“Recognizing an imbalance in payments between physicians and hospitals—that’s a good first step. There’s a still a long way to go in addressing the shortfalls in our payments.”
Nicolas Ferreyros, COA
CMS proposes the 2026 Physician Fee Schedule (PFS), addressing payment disparities in oncology, but the community oncology community warns of financial threats from the Inflation Reduction Act. Updates reflect late Tuesday release of the proposed 2026 schedule for the Hospital Outpatient Prospective Payment System.
This article has been updated.
The 2026
That’s the good news.
The bad news, according to the Community Oncology Alliance (COA), is that this progress is offset by an interpretation of the Inflation Reduction Act (IRA) that could devastate practice finances, as the Trump administration follows through
Calling the proposed PFS “a mixed bag,” in an interview, COA Managing Director Nicolas Ferreyros praised CMS for taking the first steps toward correcting longstanding payment disparities based on where a patient receives care. In particular, he cited an increase in “practice expense relative value units” for nonfacility services, which support things such as scheduling and clinical coordination, while reducing high facility payments to hospitals.
“This reflects an important, overdue shift toward site neutrality, and we encourage the agency to continue advancing policies that better align payments across sites of care,” he said in a statement.
“Recognizing an imbalance in payments between physicians and hospitals—that’s a good first step. There’s a still a long way to go in addressing the shortfalls in our payments.”
Nicolas Ferreyros, COA
On the flip side, Ferreyros said COA is “deeply alarmed” by plans to include the negotiated, reduced cost of key drugs—known as Maximum Fair Price (MFP) under the IRA—in calculations that determine what practices are paid to administer high-cost cancer drugs. Projections show that using MFP in the drug calculation could cost practices
In short, he said in an interview, the near-term wins don’t cancel out the looming threat of CMS’ interpretation of MFP policy, which Ferreyros called “an incredible threat to practices.”
Based on a 2003 law, physicians who administer Medicare Part B drugs are reimbursed based on a formula tied of the Average Sales Price, known as ASP. Originally, physicians were paid ASP plus 6%; the “add on” payment funds the cost of administering complex drugs that require special handling and storage, as well as training for staff.
In 2020, oncology drugs accounted for
CMS, for its part, said the PFS would promote the administration's goals of reducing wasteful spending while shifting resources toward chronic disease prevention.
“We are taking meaningful steps to modernize Medicare, cut waste, and improve patient care,” said CMS Administrator Mehmet Oz MD, MBA, said in a statement. “We’re making it easier for seniors to access preventive services, incentivizing health care providers to deliver real results, and cracking down on abuse that drives up costs. This is how we protect Medicare for the next generation while helping Americans live longer, healthier lives.”
Under the IRA, starting in 2028 payment from Medicare would be based not on the original price of the drug, but on MFP, projected to be considerably lower than ASP.
A year ago, Avalere estimated that negotiated MFPs for the 10 selected drugs compared with estimated 2023 net prices would result in an average discount of 20%. Of the 15 drugs first selected for negotiation under Part B, 4 are oncology/hematology drugs: enzalutamide (Xtandi), used in prostate cancer; pomalidomide (Pomalyst), used for patients with multiple myeloma; palbociclib (Ibrance), used for breast cancer; and acalabrutinib (Calquence), which treats several types of blood cancer.
Through COA and in
“This change would
COA has sounded the alarm on the need to decouple physician payment from MFP since before the IRA passed in 2022. Last week,
Both Ferreyros and COA Executive Director Ted Okon, MBA, have noted that the MFP-based calculation is the most serious threat to practice finances, but far from the only one. The American Medical Association has
Ferreyros said overall, the steps taken across the 2026 PFS show that the current administration understands the long-term decline in physician payment, which has been cited as a factor in today’s physician shortage. The One Big Beautiful Bill Act, Ferreyros noted, offers a 2.5% payment increase—offsetting a cut in the original 2025 PFS—and that CMS has proposed a conversion factor increase of 3.62%.
In fact, Okon subsequently released a statement praising elements of proposed
"At long last, CMS is proposing real meaningful action to address the outrageous payment disparities that reward hospitals for delivering the identical care at much higher costs than that provided in physicians’ clinics," Okon said. "Patients and taxpayers have been footing the bill for hospital overpayments for years and this proposal is a major step in the right direction."
Other provisions of the 2026 HOPPS proposal address a drug acquisition cost survey, which is tied to funds many hospitals receive through the 340B program. CMS also seeks to crack down on hospitals that are not following requirements for reporting their costs, which were enacted during the first Trump administration.
Still, Ferreyros emphasized, a “modest bump” does not address the ongoing financial pressures on community oncology. “Recognizing an imbalance in payments between physicians and hospitals—that’s a good first step. There’s a still a long way to go in addressing the shortfalls in our payments.”
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