On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) final rule, which includes policies related to Medicare physician payment and the Quality Payment Program.
At Andros, we’re equipped to help health plans decode and navigate these changes by designing provider networks that are optimized for measurable quality and equitable outcomes. Here’s what it all means.
Upcoming changes (and why it matters)
The upcoming CMS changes signal a meaningful shift in how care is delivered and reimbursed, and health plans should prepare for the impact. Below are the key changes, what they mean, and when they will begin.
“CMS is reinforcing primary care as the foundation of a better healthcare system while ensuring Medicare dollars support real value for patients, and not the kind of waste or abuse that erodes trust in the system. Our goal is simple: deliver better outcomes for patients and be wise stewards of the taxpayer resources that make Medicare possible.”
Healthcare Dive, “Medicare Fee Schedule 2026 Specialty Cuts,” November 2025
The upcoming CMS changes signal a meaningful shift in how care is delivered and reimbursed, and health plans should prepare for the impact. Below are the key changes, what they mean, and when they will begin.
| Change | What it means | When it starts |
|---|---|---|
| Skin substitute payment cut | CMS is addressing $10+ billion in spending on wound care products by changing payment from a high, price-based rate (biologicals) to a low, flat rate (incident-to supplies), cutting Medicare spending by nearly 90% | January 1, 2026 |
| Targeted procedure cuts | Payments for services that have become more efficient (e.g., surgical procedures, diagnostic imaging) receive a -2.5% efficiency adjustment to ensure payment accuracy; time-based services (like office visits) are exempt | January 1, 2026 |
| Improved data for payment | CMS will use better data sources (e.g., Hospital Outpatient Prospective Payment System) to establish relative values for technical services, which improves payment accuracy and price predictability | January 1, 2026 |
| Chronic disease prevention focus | CMS is aligning with the "Make America Healthy Again" agenda by focusing on physical activity and nutrition through new or repurposed codes; it also ensures advanced primary care services can integrate behavioral health | January 1, 2026 |
| New quality measures | CMS is shifting quality reporting by introducing five new outcomes measures focused on chronic disease prevention and removing ten quality measures that did not directly improve patient health | Performance Year 2026 |
| Diabetes program expansion | CMS is finalizing changes to the Medicare Diabetes Prevention Program (MDPP) to allow more people with Medicare to access coaching, peer support, and lifestyle training at no cost | January 1, 2026 |
| New mandatory specialty model (ASM) | A new, mandatory payment model focused on Heart Failure and Low Back Pain that holds specialists financially accountable for quality, reduces avoidable hospitalizations, and increases financial accountability | Model begins January 2027 |
How these changes impact provider network strategy
The 2026 CMS payment updates will reshape provider networks in a number of meaningful ways:
- By increasing reimbursement for primary care and outpatient services, CMS is incentivizing prevention, wellness, and chronic condition management, which happen outside the hospital.
- At the same time, hospital-based physicians face reduced payments due to changes in how their work and indirect expenses are calculated, creating pressure, frustration, and potential network departures from hospital-based physicians.
- For health plans, this means preparing for realignment across their networks, including:
- Rebalancing toward lower-cost, community-based care settings
- Mitigating financial disputes
- Proactively redesigning networks to remain both cost effective and compliant under the new rules
Operational impacts and how Andros helps
| Operational area | Impact of CMS changes | Action for health plans | How Andros helps |
|---|---|---|---|
| Data & analytics | Star performance continues to be driven by complex methodology and granular, real-time data | Invest in shared technology platforms with providers to facilitate real-time performance monitoring, gap closure alerts, and predictive modeling for high-risk members | Deliver real-time performance data to the right people and systems, enabling timely action; use this data to segment providers and support ongoing monitoring |
| Provider education | The weight of care outcomes is high and providers must understand exactly which actions drive success | Launch intensive, measure-specific training for provider office staff on HEDIS coding, proper documentation, and best practices for closing care gaps; this moves beyond compliance to performance management | Conduct provider outreach and education based on real-world performance data |
| Operationalizing value-based care (VBC) agreements | Rising pressure to demonstrate better outcomes will drive renewed focus on outcome-driven contracting | Invest in technologies that can automate and streamline the execution of different VBC agreements | Deliver custom contracting, payment, and engagement workflows with providers in VBC agreements |
| Continuous evaluation and improvement of provider performance | Increased pressure to understand and improve provider performance | Equip provider engagement teams to support changes that improve member outcomes | Develop strategies to enhance provider performance and technology for efficient, effective care |
| Designing high-performing networks and contracting for outcomes | Build networks designed to improve performance from day one | Design networks not just for adequacy but for strong member outcomes and high Stars performance | Data-driven approach to network design and provider recruiting |
A higher standard for provider networks
CMS’s shift is already reshaping the market, and health plans must evolve. With Andros Arc™, plans can confidently navigate every stage of the network lifecycle—analyzing financial impact, designing networks, recruiting the right providers, and managing relationships—so they’re built for this new era.
As CMS moves incentives toward prevention and outpatient care, Andros ensures plans adapt with speed, precision, and confidence.
