The proposed Physician Fee Schedule (PFS) recently released by the Centers for Medicare & Medicaid Services (CMS) appears to be a recognition of the need for care for chronic conditions – but that doesn’t mean that the proposal also supports therapy to achieve that goal.

Potential measures on nutrition and chronic disease are promising, but cuts to therapy codes tell another story, according to experts.

Cynthia Morton, CEO of therapy services advocacy group ADVION, interpreted a request for information on potential measures that promote well-being and nutrition as a recognition of widespread chronic disease and a signal that the administration is looking for information from stakeholders about dealing with it.

However, such a recognition stands in stark contrast with other moves taken in the proposed PFS – namely, cuts and low increases to therapy codes.

“Now that we have had time to digest the Physician Fee Schedule, we are really calling into question recognitions like this because they do not align with the decreases in the therapy codes,” Morton said. “For example, low cost therapy services go a long way to help a senior with their gait so that they are at a much lower risk for a fall.”

Overall, the proposed PFS feels different from previous years, with a quarter percent increase intersecting with a 2.5% boost from the One Big Beautiful Bill Act (OBBBA), a 0.25% increase associated with the Medicare Access and CHIP Reauthorization Act (MACRA) for those that don’t qualify for Advanced Alternative Payment Models (APMs), and a proposed 0.55% budget neutrality adjustment bringing the total PFS increase to 3.3%.

Jean Brooks, senior vice president for American Senior Communities Therapies and Wellness, said initial excitement for the 3.3% boost was tempered because it doesn’t apply to all codes across the board, especially therapy codes.

“When you really start looking at the data, it feels like we’re being dug at again and again and again,” said Brooks. “That’s been something we’ve talked about every time we go to the Hill for all these years. All of our therapists are getting raises, need to get raises. We can’t continue to get all these decreases or lack of increases or minor increases and still provide the same level of service.”

A different but confusing proposed PFS

The administration’s first PFS proposal for the first time differentiates conversion factors for qualifying participants in the APMs and another for non-qualifying providers.

Morton refers to a change made by MACRA, which created two conversion factors in addition to the one dedicated to Medicare fee-for-service, one called the Merit-based Incentive Payment System (MIPS) and the other being the Alternative Payment Model (APM).

“The change is that we’ve never had two conversion factors … one is higher than the other to incentivize practitioners that bill under the fee schedule to go and seek out an alternative payment model,” explained Morton.

It is a way for CMS to work value-based care into the PFS, she noted.

But nursing homes were exempted from MIPS and it’s very difficult for them to qualify for APM, Morton said. CMS reserved these incentive programs for individual practitioners while leaving nursing homes at a disadvantage here.

“Providers that didn’t go into MIPS or APM, they got penalized because their conversion factor was set at 0% for five years,” Morton said. “Coincidentally, over the last five years CMS made some big changes to [evaluation and management] EM codes … because we were starting at a zero baseline, when CMS made those big changes, it caused a big cut.”

But in 2026, the “next phase” of MACRA begins, she said. That 0% five-year phase is adjusted to 0.25%, she said, which is pennies but better than nothing. Nursing homes that do therapy or social work in house would get that bump.

A boost, at least on the surface

In addition to changes with conversion factors, CMS made changes to certain code values in order to get an overall positive budget adjustment, bolstering the overall budget adjustment to 3.3% – it’s a positive for nursing homes on the surface, Morton said, but could mean a change in therapy services considering previous cuts to such codes.

Certain codes in the PFS are nipped while others increase in order to offset the 3.3%, with changes not more than $20 million under statute. The devil’s in the details here, she said, with a lot of therapy codes either seeing a cut to offset the wider PFS increase, or a very low increase compared to last year.

“We don’t know why CMS is doing this. Some of our codes have been cut five years in a row … we don’t see the logic, especially this year with the new administration really valuing prevention and chronic care,” said Morton.

Brooks expects this change in therapy code reimbursement will have an effect on how therapy companies work with nursing homes, perhaps taking on less work in the sector because it will cost them more money than what they’re receiving in reimbursement.

“Therapy companies will only be able to go so low. There will be less services. There’s no way that we can provide the same level of service by the same type of therapist with the lack of reimbursement increase that is needed for long-term care,” said Brooks.

Therapy is a low-cost therapeutic that helps the resident avoid falls, and is something they can explore before going on pain opioids or turning to other, more costly methods of care.

“These ideas are very aligned with the new administration, and so the whole therapy community just does not understand why CMS has decreased many of our codes yet again, because it’s sending an opposite message from what the administration is sending,” said Morton.

Compounded cuts to therapy codes mean providers have cut back on use of physical therapists in the nursing home.

“Some of them can now only be available five days a week because they just can’t afford to be available in the facility for seven days, because the services just aren’t getting reimbursed what they used to be reimbursed … the reimbursement doesn’t even cover what It costs to provide the service,” said Morton.

ADVION has spoken with CMS about these issues, that members are at the end of what they can sustain. While explanations around code reimbursement changes are few and far between, CMS may say something about their decisions in the final rule, Morton noted.

And there are further positives: Aside from therapy codes and the conversion factor, Morton said changes to telehealth in the PFS are positive for nursing homes, with frequency limitations being removed.

Physicians can decide when they want to use telehealth to see a nursing home resident; they don’t have an arbitrary limit on such visits anymore.