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Medicare’s 2026 Physician Fee Schedule: What Changed and What to Do Next

Medicare’s 2026 Physician Fee Schedule: What Changed and What to Do Next

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For 2026, Medicare Part B payment policy introduces several structural updates. The Center for Medicare & Medicaid Services (CMS) finalized two national conversion factors—one for clinicians who meet advanced alternative payment model participation thresholds and one for those who do not—affecting how practices model reimbursement and clinician compensation.

The final rule also includes an “efficiency” adjustment that reduces work RVUs for many non-time-based services, updates how indirect practice expense is allocated by site of care and clarifies which telehealth flexibilities are permanent versus time-limited.

These changes have practical implications for daily operations, from scheduling telehealth follow-ups to pricing wound care services and planning quality reporting. This guide breaks down the 2026 Physician Fee Schedule and translates the final rule into concrete steps for clinics, practice leaders and revenue cycle teams.

2026 Payment Rates: New Conversion Factors Explained

Beginning January 1, 2026, Medicare uses separate national conversion factors depending on whether a clinician qualifies via advanced payment model thresholds. The amounts are $33.5675 (qualifiers) and $33.4009 (non-qualifiers). The anesthesia schedule mirrors this with $20.5998 and $20.4976. These values incorporate small statutory updates, a one-year increase and a budget neutrality adjustment. If your practice models compensation or payer mix using a single rate, update your calculators now.

Action: Confirm whether any of your clinicians meet the qualifying thresholds and run side-by-side projections for 2026 based on payer mix and service mix.

RVU Changes: How the 2.5% Efficiency Adjustment Impacts Practices

CMS finalized a 2.5% reduction to work RVUs and matched intraservice time for non-time-based codes, reflecting anticipated productivity gains as services become standardized or technology improves. Time-based codes (e.g., E/M, psychotherapy, many telehealth services) are not impacted. Specialty-level effects are modest overall (generally within ±1%), but high procedure or imaging practices should check code-level RVUs.

Action: Identify your top 25 non-time‑based CPT/HCPCS codes and compare 2025 vs 2026 RVUs and allowed amounts. Adjust productivity benchmarks and scheduling blocks as needed.

Indirect Practice Expense Updates: Site-of-Service Payment Shifts

CMS modified the indirect practice expense method so that the portion tied to work RVUs in facility settings is half the non‑facility proportion. This redistributes payment toward office‑based care and away from hospital outpatient services, though overall policy remains budget‑neutral. Office‑centric specialties may see incremental gains; hospital‑based services may see pressure.

Action: Re‑forecast margins by site of service and revisit decisions on where to furnish services (office vs HOPD/ASC), factoring lease, staffing and equipment costs.

Telehealth Policy Updates: Permanent Changes and Expiring Flexibilities

  • No more frequency caps for telehealth subsequent inpatient, subsequent nursing facility and critical care consults starting CY 2026. This helps teams avoid unnecessary in‑person “check‑ins” solely to satisfy frequency rules.
  • Virtual direct supervision via real‑time audio/video is permanently allowed for most incident‑to services; teaching physician policies permit virtual participation under defined conditions. Document modality and presence in the note.
  • Pandemic‑era flexibilities (home as originating site, audio‑only for non‑behavioral services, broadened practitioner list) continue through January 30, 2026, with several reverting after that date. FQHCs/RHCs can bill non‑behavioral telehealth through December 31, 2026 (G2025).

Actions:

  1. Update telehealth scheduling templates to reflect removed frequency limits.
  2. Refresh policies for virtual supervision (credentialing, documentation, risk management).
  3. Track the January 30, 2026 cut‑over—adjust workflows for audio‑only and practitioner types accordingly.
  4. FQHC/RHC leaders: plan 2026 revenue using G2025 and ensure coding staff have updated guidance.

Skin Substitutes: Simplified Rates and Classification

After explosive growth in spending, CMS reclassified most skin substitute products as incident‑to supplies when used with covered application procedures in the office setting, with separate payment under OPPS for hospital outpatient departments. Products are grouped by FDA regulatory pathway (361 HCT/P, device types such as 510(k) or PMA; section 351 biologics remain under ASP). For 2026, CMS set a single standardized national rate: $127.28/cm² for non‑biologic products.

Actions:

  • Audit inventory and clinical protocols; validate that product choice matches clinical indications and regulatory status.
  • Re‑price cases using the uniform rate and re‑work prior authorization scripts to reflect new coding/payment.
  • Update supply chain contracts to align with 2026 Medicare pricing realities.

QPP and MIPS Updates: Performance Thresholds and New MVPs

CMS maintains the performance threshold at 75 points through 2028 and adds six new MVPs (diagnostic radiology, interventional radiology, neuropsychology, pathology, podiatry, vascular surgery). There’s a two‑year informational‑only period for new cost measures, giving clinicians feedback before measures affect scores. Multispecialty small practices (≤15 clinicians) retain flexibility to report MVPs as a group.

Action: Map your 2026 reporting plan (Traditional MIPS vs MVP vs APP). If you’re in one of the new specialties, decide whether an MVP better reflects your practice and quality aims.

Medicare Shared Savings Program (MSSP) Updates: Risk Timelines and Equity Changes

Starting with agreements on or after January 1, 2027, ACOs are limited to five years in one‑sided BASIC track before moving to two‑sided risk. The 5,000‑beneficiary minimum can be met in benchmark year three, with guardrails if counts dip. The health‑equity add‑on to quality scores are removed in performance year 2026, with CMS citing overlap with other initiatives. Expect stronger monitoring and clarified change‑of‑ownership reporting.

Action: ACO leaders should reassess risk readiness (care management, analytics, stop‑loss) and quality strategies sans equity add-on; model the beneficiary count rules across the three benchmark years.

The Ambulatory Specialty Model (ASM): What Specialists Need to Know Before 2027

Finalized for January 1, 2027, in selected regions, ASM is a mandatory model for specialists frequently managing heart failure or low back pain, with payment adjustments from –9% to +9% based on performance in four categories. It builds on the MVP framework and evaluates clinicians individually.

Action: Cardiologists, pain/interventional, orthopedics, neurosurgery, PM&R: begin internal readiness (episode attribution, outcomes tracking, interoperability, patient‑reported measures).

2026 Medicare Physician Fee Schedule: Operational and Compliance Checklist

  • Fee schedule load: Verify both conversion factors in your PM/EMR and payer contracts.
  • RVU dashboards: Refresh productivity targets for non‑time‑based services.
  • Telehealth SOPs: Document permanent changes and the Jan 30, 2026 flexibilities cutoff; ensure virtual supervision documentation standards.
  • Wound care: Align product choices, coding, and pricing with the 2026 skin substitute framework.
  • QPP plan: Lock your 2026 reporting strategy and prep for new MVPs.
  • ACO governance: Update risk glidepath planning and beneficiary assignment modeling.

Preparing for the 2026 Medicare Physician Fee Schedule: Key Takeaways and Next Steps

The 2026 Medicare Physician Fee Schedule brings meaningful changes that will shape how healthcare organizations deliver care and manage reimbursement. With new conversion factors, efficiency adjustments to RVUs and updates to telehealth and site-of-service policies, practices face both challenges and opportunities. The emphasis on value-based care, streamlined reporting pathways, and the introduction of mandatory specialty models signals a continued evolution in Medicare’s approach to payment and quality.

Success in this environment requires proactive planning. Reviewing service lines, updating financial projections and refining care delivery workflows will help organizations adapt to regulatory changes and maintain stability. Staying informed and agile is essential, as CMS continues to refine policies and introduce new models.

Ultimately, these reforms are designed to encourage efficiency, quality and patient-centered care. By embracing these changes and preparing thoughtfully, healthcare organizations can position themselves to thrive in a landscape that increasingly rewards innovation and collaboration.

Questions about how these changes apply to your practice?

Frazier & Deeter can help you assess financial impact, evaluate operational changes and plan for upcoming value-based models. Contact us to start a conversation.

Contributors

Heather Gibson, Senior Consultant, Frazier & Deeter Advisory, LLC

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