On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) final rule, which includes policies related to Medicare physician payment and the Quality Payment Program. These policies will take effect January 1, 2026, unless otherwise noted. Despite significant stakeholder comments, CMS largely finalized its policies as proposed, with modest adjustments to key payment reforms.
Key takeaways from the CY 2026 PFS final rule
- Conversion factors (CFs): The final CY 2026 physician CFs are $33.5675 for clinicians who are qualifying participants (QPs) in advanced alternative payment models (APMs), and $33.4009 for other clinicians, representing an increase of 3.77% and 3.26%, respectively, from the final CY 2025 CF.
- Efficiency adjustment: CMS finalized a 2.5% efficiency adjustment for all codes except those specifically excluded, which include time-based codes, services on the telehealth list, and maternity care codes with an MMM global period. In a notable change from the proposed rule, CMS also exempted new services from the adjustment.
- Indirect practice expense (PE) reallocation: CMS reduced the amount of indirect PE allocated per work relative value unit (RVU) for facility services to 50% of the amount allocated for non-facility services. Maternity services with an MMM global period are exempt.
- Skin substitutes: CMS finalized a major payment policy change for skin substitutes, unpackaging payment for the products and paying for them separately based on a flat fee as incident-to supplies.
- Medicare Diabetes Prevention Program (MDPP): CMS established policies to expand participation in the MDPP, most notably by allowing MDPP suppliers to deliver MDPP services online through December 31, 2029.
- Ambulatory Specialty Model (ASM): CMS moved forward with its proposal to launch a new mandatory five-year APM for heart failure and low back pain.
- Merit-based Incentive Payment Program (MIPS): CMS finalized policies to stabilize the program, most notably by maintaining the 75-point performance threshold required to avoid a penalty and receive a positive payment adjustment through the 2028 performance period. CMS also finalized policies that support its goal of fully transitioning to MIPS Value Pathways.
- Medicare Shared Savings Program (MSSP): CMS finalized changes projected to reduce Medicare spending by $20 million through 2035 and encourage broader participation.
Kristen O’Brien and Rachel Stauffer contributed to this article