CMS Proposed 50% Cut to Secondary Service Payments
Outpatient providers face potential revenue shifts as CMS evaluates a new payment rule for same-day services.
Updated on Sept. 21, 2026 in Healthcare
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CMS published a proposed rule in the Federal Register on July 16, 2026, which would reduce payments for secondary surgical or evaluation and management services performed during the same outpatient visit. The policy would pay the primary service at 100% and subsequent services at 50% of the established rate.
Why it matters
The agency aims to eliminate what it characterizes as duplicate payments for multiple services provided on a single day. Operators are bracing for significant revenue declines if the proposal is finalized, as it would fundamentally alter reimbursement models for high-volume outpatient clinics.
The proposal mandates a 50% payment cut for secondary services against the current standard of full reimbursement for each billed item. Opposition is widespread, with 150 healthcare organizations having formally objected to the agency's plan.
The players
CMS
The federal agency within the U.S. Department of Health and Human Services that manages the Medicare program and sets national physician payment policy.
American Medical Association
A national professional association that represents physicians and advocates for medical practice standards and reimbursement policy.
The details
Under the proposal, CMS would maintain a 100% payment rate for the single most expensive procedure performed during a patient encounter, while applying a 50% reduction to any additional surgical or evaluation and management services. This mechanism targets the use of modifier 25 to ensure that providers are not receiving full compensation for multiple services that the agency suggests may include redundant administrative or procedural work. The RBRVS Update Committee provides the underlying rate recommendations that inform these CMS payment structures.
Timeline
CMS previously proposed and withdrew a similar modifier 25 rule in 2019.
The proposed rule was published in the Federal Register on July 16, 2026.
The public comment period for the proposal officially closed on September 20, 2026.
CMS is required to release a final rule regarding these payment changes by November 1, 2026.
Market Landscape
This proposal revives a controversial cost-containment strategy last seen in the 2019 CMS modifier 25 proposal. It signals a continued effort by federal regulators to scrutinize outpatient billing patterns and reduce aggregate spending on multi-service patient visits.
Outpatient providers should model the financial impact of a 50% reduction on all secondary services to prepare for potential margin compression. Operators should consult with financial advisors to review billing workflows and monitor for the final agency decision by November 1.
The takeaway
The move to reduce secondary service payments forces a reevaluation of how clinics optimize patient flow and revenue capture per visit. Operators should prepare for the November 1 final rule by auditing the volume of same-day secondary services to gauge their specific exposure to these cuts.
What happens next
CMS is required to issue a final rule regarding the proposed modifier 25 payment structure on or before November 1, 2026.
Further reading
For more on regulatory impacts on outpatient revenue, visit Healthcare.
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