On July 14, 2025, the Centers for Medicare & Medicaid Services (CMS) released the Proposed Rule for the Calendar Year 2026 Medicare Physician Fee Schedule (MPFS). This rule outlines proposed payment policies for medical services provided to Medicare beneficiaries and how physicians and other qualified health care professionals will be reimbursed. Key highlights and notable updates relevant to urologists and urology practices are provided below. Please note that these policies are not yet final and are subject to change following a 60-day public comment period.

CONVERSION FACTOR

For the first time in years, the conversion factor (CF) is set to increase. This increase is driven by a combination of factors: a statutory adjustment from the Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015, a 2.5% boost from the 2025 reconciliation (also known as the One Big Beautiful Bill Act), and a 0.55% budget neutrality adjustment addressing changes in relative value units (RVUs). Notably, in 2026, there will be 2 distinct CFs: 1 for qualifying advanced alternative payment model (APM) participants and 1 for non-APM clinicians. APM participants will see a 0.75% update, whereas non-APM clinicians will receive a 0.25% increase. The CF of APM participants therefore will increase by $1.24 (3.8%), to $33.59, whereas for non-APM participants it will increase by $1.07 (3.3%), to $33.42. Please note that, despite these increases, urology is projected to receive a 0% net update overall due to offsetting policy changes, some of which are discussed further in this article.

REDUCTION IN REIMBURSEMENT DUE TO EFFICIENCY ADJUSTMENT

CMS has proposed a 2.5% reduction in intraservice time and therefore corresponding work RVUs (and payment) for procedures, radiology services, and diagnostic tests. This would particularly affect urologists, as this adjustment would affect nearly all services that urologists provide, excluding evaluation and management codes and other time-based codes. CMS justifies this reduction as they believe that practitioners have become more efficient over time, and therefore CMS is overpaying for services if the payment is based on valuation created before there was more efficiency. As a result, CMS believes that payment adjustments are necessary to reflect this increased efficiency. As part of this argument, the agency also raised concerns about the data used to determine service values in the first place, which primarily come from the American Medical Association Relative Value Scale Update Committee surveys. CMS believes these data may not accurately capture the true time, intensity, or resource usage by practitioners, due to what it believes are issues with the Relative Value Scale Update Committee survey process, such as subjectivity in responses, low response rates, potential conflicts of interest among survey respondents, and delays in data updates, which may not reflect increasing efficiency over time in clinical practice.

The 2.5% reduction was calculated based on a 5-year review of the cumulative productivity adjustment included in the Medicare economic index, which CMS believes provides a reasonable estimate of the efficiency gains across services within the MPFS. In addition to this adjustment, CMS is proposing to revise the efficiency adjustment every 3 years moving forward. The agency also aims to place more emphasis on “empirical” evidence for the codes selected in order to minimize the limitations of relying on survey data. Examples of how this adjustment would affect selected urology procedures are shown in Table 1.

Table 1. Some Common Urology Codes and the Work Relative Value Unit Without and With the Efficiency Adjustment

UPDATES TO THE PRACTICE EXPENSE METHODOLOGY

Payment for a physician service under the MPFS is derived from a formula that includes the RVUs for physician work, practice expenses (PEs; both direct and indirect costs), and malpractice costs. Indirect PEs include the cost of rent, electricity, wages for office staff, billing, and scheduling. CMS has assumed that physicians maintained an office-based practice while also providing care in a facility setting and therefore incurred some indirect costs while performing services in the facility. With fewer physicians owning their practices, CMS believes they may be overpaying for the indirect costs to a practitioner when a service is performed in the facility/hospital setting. CMS therefore proposes a reduction in the portion of the facility PE RVUs allocated based on work RVUs to half the amount allocated to nonfacility PE RVUs. What this means is that the indirect PEs that are paid to providers will decrease in the facility setting and increase in the nonfacility setting.

REDUCING WASTE IN THE MEDICARE SYSTEM

Medicare is exploring ways to curb wasteful spending. While this is a global goal, their focus for 2026 is on skin substitutes. In 2024, Medicare spent more than $10 billion on these products, largely due to inflated pricing and instances of fraudulent use. Rather than categorizing skin substitutes as biological products, CMS proposes reclassifying them as “incident to” supplies. This change could cut costs by up to 90%, reducing the price from as high as $2000 per square inch. If finalized, this move could save billions of dollars for both Medicare and taxpayers while encouraging the use of products with stronger clinical evidence supporting their effectiveness.

SHIFTING THE PARADIGM TO PREVENTION AND WELLNESS

Under the Trump Administration’s executive order “Establishing the President’s Make America Healthy Again Commission,” CMS is prioritizing efforts to better understand and reduce chronic disease rates. The initiative aims to explore the impact of factors like improved patient nutrition, physical activity, and healthier lifestyles on patient outcomes while also addressing the need to reduce overreliance on medications and treatments. Additionally, the order calls for research on the role of new technologies, environmental factors, and food and drug quality and safety in shaping health outcomes.

The executive order further directs federal agencies to expand treatment options and provide greater flexibility in health insurance coverage to support lifestyle changes and disease prevention. As a result, CMS is placing a strong emphasis on chronic disease prevention and management and is seeking feedback on how to improve support for these efforts.

To enhance chronic disease care, CMS is proposing to reduce the burden of integrating behavioral health treatment into advanced primary care. In addition, CMS plans to eliminate 10 quality measures from the Quality Payment Program that were not directly improving patient health outcomes and replace them with 5 new outcome measures focused on chronic disease prevention, including prescreening for diabetes.

NEW PAYMENT MODEL TO IMPROVED MANAGEMENT OF HIGH-COST CHRONIC CONDITIONS

CMS is introducing a new mandatory payment model called the ambulatory specialty model, focused on improving specialty care for patients with 2 high-cost chronic conditions: heart failure and low back pain. The goal of the model is to boost care quality, reduce unnecessary treatments, and improve chronic disease management before issues become severe. Participants will be held accountable for their performance, with potential savings based on their results.

As one of the latest models from the CMS Innovation Center, the ambulatory specialty model seeks to enhance engagement from both beneficiaries and providers, encourage preventive care, and increase financial accountability for specialists. The model incentivizes specialists to identify early signs of worsening conditions, improve patient functionality, minimize preventable hospitalizations, and use technology for better communication and data sharing with patients and primary care providers.

If the model is finalized, it will launch in January 2027 and run for 5 years, concluding in December 2031. There is also potential for the model to expand to include other high-cost chronic conditions in the future.

SUPPLY PACK PRICING UPDATE

The PE component of the payment formula covers the costs of supplies, equipment, and clinical labor needed to perform each service. It was observed that the cost of certain supply packs, such as those containing drapes and gowns, exceeded the combined cost of their individual components. Through the American Medical Association’s RVU Committee, it was determined that reimbursements for 3 supply packs commonly used in urologic procedures would be adjusted.

The reimbursement of the pack for cleaning and disinfecting an endoscope (SA042) was found to be undervalued and will increase from $19.43 to $31.29. However, the reimbursements for 2 cystoscopy supply packs were found to be overvalued. The reimbursement of the cystoscopy drape pack (SA045) will be reduced from $17.33 to $14.99, and the reimbursement of the cystoscopy visit pack (SA058) will decrease significantly from $113.70 to $37.63. In response, the AUA recommended a 4-year phase-in approach to these changes to ease the financial impact on practices. CMS accepted this proposal and will gradually implement both the reduction of the reimbursement for the cystoscopy pack (SA058) and the increase of the reimbursement for the endoscope cleaning pack (SA042) over 4 years. For 2026, the reimbursement of SA058 will drop to $75.67 from $94.68, and the reimbursement of SA042 will rise to $25.36 from $22.40 (Table 2).

Table 2. Supply Pack Practice Expense Phase-In Payments per Calendar Year

Urology groups may also feel the effect of the reduction of the reimbursement of supply pack SA051 (pelvic exam supply pack). The value of SA051 was updated to $2.81, which is down from $20.16. This will also be phased in over a 4-year period and is proposed to be reimbursed at $14.38 in 2026, $8.59 in 2027, and $2.81 in 2028. The reimbursement for a hydrophilic guidewire (SD089) will also be phased in over 4 years and will go up to $27.42 in 2026, $34.29 in 2027, and $41.15 in 2028.

NEW CPT CODES OF INTEREST TO UROLOGY

Several new and revised CPT codes relevant to urology that will be released on January 1, 2026, were noted in the proposed rule. Detailed information, including specific code numbers and proposed valuations, will be published in a future issue of AUANews. Among the new Category I codes, there will also be 2 new codes for laparoscopic radical prostatectomy in addition to the current laparoscopic radical prostatectomy code, as the codes will now be bundled with lymph node dissection when performed. Under the new system, the following will be seen.

• The current CPT code 55866 will be used for laparoscopic radical prostatectomy without lymph node dissection.
• The first new code will be used if the procedure includes a limited node dissection.
• The second new code will be used if the procedure includes a full bilateral lymph node dissection.

Another major change will be an update to prostate biopsy procedures. CPT 55700 will be deleted and replaced with 9 new codes that will differentiate the procedure based on the following.

• Approach (transrectal vs transperineal)
• Type (without or with fusion biopsy)
• Guidance method (ultrasound vs in-bore MRI or CT)

CPT 55705 will now be used for non–imaging-guided biopsy procedures.

Finally, there will now be new Category I codes to report irreversible electroporation of the prostate, transurethral robotic-assisted resection of the prostate, and a cystourethroscopy procedure that involves a transurethral anterior prostate commissurotomy followed by drug delivery using drug-coated balloon catheters.

CONCLUSION

Urologists and urology groups should be aware of the key provisions outlined in the 2025 proposed rule. This summary clearly does not cover all the proposed changes and updates, and there may be changes and updates that are not included in the final rule. However, this proposal has shifts that significantly impact the practice of urology.

To further explore the real-world impact of the 2026 proposed rule, join Dr Rubenstein, Dr Kyle Richards, and Mark Painter for AUA CodingPlus Part 3Three (2025) on September 24th. Click here for more information and to register.