On October 31, 2025, CMS released the Medicare Physician Fee Schedule (PFS) final rule for calendar year (CY) 2026. Among other changes, the rule:
- Updates the conversion factor for physicians
- Includes an efficiency adjustment to work relative value units (RVUs)
- Makes changes to practice expense RVUs
- Creates codes to facilitate behavioral health integration
- Makes changes to Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)
- Permanently adopts a definition of direct supervision that allows for virtual supervision
- Finalizes a new, mandatory alternative payment model focused on chronic conditions
- Updates provisions related to the Medicare Shared Savings Program (MSSP) and Quality Payment Program (QPP)
Below is a high-level summary of key provisions included in the final rule, as well as important takeaways for affected physicians and healthcare organizations.
Conversion Factor
Starting in CY 2026, as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), there will be separate conversion factors for physicians who qualify as Advanced Alternative Payment Model (APM) participants and those who do not. The CY 2026 qualifying APM conversion factor is $33.57 (decreased from the proposed $33.59)—a 3.77% increase from the current conversion factor of $32.35. The CY 2026 nonqualifying APM conversion factor is $33.40 (decreased from the proposed $33.42), a projected increase of 3.26%.
The positive update stems from provisions in MACRA and the One Big Beautiful Bill Act (OBBBA). MACRA requires an update to the qualifying APM conversion factor in CY 2026 of 0.75% and an update to the nonqualifying APM conversion factor of 0.25%. These conversion factors also reflect a 0.49% adjustment to account for changes in work RVUs. In addition, the OBBBA requires an increase in the conversion factor of 2.5% for 2026 only. Groups representing physicians are continuing to advocate for more durable reforms to the conversion factor update.
Efficiency Adjustment & Practice Expense RVUs
CMS has longstanding concerns about the reliability of the AMA Relative Value Scale Update Committee (RUC) survey data used to update work RVUs. For 2026, the agency finalizes an efficiency adjustment to work RVUs and the related intraservice portion of physician time for non-time-based services based on the assumption that efficiency in performing these services should increase with experience. CMS is using the prior five-year Medicare Economic Index (MEI) productivity adjustment, which will result in an adjustment of -2.5%. CMS notes in the final rule that using more recent Bureau of Labor Statistics data would have resulted in an efficiency adjustment of -3.6% for 2026.
In addition, CMS finalizes updates to the methodology used to calculate practice expense RVUs given the decline in the number of physicians working in private practices and the increase in employment by hospitals and health systems. For CY 2026, the agency will recognize greater indirect costs for practitioners in office-based settings.
The 2026 Medicare payment increase marks the first for physicians in several years. However, providers will need to closely review the CPT codes they bill frequently, as both the efficiency adjustment and change to practice expense RVUs will redistribute payments across both provider types and settings of practice. These changes will have a disproportionate negative impact on hospital-based physicians.
Behavioral Health
CMS finalizes the establishment of three new G codes to be billed as add-on services when the advanced primary care management (APCM) base code (HCPCS codes G0556, G0557, and G0558) is reported by the same practitioner in the same month. These new codes are:
- HCPCS code G0568, an add-on code based on CPT code 99492 for an initial month of collaborative care model (CoCM) services delivered to patients also receiving APCM services
- HCPCS code G0569, an add-on code based on CPT code 99493 for CoCM services delivered to patients also receiving APCM services
- HCPCS code G0570, an add-on code for general behavioral health integration services based on CPT code 99484
CMS finalizes the valuation of these codes as proposed.
Telehealth
CMS finalizes updates to its telehealth policies in the CY 2026 rule:
- Subsequent Visits & Critical Care Consultations: CMS permanently removes frequency limitations for subsequent inpatient visits, subsequent telehealth visits, and critical care consultations provided via telehealth.
- Direct Supervision: CMS permanently redefines direct supervision to allow the physician or supervising practitioner to provide it through real-time audio and visual interactive telecommunications (excluding audio-only). Except for services that have a global surgery indicator of 10 or 90, virtual direct supervision may be provided for applicable incident-to services, diagnostic tests, pulmonary rehabilitation services, cardiac rehabilitation services, and intensive cardiac rehabilitation services.
- Supervision of Residents: The COVID-era policy allowing teaching physicians to provide virtual supervision to residents in all teaching settings was set to expire on December 31, 2025. CMS did not initially propose extending this policy; however, based on comments, CMS finalizes a policy that permanently allows virtual supervision of residents, but only for cases in which the service itself is furnished virtually.
RHCs & FQHCs
The CY 2026 rule finalizes several policy changes related to RHCs and FQHCs. These include:
- Behavioral Health: CMS finalizes allowing RHCs and FQHCs to use the optional add-on codes for APCM to bill for BHI and CoCM services when RHCs and FQHCs provide advanced primary care. In addition, effective January 1, 2026, RHCs and FQHCs are required to report HCPCS codes G0512 and G0071 that make up both the CoCM and the Communications Technology-Based Services (CTBS) and Remote Evaluation Services.
- Telehealth: The finalized change to the definition of direct supervision also applies to RHCs and FQHCs. For non-behavioral health services provided via telecommunications technology, RHCs and FQHCs may report HCPCS code G2025 on claims through December 31, 2026. This includes services furnished using audio-only technology.
Skin Substitutes
Beginning in CY 2026, CMS will pay for skin substitutes as incident-to supplies when they are used in services covered under the PFS in non-facility settings, or under the Outpatient Prospective Payment System (OPPS) for services provided in facility settings. CMS notes spending on these products has increased from $252 million in 2019 to over $10 billion in 2024. The agency believes basing payment on ASP has given rise to unnecessary spending. Therefore, it also finalizes a policy to pay a single rate of approximately $127.28 for skin substitutes.
Relatedly, the Center for Medicare and Medicaid Innovation recently announced a mandatory prior authorization model in select geographies beginning in 2026, for which skin substitutes are among the items or services included.
Ambulatory Specialty Model (ASM)
CMS finalizes a mandatory, two-sided alternative payment model for physicians who care for Medicare fee-for-service (FFS) beneficiaries with low back pain or heart failure. The performance years would span CY 2027 through 2031, impacting payment years 2029 through 2033.
The model is designed to test how payment adjustments could incentivize specialists to focus on chronic disease prevention, early diagnosis, and disease management. Under the ASM, performance of participating specialists would be assessed at an individual level on the four Merit-Based Incentive Payment System (MIPS) categories: quality, cost, improvement activities, and promoting interoperability. Scores across these categories would determine the payment adjustment—ranging from -9% to +9% in the first year and increasing to -12% to +12% over subsequent years—applied to future Part B claims for Medicare services. CMS will use funds withheld from participating physicians’ claims to fund bonuses for high-performing ASM physicians. The model will not be budget-neutral, as CMS will retain 15% of withheld funds to ensure savings for the Part B trust fund.
The model will initially target specialists who treat at least 20 FFS beneficiaries with heart failure or low back pain over a 12-month period in 25% of core-based statistical areas. Heart failure participants would include physicians who specialize in general cardiology. The low back pain cohort would include physicians specializing in anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, or physical medicine and rehabilitation. CMS will release additional guidance about ASM participant eligibility criteria following the publication of the final rule. The CY 2027 performance year participant list will be released in early 2026 through the CMS website.
Medicare Shared Savings Program (MSSP)
The rule makes several changes to the MSSP, including:
- Faster Downside Risk Assumption: CMS reduces the amount of time an ACO can participate in a one-sided risk track from seven years to five. This change will be effective for agreement periods beginning on January 1, 2027 and thereafter.
- Assigned Beneficiaries: Beginning on or after January 1, 2027, ACOs applying for new agreement periods will need to have at least 5,000 beneficiaries assigned in the third benchmark year but may have fewer assigned beneficiaries in one or both of the first two benchmark years. CMS also modifies the risk track eligibility and financial reconciliation requirements.
- Remove Quality Score Health Equity Adjustment: CMS removes the health equity adjustment to the MSSP quality score beginning in performance year 2026 (instead of 2025 as proposed).
- Removal of Quality Measure: CMS removes the “Screening for Social Drivers of Health” measure from the APP Plus quality measure set.
- Web-Based Consumer Assessment of Healthcare Providers and Systems Survey: Beginning with the 2027 performance year, CMS will require vendors to offer a web-based CAHPS for MIPS survey in addition to phone and mail options.
Quality Payment Program (QPP)
CMS maintains the current performance threshold at 75 points through the 2028 MIPS performance period.
The rule creates six new MIPS Value Pathways (MVPs) for the CY 2026 performance period. These include diagnostic radiology, interventional radiology, neuropsychology, pathology, podiatry, and vascular surgery.
For new cost measures, the agency finalizes an informational-only two-year lookback period to allow clinicians to find opportunities to improve performance before they are subject to the measure.
The rule also modifies the inventory of MIPS quality measures by removing those that are topped out or that the agency no longer believes are appropriate.
How Forvis Mazars Can Help
As federal healthcare policies continue to evolve, Forvis Mazars is committed to helping healthcare organizations and physician enterprises maintain regulatory excellence to support their pursuit of achieving health for their enterprises and those they serve. If you have questions about how the 2026 PFS final rule may impact your organization, please reach out to our professionals.