Advocacy groups are seeking changes by the Centers for Medicare and Medicaid Services (CMS) to the Calendar Year 2026 Physician Fee Schedule, which could cut reimbursement for many on-site practitioner services by 6 percent to 10 percent and hinder Part A skilled nursing facility (SNF) services at smaller facilities as well as those in rural and underserved communities already experiencing a shortage of physicians.

Leading the charge on the advocacy front are the Post-Acute and Long-Term Care Medical Association (PALTMed) and American Health Care Association/National Center for Assisted Living (AHCA/NCAL).

At issue is CMS’s new practice expense (PE) calculation refinements, which change the traditional way indirect costs are assigned between “facility” and “non-facility” settings. Because services delivered in SNFs are billed under the “facility” rate, this change will reduce PE reimbursement for many on-site practitioner services.

What the changes for 2026 amount to are payment cuts to visits to post-acute patients. CMS in the final Physician Fee Schedule asked for provider input the ramifications of the changes, which advocacy groups say now is clear to see as the 2026 payment rule makes it harder and harder to get doctors to see patients in rural and underserved areas.

Codes and Payments

Historically, nursing home codes have had identical facility and non-facility PE RVUs, PALTMed said. According to CMS's Medicare Claims Processing Manual, SNFs—billed as place of service (POS) 31—are classified as facility settings, while nursing facilities—billed as (POS) 32—are considered non-facility settings. Under the changes under the Physician Fee Schedule that went into effect in January, this distinction would have a significant impact, the association said.

For example, CPT code 99309, the most commonly used code in nursing homes, would see an estimated 6 percent payment reduction if calculated using facility PE RVUs with POS 31. In contrast, when billed using non-facility PE RVUs with POS 32, reimbursement for the same service would increase by approximately 10 percent.

“Of course, many clinicians who see patients/residents in the facility may not even know the patient's POS designation. However, it will become critical that clinicians are aware of the status of their patients/residents in the facility,” PALTMed said.

Seeking CMS Action

CMS said it made the change to align payments with actual cost responsibilities and argues that because some physicians share resources with facilities and many don’t maintain separate practices, reimbursing the same indirect costs twice leads to overpayment.

Alex Bardakh, PALTMed’s senior director of advocacy and strategic partnerships, spoke to Park Place Live, and said the agency’s reasoning does not hold water in the world of SNFs.

“The reason CMS did this is actually quite simple. The reason is because facility-based clinicians don't have the same overhead cost as an independent office-based practice, particularly if you're employed by the facility, and obviously, you don't spend the money the independent office spends on practice expense, staff, etc.,” he said.

“It's the overhead costs, but that doesn't apply in the nursing home world. In their [CMS] minds, the money that's paid to the facility under Medicare Part A also covers the physician services, which it just does not. It's just inaccurate. And they [CMS] don't cover any of the practice expense of the clinicians.”

Bardakh said the clinicians who see patients in SNFs, for example, bring their own stethoscopes, laptops, have their own office staff, make phone calls to families, and staff make phone calls to families. “So, they have the same overhead costs as any office ambulatory-based, independent practice,” he said.

The changes went into effect in January, so PALTMed is looking at the calendar and gauging when the best window is to get CMS to revisit the PE issue.

Bardakh said the most likely mechanism is possibly the proposed rule that comes out in July. “But I do think that this was a simple mistake by CMS under just an assumption that just was incorrect. We're going to be publicly asking them to issue either guidance or some sort of interim final rule to essentially fix it sooner than next year,” he said.

AHCA/NCAL Dead Against

In comments submitted to CMS on payment policies under the Physician Fee Schedule, AHCA/NCAL directed a portion of its communication to the PE issue. The submission, signed by Daniel Ciolek, AHCA associate vice president for therapy advocacy, made it clear the trade group opposed the then “proposed application of an unjustified one-size-fits-all revised site of service differential policy.”

“We request that CMS rescind this proposal in its entirety or at a minimum exclude the skilled nursing facility place of service [POS] from this proposed policy and maintain the current equivalent physician practice expense payment approach for nursing facility codes POS 31 and POS 32.”

AHCA/NCAL said its SNF members and its physician and non-physician practitioner care delivery partners strongly believe that “the policy will create an unintended consequence of negatively impacting beneficiary access to Medicare Part A SNF benefits due to reduced availability of physician and non-physician practitioner services furnished in SNFs.”

Further, the association said the impacts will be even more severe for those beneficiaries needing Part A SNF services in smaller facilities, and in rural and underserved locales already in need of physicians.

“Unlike many hospitals that have large patient volumes that could support full-time hospital employed physicians, it is the exception rather than the rule where such an arrangement described in the proposed rule would even be feasible in most SNFs,” AHCA/NCAL said.

The group said physicians practicing in the nursing home have shared with AHCA/NCAL that the practice expense is not different between Medicare beneficiaries regardless of their status as a SNF short-stay post-acute patient or as a long-stay nursing facility resident.

“In fact, in many cases, the same beneficiary in the same bed of a SNF will be followed and billed to Medicare Part B by the same physician using both POS codes in a short period of time if the patient is recovering from an illness resulting in hospitalization and has subsequently exhausted Medicare Part A SNF benefits eligibility,” the comments said.

PE Changes and Providers

In late December, Park Place Live reported on providers who work in SNFs and their concerns about CMS’s PE changes. One such company, Comprehensive Rehab Consultants (CRC), provides physiatry and psychiatry services to long-term care facilities.

Physiatry is a branch of medicine that aims to enhance and restore functional ability and quality of life to those with physical impairments and disabilities.

A physiatry clinician works in collaboration with the SNF’s clinical team to address barriers to therapy and ensure progress toward functional goals. Physiatry clinicians are experts in neuromusculoskeletal and disabling conditions including pain management.

Justin Molignoni, clinical lead for CRC, said in December that there was push back from the post-acute care community around the new way CMS is thinking on PE methodology.

“CMS this time around is thinking that many providers have gone to work for larger groups rather than outside the practice setting. This may be true for hospitals but not for long-term care or skilled nursing,” he said.

For reimbursement for groups like his, the change builds up over time and ends up costing real money. “When you look at a medical practice, you see 20 to 30 people a day, so even a 2 percent reduction in reimbursement over the course of 12 months per provider is a large deal,” Molignoni said.

As PALTMed’s Bardakh concludes, “I think these changes by CMS are just incorrect assumptions about how reimbursement works in nursing homes and who takes care of patients in nursing homes. And it needs to be corrected. This was a policy that didn't need to happen,” he said.

CMS did not respond to a request for comment on this article.

Read the December article in its entirety at https://tinyurl.com/bdh6ztkh.

Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.