CMS released its final rule for 2026 Medicare payments under the physician fee schedule, including two separate conversion factors, Oct. 31.
Twelve things to know:
1. CMS will implement two separate conversion factors for Medicare reimbursement. One for qualified practitioners participating in advanced alternative-payment models that promote quality and cost accountability. The other will be used for non-QP physicians and practitioners.
2. The final rule includes a QP-conversion factor of $33.57, representing a 3.77% increase from the current conversion factor of $32.35. For non-QPs, the final rule increases the conversion factor by 3.26%, from $32.35 to $33.40.
3. Changes to the QP and non-QP conversion factors for 2026 include increases of 0.75% and 0.25%, respectively, according to CMS. They also include a one-year increase of 2.5% stipulated by the One Big Beautiful Bill Act, and a 0.49% increase that the agency said is necessary to account for finalized changes in work relative value units for some services.
4. Additionally, the rule finalizes an efficiency adjustment of negative 2.5% to work RVUs and corresponding intraservice portion of physician time for non-time-based services that CMS said it expects to accrue gains in efficiency over time. This cut, based on the past five years of the Medicare Economic Index productivity factor, would periodically apply to all codes except time-based services, such as evaluation and management, care management, behavioral health, Medicare telehealth services and maternity codes, which have a global period of 270 days (designated as MMM).
5. CMS is also finalizing significant updates to its practice expense methodology that it says will “better reflect current clinical practice” and “recognize greater indirect costs for practitioners in office-based settings compared to facility settings.”
6. CMS said it is also finalizing its proposal to use data from auditable, routinely updated hospital data (i.e., from the Medicare Hospital Outpatient Prospective Payment System) to set relative rates and inform the agency’s cost assumptions for some technical services paid under the physician fee schedule. Specifically, the agency will use this data next year in setting rates for radiation treatment services and some remote monitoring services.
7. Additionally, CMS is finalizing a proposal to streamline how services are added to the Medicare telehealth services list. The agency said it is simplifying the review process by removing the distinction between provisional and permanent status, and limiting its review on whether the service can be provided via an interactive, two-way, audio-video telecommunications system.
8. The final rule also includes a new claims-based methodology to remove 340B units from Part D rebate calculations and finalizes a proposal to establish a data repository that will allow voluntary submissions by covered entities for Part D claims dated Jan. 1, 2026, or thereafter.
9. CMS said it is finalizing a new Ambulatory Specialty Model — a mandatory payment model focused on specialty care for beneficiaries with heart failure and low back pain. The agency is also finalizing changes to its diabetes prevention program.
10. The Medicare Shared Savings Program will see updates to eligibility and financial reconciliation requirements, particularly regarding the rule that accountable care organizations must serve at least 5,000 assigned Medicare fee-for-service beneficiaries. The agency said the changes are designed to increase flexibility around the minimum beneficiary threshold during benchmark years.
11. The American Medical Association issued a statement Nov. 2 cautioning that although CMS’ final rule “includes a vital, one-time 2.5% update and critical telehealth provisions, other components of the rule may have unintended consequences for patients and private physician practices across the country.”
“That physicians are not facing a reduction in reimbursements — as we have in the past — is a significant positive for 2026 and a win for patients’ access to care. Yet, this one-time correction does not keep up with increasing costs, and private practices across the country are expressing concern this rule would further put them at a disadvantage merely for treating patients at a hospital or ambulatory surgery center,” AMA President Bobby Mukkamala, MD, said in the statement. “As the new rule is implemented and its changes are felt, we will share with CMS the real-world impacts — data and details not always easily available to policymakers in Washington. This exchange and collaboration are vital to keeping practices open during a physician shortage.”
12. Executives at major health systems have also decried several aspects of CMS’ annual proposed changes to next year’s physician fee schedule and the Medicare Shared Savings Program.
To view the final rule, click here.
