CMS issues CY 2026 physician fee schedule final rule
The Centers for Medicare & Medicaid Services Oct. 31 released its calendar year 2026 final rule for the physician fee schedule. As required by law, beginning in CY 2026, CMS is implementing two separate conversion factors: one for qualifying alternative payment model participants and one for physicians and practitioners who are not QPs. The rule increases the QP conversion factor by 3.77% in CY 2026 as compared to CY 2025. It increases the non-QP conversion factor by 3.26% in CY 2026 as compared to CY 2025. These updates include statutory updates of 0.75% and 0.25% for the QP and non-QP factors, respectively; another statutory update of 2.5% as required by the One Big Beautiful Bill Act; and an increase of 0.49% that CMS states is necessary to account for changes in the work relative value units.
CMS finalizes its proposal to apply an efficiency adjustment of -2.5% to the work RVUs for non-time-based services. In addition, the agency finalizes significant updates to its practice expense methodology that it says will recognize greater indirect costs for practitioners in office-based settings compared to facility settings. It also finalizes its proposal to utilize data from auditable, routinely updated hospital data to set relative rates and inform cost assumptions for some technical services paid under PFS. Specifically, for CY 2026, it will use this data in setting rates for radiation treatment services and for some remote monitoring services.
In addition, CMS finalizes its proposal to permanently adopt its waiver defining direct supervision to include virtual presence via audio/video real-time communications technology. It also extends its waiver allowing federally qualified health centers and rural health clinics to bill for telehealth services through 2026. In addition, although it did not propose to extend its waiver allowing teaching physicians to have a virtual presence for purposes of billing for services furnished involving residents in all teaching settings, the agency adopts this waiver permanently in response to public comments.
CMS also finalizes a new claims-based methodology to remove units of drugs purchased under the 340B Drug Pricing Program for the purposes of calculating Medicare drug inflation rebates. The agency also finalizes its proposal to create a 340B claims data repository, allowing voluntary data submission by 340B providers to potentially use for the same purpose.
CMS also finalizes the Ambulatory Specialty Model, a mandatory payment model focused on specialty care for beneficiaries with heart failure and low back pain. The model will include specialists who frequently treat low back pain or heart failure and aim to enhance the quality of care by improving upstream chronic disease management.
For the Quality Payment Program, CMS adds a new Advancing Health and Wellness subcategory within the Improvement Activities category. The agency also finalizes several updates to simplify and transform the Merit-based Incentive Payment System to facilitate a transition to mandatory participation in the MIPS Value Pathways in the future.
CMS also finalizes several proposals regarding the Medicare Shared Savings Program, including modifications to the eligibility and financial reconciliation requirements to increase the flexibility in the number of assigned beneficiaries in benchmark years. Among changes to the quality performance standards and requirements, CMS removes the health equity adjustment to the ACO quality score; expands the survey mode for the Consumer Assessment of Healthcare Providers and Systems survey to include web-based survey administration beginning in 2027; removes the Screening for Social Drivers of Health measure; and expands the Extreme and Uncontrollable Circumstances Exception to include cyberattacks.
AHA members will receive a Regulatory Advisory with more details.