The Centers for Medicare & Medicaid Services (CMS) has released the final rule for the Calendar Year 2026 Medicare Physician Fee Schedule (PFS), effective January 1, 2026. This rule outlines policy changes for Medicare payments under the PFS and other Medicare Part B issues.
Since 1992, payments under the PFS have been made to physicians and other billing professionals in various settings, including physician offices, hospitals, and skilled nursing facilities. Payments are determined based on relative value units (RVUs) applied to each service, which account for work, practice expense, and malpractice expense. These RVUs are converted into payment rates using a conversion factor that includes geographic adjustments.
For CY 2026, CMS will implement two separate conversion factors: one for qualifying alternative payment model (APM) participants and another for non-qualifying practitioners. The update to the qualifying APM conversion factor is +0.75 percent, while non-qualifying APMs will see a +0.25 percent increase. The final qualifying APM conversion factor is set at $33.57, representing a projected increase of $1.22 from the current rate.
CMS is also finalizing an efficiency adjustment to address overvaluation of certain services under the PFS by applying a -2.5% adjustment to work RVUs for non-time-based services.
In terms of practice expenses, CMS will not implement new data from the AMA’s Physician Practice Information Survey due to concerns about sample size and representativeness but will recognize greater indirect costs for office-based practitioners compared to facility settings.
For telehealth services in CY 2026, CMS will streamline processes by removing distinctions between provisional and permanent services and allowing virtual direct supervision through audio-visual telecommunications.
Additionally, CMS has finalized policies aimed at improving care for chronic illnesses and behavioral health needs by creating optional add-on codes for Advanced Primary Care Management services that integrate behavioral health care.
Regarding skin substitutes, CMS plans to pay these products as incident-to supplies when used in covered procedures under PFS or OPPS settings.
Finally, new policies under the Medicare Prescription Drug Inflation Rebate Program have been established following the Inflation Reduction Act of 2022 to ensure drug prices do not rise faster than inflation rates.
Further details can be found in the full CY 2026 PFS final rule available on [Federal Register](https://www.federalregister.gov/public-inspection/current).
Information from this article can be found here.
