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CMS Finalizes 2026 Medicare Physician Fee Schedule Rule
On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) issued its Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Final Rule, which addresses physician payments under Medicare, as well as policies for the Quality Payment Program.
Some notable provisions in the final rule include:
- Four different conversion factors, based on whether a physician is a qualifying participant (QP) in an advanced alternative payment model (APM). The conversion factors reflect permanent and temporary updates, with QPs receiving slightly higher payments than non-QPs.
Medicare Conversion Factors:
- A new -2.5% “efficiency adjustment” which will be applied to work relative value units (RVUs) and intra-service time for non-time-based services, affecting most surgical specialties, radiology, and pathology by reducing their overall payment.
- Optional add-on codes for Advanced Primary Care Management (APCM) behavioral health expansion.
- Permanent telehealth fixes that lift the frequency limits on telehealth services provided to patients in hospitals and skilled nursing facilities, allow virtual direct supervision for most services that require supervision, and allow teaching physicians to provide virtual supervision to residents providing telehealth services in all training sites instead of to only to rural areas as originally proposed.
- The Merit-based Incentive Payment System (MIPS) performance threshold will remain at 75 points through the 2028 performance year/2030 payment year to avoid harsh penalties that continue to disproportionately impact small and rural practices.
- The portion of the facility Practice Expense (PE) RVUs allocated based on work RVUs will be reduced to half the amount allocated to non-facility PE RVUs.
- A new mandatory Ambulatory Specialty Model (ASM) for certain specialists in select geographic areas who commonly treat people with heart failure or low back pain in an outpatient setting. Implementation will begin in 2027 with payment adjustments between -9% and +9% starting in 2029.
- A two-year informational-only feedback period for new cost measures, allowing clinicians to receive feedback on their score(s) and find opportunities to improve performance before a new cost measure affects their MIPS final score.
- Six new MIPS Value Pathways (MVPs) for the 2026 performance period that are related to diagnostic radiology, interventional radiology, neuropsychology, pathology, podiatry, and vascular surgery.
- Modifications to all 21 existing MVPs, in alignment with proposals to update the quality measure and improvement activity inventories.
- Reduction in the time an Accountable Care Organization (ACO) can participate in a one-sided model of the BASIC track to five years.
- Modification of the eligibility requirement that ACOs have at least 5,000 Medicare FFS beneficiaries, and removing the health equity adjustment.
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