What Changed in the 2026 Medicare Physician Fee Schedule?

Published 23 September 2026. Last reviewed 23 September 2026.

CMS finalized two Medicare conversion factors for 2026: one for qualifying APM participants, one for everyone else. A new efficiency adjustment cut work RVUs on many non-time-based procedure codes. Telehealth review, direct supervision and skin substitute payment also changed, effective for services on or after January 2026.

Every figure above comes from the CMS CY2026 Physician Fee Schedule final rule fact sheet .

What the Physician Fee Schedule is, and what a conversion factor does

The Physician Fee Schedule is the rate system Medicare uses to pay physicians and other billing practitioners under Part B. CMS assigns each service three relative value units, for work, practice expense and malpractice expense, then converts those units into dollars.

The conversion factor is the multiplier that does the converting. In the words of the fact sheet, "relative value units (RVUs) are applied to each service for work, practice expense, and malpractice expense. These RVUs become payment rates through the application of a conversion factor." Geographic practice cost indices adjust the result by locality. Payment for a service is therefore its geographically adjusted work, practice expense and malpractice RVUs multiplied by the conversion factor that applies to the billing practitioner.

Two properties of that arithmetic matter for the 2026 changes. A change to the conversion factor moves every payable code at once. A change to a work RVU moves one code, or one family of codes, and leaves the rest alone. CMS did both this year, in opposite directions.

The rule arrives at the billing desk before it arrives at the physician

A fee schedule update is a clinical conversation for about a week and an operational one for the rest of the year. Someone has to load the new rates, reconcile the expected reimbursement in the practice management system, answer the first client who asks why a January remittance came in under the December figure, and explain a variance that has three separate causes inside it.

For a billing company, the January problem is rarely the rule text. It is that a single client book now contains practitioners paid from different conversion factors, procedure codes whose work RVUs moved while their E/M codes did not, and a facility-versus-office split that shifted underneath the practice expense side. Medicare calculates payment from its own files, so the problem that surfaces in February is usually an expected-payment variance rather than a denial: a stale internal fee table, a conversion factor assigned to the wrong practitioner, or an RVU file nobody reloaded.

CMS published the rule on 31 October 2025, effective for services on or after 1 January 2026. The exposure runs from the first claim of the year, not from the first appeal.

What CMS finalized for CY2026

Two conversion factors. CMS states that "as required by statute, beginning in CY 2026, there will be two separate conversion factors: one for qualifying alternative payment model (APM) participants (QPs) and one for physicians and practitioners who are not QPs." The final qualifying APM conversion factor is $33.57 and the nonqualifying factor is $33.40, both up from $32.35. Inside those figures sit a statutory one-year increase of +2.50 percent, updates of +0.75 percent and +0.25 percent respectively, and an estimated +0.49 percent adjustment for finalized work RVU changes. A QP is a qualifying APM participant: by statute, one who met the participation thresholds for an Advanced APM under the Quality Payment Program.

An efficiency adjustment to work RVUs. CMS finalized "application of an efficiency adjustment to the work RVUs and corresponding intraservice portion of physician time for non-time-based services that we expect to accrue gains in efficiency over time." The adjustment for CY2026 is -2.5%, derived from the Medicare Economic Index productivity adjustment over a five-year look-back. CMS excluded time-based codes, naming evaluation and management services, care management services, behavioral health services, services on the Medicare telehealth list, and maternity codes with a global period of MMM, and finalized "an updated list of HCPCS codes that will be exempt from the efficiency adjustment."

Practice expense reallocated toward the office. CMS declined to adopt the AMA’s 2024 survey data and instead finalized "significant updates to our PE methodology," specifically "to recognize greater indirect costs for practitioners in office-based settings compared to facility settings." CMS also began using hospital outpatient data to set rates for radiation treatment services and some remote monitoring services.

Telehealth review simplified, virtual supervision made permanent. CMS removed "the distinction between provisional and permanent services" on the Medicare Telehealth Services List and permanently removed frequency limitations for subsequent inpatient visits, subsequent nursing facility visits and critical care consultations. It also adopted a permanent definition of direct supervision allowing supervision "through real-time audio and visual interactive telecommunications (excluding audio-only)," covering incident-to services under §410.26, diagnostic tests under §410.32, pulmonary rehabilitation under §410.47 and cardiac rehabilitation under §410.49, other than services with a global surgery indicator of 010 or 090.

Skin substitutes moved off ASP pricing. CMS now pays skin substitute products "as incident-to supplies when they are used as part of a covered application procedure," at a single rate of approximately $127.28/cm² before geographic adjustment, covering PMA approvals, 510(k)s and registered 361 HCT/Ps alike. CMS cites Part B spending on these products rising from $252 million in 2019 to over $10 billion in 2024.

Two things people are conflating

The conversion factor rose. That does not mean every code pays more. The two movements run against each other. A practice whose revenue concentrates in procedural codes absorbed a work RVU reduction on those codes while collecting a higher conversion factor on all of them. A practice weighted toward office visits kept its work RVUs and took the conversion factor increase. The net depends on code mix, and a single headline percentage describes neither practice.

The efficiency adjustment is not a fee cut applied to a specialty. CMS applied it at the code level, to work RVUs on non-time-based services, with a published exemption list. Two clinicians in the same specialty can land in different places depending on which codes they actually report. The way to answer the question for a given client is to reprice their top codes, not to look up their specialty in an impact table.

A third distinction is worth stating on its own. Qualifying APM status attaches to the practitioner, not to the claim line. The same procedure code pays two different amounts depending on who performed it, which is a property no fee table built before 2026 was designed to carry.

What to do before the next quarterly update

• Reprice your top codes rather than reading impact tables. Take the fifty codes that carry most of the volume for each client, apply the current work RVU and the correct conversion factor, and compare against what you were expecting. The exercise takes an afternoon and replaces an argument with a number.
• Confirm which practitioners are qualifying APM participants. This determines the conversion factor and it is not visible on the encounter. Where the status is unknown, the expected reimbursement figure is a guess.
• Check the exempt HCPCS list against your own procedural volume. The exemption list is the difference between a code that moved and one that did not, and it was updated in response to comments rather than proposed as final.
• Separate the office and facility variants in your fee tables. The practice expense change lands on the split between settings, so a table that carries one rate per code will drift on exactly the services where the change is largest.
• Re-check the telehealth and supervision rules against your edit logic. Removed frequency limits and virtual direct supervision both widen what is billable. Edits written against the older policy will reject clean claims, and those denials look like coding errors in a monthly report when they are configuration errors. A coding audit against a sample of January claims will separate the two faster than a denial trend will.

Where the CMS files actually live

Which codes are subject to the efficiency adjustment?

CMS publishes the list. The file is named "CY 2026 PFS Final Rule Codes Subject to Efficiency Adjustment" and sits with the rest of the supporting documentation on the CMS-1832-F page , alongside the final rule addenda, the skin substitute product file and the telehealth list. CMS revised it after publication, so check the update date before trusting a copy someone saved.

Where do the 2026 RVU files come from?

The PFS Relative Value Files page carries them by quarter, RVU26A through RVU26D. A fee table built in January from RVU26A drifts as later quarters land, which is the mechanism behind most mid-year variance.

Where is the current telehealth list?

CMS maintains the List of Telehealth Services , published as an annual file of the services payable under the fee schedule when furnished via telehealth. Check it against your edit logic rather than against last year’s memory of it.

Where per-chart routing helps

Rule changes of this shape create a specific coding problem: the documentation did not change, the codes did not change, and the policy underneath both did. Nothing in the chart signals it.

Complete charts flow through AutoPilot for fully autonomous coding. Charts where the documentation is thin or contradictory stay in CoPilot, where a person reviews and finalizes the output. Real-time compliance checks resolve NCCI edits, MUE limits and LCD or NCD coverage while the claim is built, and quarterly policy updates apply without your team retraining on them. See computer-assisted coding software for how that compares with suggestion-only tools, and RCM medical coding for the multi-client version.

Every code ships with its documentation passage and the compliance rule behind it. In a year with three separate rate mechanisms moving, that record is what turns a client’s question about a January payment into a lookup.

What has not changed

Coding guidelines did not move because payment did. The documentation still has to support the code, and the CY2026 rule adjusted valuation rather than the rules of code assignment.

Commercial payers are not bound by the Medicare fee schedule. A contract priced as a percentage of Medicare may follow these changes, depending on which schedule version, locality, RVU components and effective date the contract incorporates. Read the contract before assuming it moved.

The conversion factor is still a rate, not a policy. It tells you what a relative value unit is worth in dollars. It tells you nothing about whether the service was covered, documented or correctly coded, and security and compliance obligations around that record are unchanged.

See how this lands on your own charts

Book a Demo and we will run an accuracy check against a sample of your own charts, so you can see which route to autonomous coding and which come back for human review.

Related: RCM medical coding · Coding audit services · Who we serve: RCM companies .

Sources

1. CMS, Calendar Year (CY) 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F), fact sheet, 31 October 2025. cms.gov fact sheet
2. CMS, CY 2026 Payment Policies Under the Physician Fee Schedule, final rule, Federal Register, 5 November 2025. federalregister.gov
3. CMS, CMS-1832-F supporting documentation, including Codes Subject to Efficiency Adjustment, the final rule addenda, the skin substitute product file and the telehealth list. cms.gov CMS-1832-F
4. CMS, PFS Relative Value Files (quarterly). cms.gov relative value files
5. CMS, List of Telehealth Services. cms.gov telehealth list