and substantially related and integral to the clinical success of, other covered services (87 FR 69663 through 69688). We appreciate all those who submitted recommendations through this process. We received seven submissions from various organizations and individuals on or before February 10, 2025.

Most of the submissions recommended that we consider clinical scenarios involving beneficiaries with diabetes mellitus when contemplating

payment under Medicare for dental services that are inextricably linked to other covered services. Four submitters had similar themes in their submissions that expressed the concern that the absence of treatment of chronic dental infections could complicate covered medical treatment for the management of diabetes-associated retinopathy and nephropathy. Two submitters were focused on their view of how important it is to improve oral health through treatment of oral infections like periodontitis and preventive dental care, as they asserted these dental services are related to the successful prevention and treatment of diabetic retinopathy. These two submitters were specifically concerned about beneficiaries who are at risk for diabetes-related retinopathy and vision loss or who have diabetes-related retinopathy and vision loss.

One submitter explained that their submission's purpose was not to nominate a new clinical scenario for consideration for CY 2026 rulemaking but instead was to provide an update on their ongoing research efforts in response to CMS' previous questions about the connection between autoimmune disease and oral health. The submitter referred to their nomination for CY 2025 rulemaking and CMS' respective request for comment which is discussed in the CY 2025 PFS proposed rule (89 FR 61760 through 61762). The letter emphasized that patients with autoimmune diseases often experience oral and dental complications, which can be exacerbated by immunosuppressive therapies. The submitter stated that they are currently analyzing Medicare claims data and commercial insurance data to demonstrate the positive impact of dental care on patients undergoing immunosuppressive treatment. They explained that they are particularly focused on investigating the relationship between regular preventive dental visits and systemic infection rates for those with Sjogren's disease.

Since CY 2023, we have discussed our commitment to review submissions we receive through the public submissions process. We have also expressed our intention to continue to engage in discussions with the public on a wide spectrum of issues relating to Medicare payment for dental services that may be inextricably linked to other covered services. For CY 2026, we did not make any proposals in response to the submissions that we received and will take the information and recommendations submitted into consideration for the future.

While we did not have proposals or a comment solicitation, we received public comments on section II.J. of the CY 2026 PFS proposed rule (90 FR 32511 through 32512). We appreciate commenters for their comments and will take them into consideration for potential future rulemaking.

The CY 2014 Hospital Outpatient Prospective Payment System (OPPS)/ Ambulatory Surgical Center (ASC) final rule with comment period describes skin substitutes as “. . . a category of products that are most commonly used in outpatient settings for the treatment of diabetic foot ulcers and venous leg ulcers . . .” (78 FR 74930 through 74931). When a procedure utilizing a skin substitute product is performed, providers bill one or more Healthcare Common Procedure Coding System (HCPCS) codes to describe the preparation of the wound, the use of at least one skin substitute product, and application of the skin substitute product through suturing or various other techniques. Specifically, CPT codes 15271 through 15278 describe the application of skin substitutes to various size wounds and anatomical locations.

Recently, several novel industry practices have come to our attention, likely driving substantial and unusual increases in the number of available skin substitute products, the sales and distribution structure for these products, and the rapidity of products changing manufacturer ownership. These industry changes are causing a significant increase in spending under Medicare Part B for skin substitute products in the non-facility setting. According to Medicare claims data, Part B spending for these products rose from approximately $250 million in 2019 to over $10 billion in 2024, a nearly 40-fold increase, while the number of patients receiving these products only doubled. Increases in payment rates and launch prices for skin substitutes, especially newer products, account for the majority of observed Medicare spending increases on these products. Of note, as part of its workplan, the U.S. Department of Health and Human Services' Office of the Inspector General announced in November 2024 plans to review Medicare Part B claims for skin substitutes to identify payments that were at risk for noncompliance with Medicare requirements with an expected issue date of fiscal year 2026.\101\

\101\ https://oig.hhs.gov/reports-and-publications/workplan/summary/wp-summary-0000894.asp.

We outlined our HCPCS Level II coding and payment policy objectives for skin substitutes in the CY 2023 Medicare Physician Fee Schedule (PFS) proposed rule (87 FR 46249) because we concluded it would be beneficial for interested parties to understand our priorities as we work to create a consistent approach for the suite of products we have referred to as skin substitutes. As discussed in the CY 2023 PFS proposed rule, we have a number of objectives related to refining our Medicare policies in this area, including: (1) ensuring a consistent payment approach for skin substitute products across the physician office and hospital outpatient department settings; (2) ensuring that appropriate HCPCS codes describe skin substitute products; (3) employing a uniform benefit category across products within the physician office setting, regardless of whether the product is synthetic or comprised of human- or animal-based material, so we can incorporate payment methodologies that are more consistent; and (4) promoting clarity for interested parties on CMS skin substitutes policies and procedures. Interested parties have requested that CMS address what they have described as inconsistencies in our payment and coding policies, indicating that treating clinically similar products (for example, animal-based and synthetic skin products) differently for purposes of payment is confusing and problematic for healthcare providers and patients. These concerns exist specifically within the non-facility setting; however, interested parties have also indicated that further alignment of our policies across the non-facility and hospital outpatient department settings would reduce confusion.

On April 25, 2024, the Medicare Administrative Contractors (MACs) released a proposed Local Coverage Determination (LCD) to provide appropriate coverage for skin substitute grafts used for chronic non- healing diabetic foot and venous leg ulcers. The MACs issued the collaborative proposed Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers LCD to make sure that Medicare covers, and people with Medicare have access to, skin substitute products that are supported by evidence that shows that they are reasonable and necessary for the treatment of diabetic foot and venous leg ulcers in the Medicare population and that coverage aligns

with professional guidelines for appropriately managing these wounds. All of the MACs have delayed the effective date of the final LCDs for cellular and tissue-based products for wounds, or skin substitutes, in diabetic foot ulcers and venous leg ulcers, moving the implementation date across all MAC jurisdictions to January 1, 2026. For details, please see the final LCD, titled: Skin Substitute Grafts/Cellular and Tissue-Based Products for the Treatment of Diabetic Foot Ulcers and Venous Leg Ulcers at: https://www.cms.gov/medicare-coverage-database/basket/basket.aspx?loadBasketLink=Y&basketLinkId=552. We note that additional coverage determinations may apply to skin substitute products.

The Medicare statute, regulations, and manual provisions empower the Medicare program to determine if a product is reasonable and necessary for the treatment of a beneficiary's condition and safe and effective, not experimental or investigational, and appropriate and therefore eligible for coverage under Part B. (See, for example, section 1833(e) of the Act (42 U.S.C. 1395l(e)), section 1862(a)(1)(A) of the Act (42 U.S.C. 1395y(a)(1)(A)), 42 CFR 411.15(k)(1), 424.5(a)(6), Medicare Program Integrity Manual Sec. 3.6.2.2, Medicare Benefit Policy Manual ch. 15, Sec. Sec. 50.4.1-50.4.3, and Medicare Program Integrity Manual, ch. 13 Sec. Sec. 13.5.3, 13.5.4.) Coverage is a threshold determination that must be satisfied before payment considerations arise. The inclusion of a product in this payment rule or in any payment file does not necessarily imply that a determination has been made by CMS or its contractors that it is reasonable and necessary and meets the other preconditions to Medicare coverage. Any skin substitute could not be covered if it were determined to be unreasonable or unnecessary for a particular beneficiary. Similarly, the use of short descriptors and associated FDA regulatory categories \102\ may reflect current FDA regulation but are not intended to imply that FDA has determined that a product meets any specific FDA statutory or regulatory requirements. FDA's statutory and regulatory framework, including, for example, FDA's findings that a product is “safe and effective,” is not controlling of Medicare's determination under its own authorities of whether a product is “reasonable and necessary” for an individual patient and meets all preconditions for Medicare coverage and payment. FDA does not make Medicare coverage or payment determinations, nor do FDA statutes and regulations govern Medicare coverage or payment determinations.

\102\ The term “FDA regulatory categories” is used in this final rule when referring to the basis for CMS's payment policies but is not intended to reflect or imply that the products discussed within this final rule are characterized as such or grouped together by FDA.

Medicare coverage and payment are also governed under separate statutory authorities and serve fundamentally different purposes. Coverage determinations under section 1862(a)(1)(A) (and related provisions) of the Act establish whether a service is reasonable and necessary while payment methodologies under section 1848 of the Act (and other applicable payment provisions) of the Act establish the amount Medicare will pay for covered physician services based on considerations such as resource similarity. CMS has determined that setting payment rates on a prospective basis is a different inquiry and exercise with a different set of considerations and that it makes sense here to consider how FDA regulates skin substitute products as a factor in grouping those products in various categories as described later in this section.

We continue to believe that our existing payment policies are unsatisfactory, unsustainable over the long term, and rooted in historical practice established two decades ago prior to significant evolutions in medical technology and practice. After hosting a town hall \103\ to provide an opportunity for public input, including discussion of potential approaches to the methodology for payment of skin substitute products, as well as reviewing several years of comments in response to CY rulemaking in 2023, 2024, and 2025 on this subject, we developed a proposal that addressed our stated objectives as well as many of the comments we have received.

\103\ CMS Skin Substitutes Town Hall, which was held virtually on January 18, 2023. More information regarding the CMS Skin Substitutes Town Hall such as links to recording and transcripts is available at https://www.cms.gov/medicare/payment/fee-schedules/ physician/skin- substitutes#:~:text=The%20CMS%20Skin%20Substitutes%20Town,Physician%2 0Fee%20Schedule%20(PFS).

B. Medicare Part B Payment for Skin Substitutes 1. Payment for Skin Substitutes When Used During a Covered Application Procedure Under the PFS in the Non-Facility Setting

We have historically considered skin substitutes to be biologicals for payment purposes under Medicare Part B. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. 108-173) (MMA) established payment methodology for drugs and biologicals under section 1847A of the Act (42 U.S.C. 1395w-3a). Under this methodology, a vast majority of drugs and biologicals separately paid under Medicare Part B are paid at the Average Sales Price (ASP) plus six percent. Section 303(c) of the MMA, titled “Payment reform for covered outpatient drugs and biologicals,” amended Title XVIII of the Act by adding new section 1847A of the Act. In part, this section established the use of the ASP to determine the payment limit for drugs and biologicals described in section 1842(o)(1)(C) of the Act (42 U.S.C. 1395u(o)(1)(C)) (that is, drugs or biologicals billed by a physician, supplier, or any other person and not paid on a cost or prospective payment basis) furnished on or after January 1, 2005. Because Medicare is currently paying for most skin substitutes as biologicals using the methodology under section 1847A of the Act, each skin substitute product receives a unique billing code (typically, a Level II HCPCS code) and payment limit.

Section 401 of Division CC, Title IV of the Consolidated Appropriations Act, 2021 (Pub. L. 116-260) (CAA, 2021) amended section 1847A of the Act to add new section 1847A(f)(2) of the Act, which requires certain manufacturers without a Medicaid drug rebate agreement, such as certain manufacturers of skin substitutes, to report ASP data to CMS for calendar quarters beginning on January 1, 2022, for drugs or biologicals payable under Medicare Part B and described in sections 1842(o)(1)(C), (E), or (G) or 1881(b)(14)(B) of the Act (42 U.S.C. 1395rr(b)(14)(B)), including items, services, supplies, and products that are payable under Part B as a drug or biological. Because most skin substitutes are currently paid as biologicals using the methodology described in section 1847A of the Act, manufacturers of these products are currently required to report their ASP data to CMS every quarter. Prior to this, section 1927(b)(3)(A)(iii)(I) of the Act only required manufacturers with a Medicaid drug rebate agreement to report ASP data to CMS for drugs or biologicals described in section 1842(o)(1)(C) of the Act.

Section 1847A of the Act also includes several relevant definitions. While the definition of “single-source drug or biological” provided at section 1847A(c)(6)(D) includes “a biological,” sections 1847A(c)(6)(H) and (I) of the Act offer more insight into the meaning of the term for purposes of this section.

Subparagraph (I) of such section defines the term “reference biological product” as a biological product licensed under section 351 of the PHS Act (42 U.S.C. 262). Subparagraph (H) of section 1847A(c)(6) defines the term “biosimilar biological product” as “a biological product approved under an abbreviated application for a license of a biological product that relies in part on data or information in an application for another biological product licensed under section 351 of the Public Health Service Act.”

Section 1927 of the Act (42 U.S.C. 1396r-8), which is referred to multiple times in section 1847A of the Act, also references section 351 of the PHS Act when referencing biologicals. The title of section 303 of the MMA, which added section 1847A to the Act, refers to “covered outpatient drugs,” defined in section 1927(k)(2) of the Act. Subparagraph (B) of section 1927(k)(2) adds biological products to this definition when those products are licensed under section 351 of the PHS Act, among other requirements.

In the CY 2022 PFS final rule, to address the need to establish a payment mechanism for synthetic skin substitutes in the physician office setting and to be responsive to feedback received from commenters, we finalized an approach for payment of each synthetic skin substitute for which we had received a HCPCS Level II coding application. We finalized that those products would be payable in the physician office setting and billed separately from the procedure to apply them using HCPCS A-codes (86 FR 65120). 2. Payment for Skin Substitutes Under the Outpatient Prospective Payment System (OPPS)

Prior to CY 2014, all products considered to be skin substitutes were separately paid under the OPPS as if they were biologicals according to the ASP methodology (78 FR 74930 through 74931). In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74938), we unconditionally packaged skin substitute products furnished in the hospital outpatient setting into their associated application procedures as part of a broader policy to package all drugs and biologicals that function as supplies when used in a surgical procedure. As part of the policy to package skin substitutes, we also finalized a methodology that divides the skin substitutes into a high- cost group and a low-cost group, to ensure adequate resource homogeneity among Ambulatory Payment Classification (APC) assignments for the skin substitute application procedures (78 FR 74933). In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66886), we stated that skin substitutes are best characterized as either surgical supplies or devices because of their required surgical application and because they share significant clinical similarity with other surgical devices and supplies.

Skin substitutes assigned to the high-cost group are described by CPT codes 15271 through 15278. Skin substitutes assigned to the low- cost group are described by HCPCS codes C5271 through C5278. Claims billed with primary CPT codes 15271, 15273, 15275, or 15277 are used to calculate the geometric mean costs for procedures assigned to the high- cost group, and claims billed with primary HCPCS codes C5271, C5273, C5275, or C5277 are used to calculate the geometric mean costs for procedures assigned to the low-cost group (78 FR 74935). The graft skin substitute administration add-on codes, which include “each additional 25 sq cm” in the description (that is, CPT codes 15272, 15274, 15276, and 15278; HCPCS codes C5272, C5274, C5276, and C5278), are packaged into the payment rates for the primary administration codes.

For CY 2025, each of the HCPCS codes described earlier are assigned to one of the following three skin procedure APCs according to the geometric mean cost for the code: APC 5053 (Level 3 Skin Procedures): HCPCS codes C5271, C5275, and C5277; APC 5054 (Level 4 Skin Procedures): HCPCS codes C5273, 15271, 15275, and 15277; or APC 5055 (Level 5 Skin Procedures): HCPCS code 15273. In CY 2025, the payment rate for APC 5053 (Level 3 Skin Procedures) is $612.13, the payment rate for APC 5054 (Level 4 Skin Procedures) is $1,829.23, and the payment rate for APC 5055 (Level 5 Skin Procedures) is $3,660.97. Table A-K1 lists the APC assignments and CY 2025 payment rates for the HCPCS codes describing the skin substitute application procedures. This information is also available in Addenda A and B of the CY 2025 final OPPS/ASC rule with comment period (the Addenda A and B are available on the CMS website https://www.cms.gov/medicare/payment/prospective-payment-systems/hospital-outpatient/regulations-notices). [GRAPHIC] [TIFF OMITTED] TR05NO25.093

Beginning in CY 2016, we adopted a policy where we determine the high-cost/low-cost status for each skin substitute product based on either a product's geometric mean unit cost (MUC) exceeding the geometric MUC threshold or the product's per day cost (PDC), which is calculated as the total units of a skin substitute multiplied by the mean unit cost and divided by the total number of days, exceeding the PDC threshold. We assign each skin substitute that exceeds either the MUC threshold or the PDC threshold to the high-cost group. We assign any skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low-cost group (87 FR 71976). We also assign skin substitutes with pass-through payment status to the high-cost category.

We assign skin substitutes with some pricing information but without claims data for which to calculate a geometric MUC or PDC to either the high-cost or low-cost category based on the product's ASP plus 6 percent payment rate as compared to the MUC threshold. If ASP is not available, we use the wholesale

acquisition cost (WAC) plus 3 percent to assign a product to either the high-cost or low-cost category. Finally, if neither ASP nor WAC is available, we use 95 percent of the average wholesale price (AWP) to assign a skin substitute to either the high-cost or low-cost category.

In the CY 2021 OPPS/ASC final rule with comment period, after the first entirely synthetic skin substitute products were introduced into the market, we revised our description of skin substitutes to include both biological and synthetic products (85 FR 86064 through 86067). Any skin substitute product that is assigned to a code in the HCPCS A2XXX series is assigned to the high-cost skin substitute group, including new products without pricing information. New skin substitutes without pricing information that are not assigned a code in the HCPCS A2XXX series are assigned to the low-cost category until pricing information is available to compare to the MUC and PDC thresholds (89 FR 94247).

In the CY 2014 OPPS/ASC final rule, we also noted that several skin substitute products are applied as either liquids or powders per milliliter or per milligram and are employed in procedures outside of CPT codes 15271 through 15278. We stated that these products “. . . will be packaged into the surgical procedure in which they are used.” (78 FR 74930 through 74931).

We also clarified that our definition of skin substitutes does not include bandages or standard dressings, and that, under the OPPS, these items cannot be assigned to either the high-cost or low-cost skin substitute groups or be reported with either CPT codes 15271 through 15278 or HCPCS codes C5271 through C5278 (85 FR 86066).

The FDA regulates products that CMS considers to be skin substitutes based on a variety of factors, including product composition, mode of action, and intended use. Relevant categories of FDA regulation for skin substitute products include the following: 1. Self-Determination Under Section 361 of the PHS Act and the Regulations in 21 CFR 1271 (361 HCT/Ps)

Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/ Ps) are defined in 21 CFR 1271.3(d) as articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient. Examples include bone, ligament, skin, dura mater, heart valve, cornea, hematopoietic stem/progenitor cells derived from peripheral and cord blood, manipulated autologous chondrocytes, epithelial cells on a synthetic matrix, and semen or other reproductive tissue. Pursuant to section 361 of the Public Health Service (PHS) Act, FDA promulgated regulations at 21 CFR 1271, et seq. that create an electronic registration and listing system for establishments that manufacture HCT/Ps, regulate donor eligibility, and establish current good tissue practice and other procedures to prevent the introduction, transmission, and spread of communicable diseases by HCT/Ps.

A subset of HCT/Ps are those that are regulated solely under section 361 of the PHS Act and the regulations in 21 CFR 1271 (361 HCT/ Ps). The FDA has taken a risk-based, tiered approach in regulating HCT/ Ps; as the potential risk posed by a product increases, so too does the level of oversight (63 FR 26745). Although FDA is authorized to apply applicable requirements in the Federal Food, Drug, and Cosmetic Act (FD&C Act) and/or the PHS Act to those products that meet the definition of drug, biological product, or device, under a tiered, risk-based approach, HCT/Ps that meet specific criteria or fall within detailed exceptions do not require premarket review and approval. HCT/ Ps that do not meet all the criteria in 21 CFR 1271.10(a) are not regulated solely under section 361 of the PHS Act and the regulations in 21 CFR part 1271. Unless an exception in 21 CFR 1271.15 applies, such products are regulated as drugs, devices, and/or biological products under the FD&C Act and/or the PHS Act and are subject to additional regulation, including applicable premarket review and approval. An HCT/P is regulated solely under section 361 of the PHS Act and 21 CFR part 1271 if it meets all of the following criteria (21 CFR 1271.10(a)):

The HCT/P is minimally manipulated.

The HCT/P is intended for homologous use only, as reflected by the labeling, advertising, or other indications of the manufacturer's objective intent.

The manufacture of the HCT/P does not involve the combination of the cells or tissues with another article, except for water, crystalloids, or a sterilizing, preserving, or storage agent, provided that the addition of water, crystalloids, or the sterilizing, preserving, or storage agent does not raise new clinical safety concerns with respect to the HCT/P.

Either:

++ The HCT/P does not have a systemic effect and is not dependent upon the metabolic activity of living cells for its primary function; or

++ The HCT/P has a systemic effect or is dependent upon the metabolic activity of living cells for its primary function; and

--Is for autologous use;

--Is for allogeneic use in a first-degree or second-degree blood relative; or

--Is for reproductive use.

Establishments that manufacture 361 HCT/Ps, as defined by 21 CFR 1271.3(e), must register and list their 361 HCT/Ps in the FDA's electronic Human Cell and Tissue Establishment Registration System (eHCTERS), but premarket review and approval by FDA is not needed. However, FDA acceptance of an establishment registration and 361 HCT/P listing form does not constitute a determination that an establishment is compliant with applicable FDA rules and regulations, that the FDA has agreed with the manufacturer's self-determination as a 361 HCT/P, or that the HCT/P is licensed or approved by FDA (21 CFR 1271.27(b)). When this final rule refers to 361 HCT/Ps, it generally refers to products where an establishment has self-determined that their product is a 361 HCT/P.\104\ If an HCT/P does not meet the criteria set out in 21 CFR 1271.10(a), and the establishment that manufactures the HCT/P does not qualify for any of the exceptions in 21 CFR 1271.15, the HCT/P will be regulated as a drug, device, and/or biological product under the FD&C Act, and/or section 351 of the PHS Act (42 U.S.C. 262), and applicable regulations, including 21 CFR part 1271, and premarket review generally is required.

\104\ We note that establishments may seek feedback from FDA regarding their self-determination analysis and conclusion that a particular product is a 361 HCT/P. See, For example., https://www.fda.gov/vaccines-blood-biologics/tissue-tissue-products/tissue-reference-group.

2. 510(k) Premarket Notification Submissions, Premarket Approval Applications, and De Novo Requests

“Devices,” as defined under 21 U.S.C. 321(h)(1), do not achieve their primary intended purposes through chemical action and are not dependent upon being metabolized for the achievement of their primary intended purposes. Devices may be subject to premarket review through: (1) a 510(k) premarket notification submission (510(k)) in accordance with section 510(k) of the FD&C Act and implementing regulations in subpart E of 21 CFR part 807; (2) a premarket approval application (PMA) under section 515 of the FD&C Act and regulations in 21 CFR part 814; or,

potentially, (3) a De Novo classification request (De Novo request) under section 513(f)(2) of the FD&C Act and regulations in subpart D of 21 CFR part 860. A 510(k) is a premarket submission made to the FDA to demonstrate that the device to be marketed is substantially equivalent to a legally marketed device that is not subject to premarket approval (sections 510(k) and 513(i) of the FD&C Act). Premarket approval is the most rigorous type of review and generally is required for class III medical devices. Class III devices are those devices for which insufficient information exists to determine that general controls and special controls would provide a reasonable assurance of safety and effectiveness and are purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health, or present potential unreasonable risk of illness or injury (section 513(a)(1)(C) of the FD&C Act). De Novo classification is a marketing pathway for novel medical devices for which general controls alone (class I), or general and special controls (class II), provide reasonable assurance of safety and effectiveness, but for which there is no legally marketed predicate device. Devices that are classified into class I or class II through a De Novo request may be marketed and used as predicates for future premarket notification (that is, 510(k)) submissions, when applicable. 3. Biologics License Application

To lawfully introduce or deliver for introduction into interstate commerce a drug that is a biological product, a valid biologics license application (BLA) must be in effect under section 351(a)(1) of the PHS Act, 42 U.S.C. 262(a)(1), unless exempted under 42 U.S.C. 262(a)(3). Such licenses are issued only after showing that the product is safe, pure, and potent. Approval of a biologics license application or issuance of a biologics license shall constitute a determination that the establishment(s) and the product meet applicable requirements to ensure the continued safety, purity, and potency of such products (21 CFR 601.2(d)). Potency has long been interpreted to include effectiveness (21 CFR 600.3(s)).

The definition of the term “biological product” in section 351(i) of the PHS Act is: “a virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, protein, or analogous product . . . applicable to the prevention, treatment, or cure of a disease or condition of human beings.” (42 U.S.C. 262(i)). In contrast to the registration and listing requirements for a 361 HCT/P or the substantial equivalence requirements for 510(k)s, products licensed under section 351 of the PHS Act are required to meet stringent pre-and post-market requirements to ensure the products' safety and efficacy when marketed. Table A-K2 lists several other notable differences between the relevant FDA regulatory categories for products CMS considers to be skin substitutes. [GRAPHIC] [TIFF OMITTED] TR05NO25.094