CMS has finalized the 2026 Medicare Physician Fee Schedule (MPFS), which includes some critical payment shifts we’ve seen in recent years. Whether you’re a physician, practice manager, biller, or RCM partner, these changes will reshape your workflows and reimbursement patterns.

Let’s break it down.

Major Updates in the 2026 Medicare Fee Schedule

The 2026 final rule is packed with changes. Here’s a spotlight on the ones that will shape your daily workflow.

1. Dual Conversion Factors

For the first time, CMS is implementing two separate conversion factors in the 2026 MPFS: one for physicians and practitioners who qualify as participants (QPs) in the Alternative Payment Model (APM) and another for those who do not. 

The finalized conversion factors for CY 2026 are:

• QP Clinicians: $33.57 (a 3.77% increase from 2025)
• Non-QP Clinicians: $33.40 (a 3.26% increase from 2025)

This change sends a strong message that Medicare is rewarding participation in value-based care more directly than ever before.

2. One-Time Payment Increase

CMS has also finalized a one-year +2.5% increase to the conversion factor under the One Big Beautiful Bill Act, designed to help offset the cumulative impact of years of Medicare payment reductions.

In addition to this temporary boost, CMS is applying an estimated +0.49% upward adjustment to reflect changes in work RVUs for certain services. This adjustment ensures that the updated valuations for physician work are accurately incorporated into the 2026 rates.

3. Efficiency Adjustment to RVU

CMS believes that advances in medical technology and workflow tools have made many clinical services more efficient over time. As a result, the agency argues that historical valuations may overestimate the actual time and intensity required to perform certain services.

To better align payments with real-world efficiency and to anticipate continued improvements, CMS has finalized a –2.5% efficiency adjustment to the work RVUs (and the intraservice time component) for non-time-based services. CMS also intends to reassess and reapply these adjustments every three years as new data becomes available.

According to the AMA, this policy will affect around 91% of all services, raising significant concerns about its potential impact on physician revenue and the long-term viability of private practices.

However, the good news is that CMS has excluded several key categories from this adjustment. The –2.5% cut does not apply to:

• Evaluation & Management (E/M) services
• Care management services
• Behavioral health services
• Medicare telehealth services
• Maternity global codes

4. A New Method for Practice Expense (PE) Calculations

CMS has revised the 2026 Practice Expense (PE) methodology to align with how physicians practice today. Previously, Medicare treated indirect expenses, like rent, staffing, billing, utilities, and IT support, the same across facility (hospital/ASC) and non-facility office settings.

However, with more physicians now hospital-employed, CMS found that facility-based clinicians no longer shoulder the same overhead as independent office practices, leading to duplicative payments.

To address this, CMS has finalized a reduction in indirect PE RVUs for facility settings, compared with non-facility office settings.

The AMA argues that while CMS aims to prevent duplicative payments for overhead already covered by hospitals, this significant reduction fails to reflect the actual costs and resources required by providers practicing in facility settings. They warn that it could strain private practices, limit competition, and overlook the administrative workload physicians still manage in hospitals.

5. Telehealth Gets Even More Flexible

Telehealth is getting a major upgrade in 2026. CMS is strengthening its commitment to virtual care with these key changes:

• The distinction between provisional and permanent telehealth services is removed. 
• Frequency limits for subsequent inpatient visits, subsequent nursing facility visits, and critical care telehealth are permanently removed. 
• Physicians can provide direct supervision via real-time audio-video communication (not audio-only) for incident-to services, certain diagnostic tests, and pulmonary or cardiac rehabilitation, except for 10-day and 90-day global surgery services.
• Teaching physicians may continue to supervise residents virtually (via real-time audio-video telecommunications) across all teaching settings, but only when the patient service itself is furnished as a Medicare telehealth service.

6. Expanded Behavioral Health & Chronic Care Support

Aligned with the Trump administration’s MAHA policy, CMS is deepening its focus on chronic disease prevention and integrated care. Key updates include:

• Introduction of three new add-on codes (G0568–G0570) that can be billed alongside Advanced Primary Care Management (APCM) services (G0556–G0558) by the same practitioner within the same month. These add-on codes are designed to enhance support for integrated behavioral health services.
• Expansion of digital mental health treatment (DMHT) reimbursement (G0552–G0554) to cover devices used in the treatment of ADHD, broadening access to digital therapeutic tools.

7. Skin Substitutes Payment Overhaul

Medicare spending on skin substitutes has surged dramatically from $252 million in 2019 to more than $10 billion in 2024, primarily due to rising payment rates and high launch prices for new products. In response, CMS is transitioning skin substitutes from ASP-like, separately priced “biologicals” to incident-to supplies bundled into the application procedure under both the PFS and OPPS.

In 2026: 

• Skin substitutes are reclassified as incident-to supplies and no longer paid separately.
• Skin substitute products are grouped as 361 HCT/Ps, PMA, and 510(k) based on their FDA regulatory status.
• A single bundled payment of $127.28 per application replaces product-specific pricing.

CMS has also indicated plans to propose future payment rates that distinguish between the three FDA regulatory categories, allowing more refined pricing as the policy evolves.

Wrapping Up

Overall, the 2026 Medicare Physician Fee Schedule represents a significant turning point, reshaping how practices deliver care and how they are reimbursed.

Primary care clinics stand to benefit from enhanced support for E/M services, behavioral health integration, chronic care management, and expanded telehealth flexibility. Subspecialties and procedural specialists, however, may encounter challenges, particularly with the RVU efficiency adjustments and the new skin substitute payment structure.

Practices should analyze their 2026 financial impact using CMS modeling tools, revisit coding and cost structures, and optimize telehealth and billing workflows to stay aligned and competitive.