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Physician Fee Schedule
- Conversion Factor: As required by statute, CMS implements two separate conversion factors: one for qualifying alternative payment model (APM) participants (QPs) and one for physicians and practitioners who are not QPs.
- The CY 2026 QP conversion factor is $33.57, representing a 3.77% increase from CY 2025, based on the 0.75 percent update in law for QPs, 0.49 percent adjustment to account for budget neutrality, and 2.50 percent for CY 2026 as stipulated in the recent budget reconciliation package (HR 1) passed by Congress.
- The CY 2026 non QP conversion factor is $33.40, representing a 3.26% increase from CY 2025, based on the 0.25 percent update in law for non QPs, 0.49 percent adjustment for budget neutrality, and the 2.50 percent for CY 2026 in law.
- Efficiency Adjustment: CMS will begin to apply an efficiency adjustment of -2.5% for CY 2026 to the work RVU and corresponding intraservice portion of physician time for non-time-based services as CMS expects these kinds of services to accrue efficiencies over time as changes in medical practice occur. The efficiency adjustment will periodically apply in future years, and will be based on the Medicare Economic Index (MEI) productivity adjustment percentage. This adjustment will generally apply to all codes except time-based codes, such as E/M services, care management services, behavioral health services, services on the CMS telehealth list, and maternity codes with a global period of MMM. With this change, specialties that bill more often for timed codes and excepted codes (such as family practice, clinical psychologists, clinical social workers, geriatrics, and psychiatry) will likely see an increase in RVUs; while specialties that bill more often for procedures, diagnostic imaging, and radiology services (such as radiation oncology, radiology, and some surgical specialties) will likely see a decrease in RVUs. The efficiency adjustment impacts most surgical specialties, radiology, and pathology by reducing overall payment by one percent. The efficiency adjustment is responsible for the 0.49 percent positive adjustment to the 2026 conversion factors.
- Revaluation of Indirect Practice Expense (PE) RVUs Based on Site of Service: CMS will begin to recognize greater indirect practice expense costs for practitioners in office-based settings compared to facility settings in CY 2026. CMS states that there has been a steady decline in the number of physicians working in private practice, with a corresponding rise in employment by hospitals and health systems. For each service valued in the facility setting, CMS will reduce the portion of the facility PE RVUs allocated based on work RVUs to half the amount allocated to non-facility PE RVUs. As a result, specialties that practice primarily in the non-facility setting will see an increase in PE RVUs and specialties that perform services primarily in the facility setting will see a decrease. Overall, facility-based payment to physicians will decrease by -7 percent while non-facility-based payment to physicians will increase by 4 percent. The impact on individual physicians and specialties of this policy is significant and varies depending on the setting in which care is delivered.
- Telehealth and Other Services Involving Communications Technology: CMS lacks the authority to extend certain telehealth flexibilities from the COVID-19 pandemic beyond September 30, 2025 without Congressional action. However, CMS finalized the following additional telehealth policies:
- Streamlined the review process of the Medicare Telehealth services by eliminating the distinction between the provisional and permanent list. Services currently on the telehealth list will remain and going forward CMS will add services to the list on a permanent basis if it determines the service can be furnished using an interactive, two-way audio-video telecommunications system.
- Permanently added Multiple-Family Group Psychotherapy, Group Behavioral Counseling for Obesity, Infections Disease Add-on, Auditory Osseointegrated Sound Processor services to the Medicare Telehealth List. CMS did not add the telemedicine E/M services (CPT codes 98000 through 98015).
- Finalized payment for Digital Mental Health Treatment (DMHT) for the treatment of Attention Deficit Hyperactivity Disorder (ADHD).
- Permanently suspended the frequency telehealth limitations for Subsequent Inpatient Visits, Subsequent Nursing Facility Visits, and Critical Care Consultation Services.
- Permanently allowed direct supervision requirements for services provided by auxiliary personnel incident to a physician's professional services to be met through real-time audio and visual interactive telecommunications services (excluding audio-only) except for services that have a global surgery indicator of 010 or 090.
- Virtual Supervision of Residents Providing Telehealth in All Training Locations: CMS initially proposed to end payment to teaching physicians who supervise residents virtually for telehealth services effective Dec. 31, 2025. Thanks to advocacy from the AAMC, our members, and other specialty societies, CMS did not finalize this policy and instead will permanently allow teaching physicians to virtually supervise residents delivering care via telehealth in all training locations.
- Advanced Primary Care Management (APCM) Services: CMS finalized payment for APCM services to facilitate providing complementary behavioral health integration (BHI) or psychiatric Collaborative Care Model (CoCM) services, through three new add-on codes when the APCM base code is reported by the same practitioner in the same month.
- Medicare Prescription Drug Inflation Rebate Program: CMS is finalizing new policies for the Medicare Part B Drug Inflation Rebate Program and Medicare Part D Drug Inflation Rebate Program (collectively referred to as the "Medicare Prescription Drug Inflation Rebate Program") that include, but are not limited to, establishing a claims-based methodology to remove 340B units from Part D rebate calculations starting on January 1, 2026. Additionally, CMS is establishing a Medicare Part D Claims Data 340B Repository (hereinafter, "340B repository") for voluntary submissions by covered entities for Part D claims with dates of service on or after January 1, 2026, to allow CMS to begin usability testing for the 340B repository.
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Medicare Shared Savings Program (SSP) Accountable Care Organizations (ACOs)
- ACO Assigned Patient Minimum Eligibility and Related Financial Reconciliation Requirements: CMS finalized a change to allow ACOs entering the program on or after 2027 to have fewer than 5,000 assigned patients in their first two benchmark years so long as they have at least 5,000 assigned patients in their third (most recent) benchmark year. ACOs in such scenario would be limited to the BASIC track and would have a cap on shared savings and losses.
- Quality Reporting and Performance: CMS removed the Health Equity Adjustment to an ACO's quality score and revised the Medicare CQM reporting option by narrowing the definition of a beneficiary eligible for Medicare CQMs to ensure greater overlap of Medicare CQM patients with those patients that are assignable to the ACO. Additionally, CMS updated the APP Plus Quality Measure set for SSP ACOs and added a web-based survey mode to the CAHPS for MIPS Survey.
- Beneficiary Assignment: CMS added new BHI and CoCM add-on services to the definition of primary care services used for attributing patients to ACOs through claims-based assignment, where those new add-on services are furnished with APCM services. Additionally, CMS removed the SDOH screening service from the definition of primary care services for purposes of assignment.
- Expand Extreme and Uncontrollable Circumstances (EUC) Policies: CMS expanded the application of the EUC policies to ACOs affected by an EUC due to a cyberattack, including ransomware/malware, as determined by the Quality Payment Program (QPP), and to apply a MIPS EUC Exception under the QPP for an ACO to also provide relief to that ACO under the SSP.
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New Mandatory Ambulatory Specialty Model (ASM)
- Mandatory Model: CMS finalized a new mandatory ambulatory specialty model for individual physicians who treat heart failure and low-back pain in the outpatient setting.
- Model Participation: Physician participation will be based on specialty, cases of treating patients with low-back pain or heart failure in the ambulatory setting, and practice within selected geographic areas (core-bases statistical area or metropolitan divisions). Physicians would be assessed on an individual basis, and not at the practice level. CMS plans to release a list of physicians selected for participation for the 2027 performance year based on 2024 data in early 2026. Participants will include:
- Low Back Pain Specialists: Anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation.
- Heart Failure Specialists: Cardiology
- Model Performance Measures and Payment: Model participants will be assessed on Quality, Cost, Care Improvement Activities, and Improving Interoperability to determine whether they will receive positive, neutral, or negative payment adjustments (-9% to +9%) on future Medicare Part B claims for covered services. Payments for total positive adjustments for high performers would be funded by the total negative adjustments for low performance.
- Model Duration: The model will begin January 1, 2027, and run for five years, until December 31, 2031.
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