Fixing the Medicare Physician Fee Schedule is Critical to Safeguarding Skilled Nursing Care in Texas

Protecting access to high-quality care in skilled nursing facilities is not just a policy issue—it is a commitment to the health and dignity of Texas seniors.
 
By Travis Clardy
 
Medicare plays a vital role in supporting the health and well-being of more than 4.7 million Texans—many of whom are older adults with complex medical needs. Ensuring access to high-quality care under this program is essential to helping seniors recover, maintain independence, and live with dignity.
 
For many of these individuals, care is not simple or short-term. They often face multiple chronic conditions, longer recovery periods, and a greater need for coordinated medical oversight. This reality makes access to consistent, high-quality care across the healthcare continuum especially important.
 
Skilled nursing facilities (SNFs) are a cornerstone of that continuum. Across Texas, SNFs provide critical post-acute care that helps patients transition safely from the hospital back to their homes or communities. These facilities deliver intensive medical services, rehabilitation, and ongoing monitoring that reduce complications, prevent unnecessary hospital readmissions, and ultimately lower overall healthcare costs.
 
However, recent changes to the Centers for Medicare & Medicaid Services (CMS) 2026 Physician Fee Schedule (PFS) have unintentionally placed this essential care at risk.
 
The policy changes were designed to address cost disparities associated with hospital-owned physician practices—where higher reimbursement rates have not consistently translated into better patient outcomes. Unfortunately, in implementing these changes, CMS also reduced reimbursement for independent physicians who provide care in skilled nursing facilities.
 
This is a critical distinction.
 
Unlike hospital-employed physicians, independent practitioners serving SNFs are responsible for covering their own operational expenses, including staffing, billing, and malpractice insurance. They are not subsidized by the facilities where they practice. Applying the same reimbursement reductions to these providers fails to recognize the realities of their practice model.
 
The consequences of this policy misalignment are serious. Reduced reimbursement threatens the financial viability of independent physicians who serve SNFs, potentially leading to fewer providers willing or able to care for this vulnerable population. Without adequate physician coverage, residents in skilled nursing facilities may experience disruptions in care, delayed treatment, and higher risks of rehospitalization.
 
The impact would be especially severe in rural and underserved areas of Texas, where access to healthcare providers is already limited. In many of these communities, SNFs rely heavily on independent physicians. Losing that access could leave seniors with few, if any, viable care options.
 
Additionally, the current policy may inadvertently accelerate consolidation within the healthcare system. As independent practice becomes less sustainable, more physicians may be forced into hospital employment models counteracting CMS’s broader goal of reducing unnecessary consolidation and controlling costs.
 
There is, however, a practical and straightforward solution.
 
CMS can correct this issue in the 2027 Physician Fee Schedule by aligning reimbursement policies for skilled nursing facilities (Place of Service 31) with those already in place for nursing facilities (Place of Service 32). Under POS 32, CMS acknowledges the legitimate costs physicians incur when providing care and adjusts practice expense values accordingly.
 
Applying this same framework to SNFs would resolve a clear inconsistency. In many cases, the same physicians provide care to patients in both settings often within the same building. Aligning these policies would ensure fairness, accuracy, and stability in reimbursement.
 
Looking ahead in Texas, the need for skilled nursing care will only grow. By 2034, older adults are projected to outnumber children in the United States. Texas must be prepared to meet this demand with a strong, sustainable network of providers and facilities.
 
The Texas Health Care Association urges CMS to act swiftly to make this technical correction. Protecting access to high-quality care in skilled nursing facilities is not just a policy issue—it is a commitment to the health and dignity of Texas seniors.
 
Failing to address this issue risks undermining care for some of our most vulnerable citizens. Getting it right ensures that skilled nursing facilities can continue to deliver the essential services that millions of Texans depend on every day.
 
Travis Clardy, a former member of the Texas House of Representatives, is president of the Texas Heath Care Association