What Healthcare Providers Need to Know About the 2026 Physician Fee Schedule Changes

Understanding the Changes in the 2026 Physician Fee Schedule

On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) unveiled its final rule for the Calendar Year (CY) 2026 Physician Fee Schedule (PFS), setting forth pivotal changes that will affect healthcare providers across the United States. As mandated by law, CMS will implement two distinct conversion factors starting in 2026: one for those participating in qualifying alternative payment models (APMs) and another for those who are not. This final rule is essential for physicians and practitioners, as it will influence their reimbursement levels and ultimately impact the services they can provide to patients.

What Do the Conversion Factor Changes Mean?

The conversion factor for qualifying participants in APMs will increase by 3.77% to $33.5675, while for non-participants, it will rise by 3.26% to $33.4009. These increases stem from several statutory updates, including a 0.75% and 0.25% adjustment for QPs and non-QPs respectively, a 2.5% adjustment from the One Big Beautiful Bill Act, and an additional 0.49% increase tied to changes in the work relative value units. This structured approach aims to incentivize participation in APMs, which are designed to improve care coordination and patient outcomes.

Anticipated Financial Impact on Medical Practices

With the introduction of the efficiency adjustment of -2.5%, practices that offer non-time-based services may face challenges in maintaining revenue levels. CMS estimates this overhaul will reduce the payment structure significantly for facility-based services by more than 10% for select procedures that have traditionally been offered in hospital settings. This shift places additional pressure on hospitals and independent practices, especially as the landscape of healthcare delivery continues to evolve.

The Role of Telehealth in the New Fee Schedule

In an increasingly digital world, CMS's decision to extend its waivers allowing telehealth services remains a critical point of progress. Virtual presence via audio/video technology has been officially adopted for direct supervision, easing the logistics for healthcare providers. Given that many practitioners and patients have embraced telehealth in recent times, this permanent measure underscores the growing acceptance of remote care as an essential component of modern medicine. Additionally, federally qualified health centers and rural health clinics may continue to bill for necessary telehealth services through 2026.

New Models for Specialty Care

CMS’s rollout of the Ambulatory Specialty Model (ASM) is a crucial development aimed at improving outcomes for patients with specific chronic conditions like heart failure and low back pain. Under this mandatory five-year model, specialists who frequently treat these conditions will become more accountable for managing their patients' overall health. By enhancing chronic disease management protocols, the government aims to streamline care and reduce costs for both patients and the healthcare system.

Quality Payment Program Updates

The Quality Payment Program (QPP) will also undergo transformations, including the introduction of an Advancing Health and Wellness subcategory. With these changes, CMS strives to simplify reporting requirements and promote adherence to improvement activities. Importantly, the potential move towards mandatory participation in MIPS Value Pathways signals a shift towards more standardized measures across healthcare practices.

Impact of Congressional Policy on Healthcare Providers

Additionally, the adjustments linked to the Medicare Shared Savings Program reflect the need for flexibility in a continuously changing healthcare environment. As they adapt to new eligibility and financial reconciliation guidelines, healthcare providers must remain vigilant in understanding how these changes may affect their practices. Challenges like the removal of health equity adjustments to scorecards could alter how various services are evaluated moving forward.

As these comprehensive updates take effect, they will reshape the landscape of Medicare reimbursement and healthcare service delivery as we know it. Stakeholders across the board—physicians, practitioners, administrators, and patients—will need to closely monitor how these new regulations and conversion factors will impact service offerings, reimbursements, and ultimately the quality of care provided.

Call to Action: Staying Informed

As these changes unfold, it is imperative for healthcare providers, practitioners, and patients to engage with the regulatory updates and advocacy resources offered by organizations such as the American Hospital Association (AHA) and the American College of Cardiology (ACC). By staying informed and involved, key players in the healthcare space can navigate the shifts stemming from the 2026 Physician Fee Schedule and ensure that they are maximizing their coverage options, including Medicare Advantage plans, to secure the best available benefits.