Medicare physician payments rise in 2026, but new rules and efficiency adjustments will impact reimbursements by specialty and setting.
Physicians will see a positive update in 2026 combined with changes to how their payment rates are set with the release of the Centers for Medicare & Medicaid Services’ (CMS) final calendar year (CY) 2026 physician fee schedule (PFS) rule.
Positive 2026 payment update
It’s welcome news that physicians and other practitioners paid under the PFS receive a positive update in 2026. A major part of that update is a 2.5% increase mandated under the budget reconciliation law (HR 1/OBBBA).
Additionally, existing statutes require either a 0.75% or 0.25% increase based on whether providers are in a Qualifying Alternative Payment Model (APM) or not, respectively. There is also another 0.49% adjustment to account for other changes in the rule.
“We know physicians will be pleased to see a positive Medicare reimbursement update for 2026, but other policies may not be as well received,” said Emily Lambert, physician and dental practices leader for CLA. “That’s why it will be important for physicians to prepare for the impacts of these changes by closing out 2025 well. This includes submitting charges by year end, cleaning up accounts receivable, planning for increases (or decreases) in Medicare payments, analyzing expenses year-over-year, and more.
CLA can help.”
Combined, these policies will result in Medicare payment updates for 2026 of:
- Qualifying APM — Total conversion factor of $33.57 or 3.77% (projected increase of $1.22)
- Nonqualifying APM — Total conversion factor of $33.40 or 3.26% (projected increase of $1.05)
CMS efficiency adjustment
CMS does finalize its “efficiency adjustment” factor for work relative value units (wRVUs) and corresponding intraservice portion of physician time of non-time-based services. The adjustment is a negative 2.5% for CY 2026, which is based on the sum of the past five years of the Medicare Economic Index productivity adjustment percentages.
The efficiency adjustment applies to all codes except time-based codes, such as evaluation and management (E/M) services, care management services, behavioral health services, services on the Medicare telehealth list, and maternity codes with a global period of MMM.
CMS will apply the efficiency adjustment every three years.
The Affects of PE Changes
The practice expense changes will impact reimbursements in facility-based settings — hospitals, ambulatory surgery centers, and nursing homes. Combined with the other changes, these impacts will vary considerably by specialty and setting.
For example, CMS estimates cardiology will see an estimated 1% increase overall. When looking at it by setting, non-facility-based physicians will see a 5% increase while facility-based settings see a 7% decrease.
Practice expense (PE) changes
CMS finalizes a practice expense change to indirect cost based on whether those are office-based or facility-based. For CY 2026, CMS finalized reducing the portion of the facility PE RVUs allocated based on work RVUs by 50% of the amount allocated to non-facility PE RVUs.
This will reduce reimbursements in those facility-based settings — such as hospitals, ambulatory surgery centers or nursing homes — while increasing reimbursements in office-based settings due to budget-neutrality requirements. There are some exempted services.
New ambulatory specialty model (ASM)
CMS finalized the mandatory ASM model for certain specialties related to lower back pain and heart failure. The model begins January 1, 2027. Its focus is to reduce unnecessary costs and improve outcomes for these chronic conditions.
Subscribe
Watch for CLA’s forthcoming article on the ASM. Make sure you don’t miss it by signing up for CLA Email Subscriptions.
ASM is a two-sided risk model, meaning payments would be adjusted up or down depending on outcomes. CMS indicates roughly 25% of all core-based statistical areas and metropolitan divisions will be included in the model. Final selection of these geographies is forthcoming. The mandated specialties included are anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation and cardiology.
The model applies only to patients in traditional, fee-for-service Medicare. The potential payment adjustment is +/- 9% in the first payment year up to +/-12% by the end of the model.
Telehealth services updates, remote monitoring services
CMS finalizes several changes related to telehealth, including removing the frequency limitations on furnishing certain services via telehealth. These frequency limits had been periodically lifted, such as during the pandemic, and CMS believes making that permanent is appropriate. Frequency limits are lifted for the following hospital and nursing home codes — subsequent inpatient visits, subsequent nursing facility visits and critical care consultation services.
CMS adds several codes to the permanent telehealth list (group behavioral counseling for obesity, multiple-family group psychotherapy, plus several others) and finalizes updates to remote patient (RPM) and therapeutic monitoring (RTM) codes to include new codes that will apply for a shorter duration of days (2–15) plus reduced amount of clinical time needed to bill.
Rural health clinics (RHC), federal qualified health centers (FQHC)
Continuing the trend of having RHCs and FQHCs separately bill for certain services, CMS finalizes that advanced primary care management (APCM) add-on codes can be used for behavioral health integration and collaborative care model services. CMS also finalizes unbundling of G0071 related to communications-based technology services beginning January 1, 2026.
CMS will require FQHCs and RHCs providing mental health services through telecommunications technology to meet in-person visit requirements beginning October 1, 2025. Therefore, beginning October 1, 2025, there must be an in-person mental health service furnished within six months prior to the furnishing of the telecommunications service and that an in-person mental health service (without the use of telecommunications technology) must be provided at least every 12 months while the beneficiary is receiving services furnished via telecommunications technology for diagnosis, evaluation, or treatment of mental health disorders. There is a limited ability to waive this requirement.
Shared savings program (ACOs)
CMS finalizes various changes to its main accountable care organization (ACO) program. Examples include:
- Requiring certain change of ownership notifications by ACOs. This also includes ACO’s skilled nursing facility (SNF) affiliate list.
- Reducing the time period ACOs can participate in a one-sided model of the BASIC track to a maximum of only five performance years during the ACO’s first agreement period instead of seven performance years. This change begins with agreement periods on or after January 1, 2027.
- Allowing fewer than 5,000 beneficiaries in an ACO in benchmarks years 1 and 2 with agreement periods on or after January 1, 2027.
How CLA can help
These changes and many others in the PFS 2026 rule are now final. Physicians and other clinicians should prepare for 2026 by closing out 2025 on solid financial and operational footing.
CLA’s physician and medical group team can assist with revenue cycle review and cleanup, compensation studies, technology utilization, cybersecurity assistance, and more.