Finalized Rule Advances Long-Overdue Reforms to Improve Payment Accuracy and Strengthen Primary Care in Medicare

Statement from Mark E. Miller, executive vice president of Health Care at Arnold Ventures, on the recently finalized rule from the Centers for Medicare & Medicaid Services.

Washington, D.C. (November 3, 2025) – The Centers for Medicare & Medicaid Services (CMS) finalized policy changes for Medicare payments under the Physician Fee Schedule (PFS) and other Medicare Part B issues. Changes will become effective on or after January 1, 2026.

“There are significant structural flaws in the Medicare Physician Fee Schedule (MFPS), which overvalues specialty care, underinvests in primary care, and strongly influences physician rates paid by private insurers. And we applaud the administration for its efforts to improve payment accuracy and reduce duplicative payments within the Medicare program through the finalization of this rule. 

“The efficiency adjustment makes long-overdue progress toward ensuring physician payments for services reflect true time and resource costs and provides for future adjustments as clinicians continue to become more efficient over time. The finalized rule will also offer an immediate revenue boost to independent practices, including primary care physicians, which could help reduce incentives for vertical integration — a frequent driver of rising health care costs.

“While this rule represents meaningful progress, we urge the administration to develop a long-term strategy to overhaul the current physician fee valuation process and to consider more transformative changes to primary care payment such as incorporating partial capitation. Doing so is essential to ensuring Americans have the efficient, high-quality health care system they deserve.

“Additionally, we applaud the administration’s work to address the ballooning costs of skin substitutes — medical products designed to replace or support damaged or missing skin — in Medicare Part B, for which spending has surged 640% in just two years. The finalized rule is estimated to reduce program spending related to skin substitutes by almost $20 billion in 2026.”