Contributed commentary by Curtis Johnson, former Deputy Speaker in the Tennessee House, on a change to the Centers for Medicare & Medicaid Services 2026 Physician Fee Schedule.

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Contributed commentary by Curtis Johnson, former Deputy Speaker in the Tennessee House of Representatives:

I spent 20 years representing Clarksville in the Tennessee House of Representatives. As a member, one of my priorities was ensuring healthcare access for our seniors – a priority that was all the more important given our location as a smaller, more rural city. Ensuring our healthcare infrastructure could meet the needs of our most vulnerable residents was essential. The consequences of a weakened system or a reduction in access to care hit harder here than in Nashville or Knoxville.

And right now, I’m concerned about how a change to the Centers for Medicare & Medicaid Services (CMS) 2026 Physician Fee Schedule is threatening access to care.

Change in the calculation

In this year’s Physician Fee Schedule, CMS changed how it calculates practice expenses for physicians working in facilities, including skilled nursing facilities (SNFs). The change assumes that physicians inside facilities don’t have meaningful costs, because the facility covers them.

But that’s not how it works for independent physicians serving SNFs. In these settings, the physicians are responsible for maintaining their own practice infrastructure. They carry those costs themselves. Whether it’s staff, billing, malpractice, or more, the facility doesn’t cover any of it.

When reimbursement no longer reflects the real cost of providing care, it may not be financially viable for independent physicians to serve SNFs. Seniors who rely on this care to manage conditions and prevent re-hospitalization could lose access to high-quality physician care. Patients in larger cities may have other options. In rural areas or underserved small towns like ours, they don’t.

There’s also a cost to the Medicare program itself. SNFs help get patients healthy and home. Policies that reduce access to care for patients in SNFs could force seniors back to hospitals and costlier settings to continue their recovery, driving up costs to Medicare in the process.

Separately, the rule was intended to curb the practices of hospitals, which have been driving higher costs to Medicare by purchasing physician offices and shifting care to higher-cost billing departments. But grouping SNFs with hospitals makes this challenging to address. That’s likely to push independent physicians toward hospital employment anyway, deepening the consolidation the rule was meant to prevent.

Solution possible in Physician Fee Schedule

In the 2027 Physician Fee Schedule, CMS can align the treatment of SNFs under Place of Service 31 with that of nursing facilities under Place of Service 32, where practice expense values already reflect the real costs physicians carry. That ensures that independent physicians in SNFs are paid in a way that reflects what it actually costs to serve these patients.

The Trump administration was right to target hospital systems and their pattern of raising costs without improving care. Unfortunately, SNFs and the physicians who serve them were caught in the crossfire.

CMS must address this with the 2027 Physician Fee Schedule. Aligning Place of Service 31 with Place of Service 32 keeps independent physicians in rural communities, discourages further consolidation, and protects access to care for 1.4 million Tennessean seniors on Medicare who are counting on it.

Curtis Johnson