CMS has released its final rule for the 2026 Medicare Physician Fee Schedule, including major reimbursement changes, updated conversion factors, and policy shifts affecting physician practices, ACOs, and specialty care models.
1. Two Separate Conversion Factors
For 2026, CMS will use two different conversion factors:
- One for Qualified Practitioners (QPs) participating in Advanced APMs.
- One for non-QP physicians and practitioners.
2. New Conversion Factor Amounts
- QP conversion factor: $33.57 (up 3.77% from $32.35).
- Non-QP conversion factor: $33.40 (up 3.26% from $32.35).
3. What Drives These Increases
Each conversion factor reflects:
- A 0.75% increase for QPs and 0.25% for non-QPs.
- A one-year 2.5% increase is required by the One Big Beautiful Bill Act.
- A 0.49% increase tied to finalized changes in work RVUs.
4. New 2.5% Efficiency Adjustment
CMS finalized a –2.5% efficiency adjustment to work RVUs and physician time for non–non-time-based services.
This cut does not apply to services such as:
- E/M
- Behavioral health
- Care management
- Medicare telehealth
- Maternity/global period (270-day) MMM codes
5. Updated Practice Expense Methodology
CMS is overhauling practice expense calculations to better reflect current clinical practice and recognize higher indirect costs for office-based practitioners compared to facility settings.
6. Use of Auditable Hospital Data
Starting in 2026, CMS will use Hospital Outpatient PPS data to inform cost assumptions for certain technical services.
This affects radiation therapy and some remote monitoring services.
7. Streamlined Medicare Telehealth Additions
CMS is simplifying how services are added to the telehealth list by:
- Eliminating the distinction between “provisional” and “permanent”
- Focusing the review solely on whether a service can be delivered via two-way, audio-video communication
8. New 340B Claims Methodology
The rule includes a new claims-based method to remove 340B units from Part D rebate calculations and establishes a voluntary data repository for Part D claims dated Jan. 1, 2026, and onward.
9. New Mandatory Ambulatory Specialty Model
CMS is launching a mandatory Ambulatory Specialty Model, targeting:
- Heart failure and low back pain
Additional updates were finalized for the Medicare Diabetes Prevention Program.
10. Shared Savings Program Flexibilities
CMS is updating MSSP eligibility and financial reconciliation rules, including more flexibility around the requirement that ACOs serve at least 5,000 FFS beneficiaries, particularly during benchmark years.
11. AMA Response
The AMA applauded the one-time 2.5% update and telehealth provisions but warned of potential unintended consequences.
While the rule prevents reimbursement cuts, AMA President Bobby Mukkamala, MD, emphasized that the update does not match rising practice costs, especially for private practices and hospital-based providers.
12. Health System Leaders React
Leaders of major health systems have also raised concerns about the rule’s broader impact on physician practices and value-based care participation.
Resource: Providers decry CMS’ ‘efficiency adjustment’ proposal: 3 notes