CMS issues 2026 Fee Schedule Final Rule: Here’s what’s new
By Jarrod Fowler, MHA, FMA Director of Health Care Policy and Innovation
Last Friday, the Centers for Medicare & Medicaid Services (CMS) released the Medicare Physician Fee Schedule Final Rule for the 2026 calendar year. Following is a summary of key changes within the final rule, as well as brief updates on MIPS penalties and telehealth services for Medicare beneficiaries.
Conversion Factor
The fee schedule conversion factor is affected by several elements, including budget neutrality adjustments, an efficiency adjustment, and a one-year 2.5% update passed by Congress to account for inflationary pressures. Overall, for physicians who don’t participate in an advanced alternative payment model (A-APM), the conversion factor will rise from $32.34 to $33.40. For those who do participate in an A-APM, the conversion factor will increase to $33.56.
Policy organizations increasingly agree that the conversion factor needs more significant and sustained updates to ensure a healthy Medicare program. As the AMA recently stated in comments to Congress, “In their June 2025 Report to Congress, the Medicare Payment Advisory Commission (MedPAC) expressed concerns about the growing gap between physicians’ input costs and Medicare payment, warning: “[t]his larger gap could create incentives for clinicians to reduce the number of Medicare beneficiaries they treat, stop participating in Medicare entirely, or vertically consolidate with hospitals, which could increase spending for beneficiaries and the Medicare program.”
MedPAC therefore recommended that Congress repeal current law updates and replace them with annual updates tied to MEI for all future years. The 2025 Medicare Trustees Report reiterated similar concerns about patient access to care, stating that under current law, “the Trustees expect access to Medicare-participating physicians to become a significant issue in the long term.”
At every available opportunity, the FMA will continue advocating for our long-standing goal of increasing Medicare payments for physicians.
Telehealth
As the federal government shutdown has lingered, many telehealth flexibilities have expired, with an exception for patients who have mental health and substance abuse disorders. While CMS cannot correct this issue through rulemaking, the agency lifted frequency limits on telehealth services provided to patients in hospitals and skilled nursing facilities and permanently allowed virtual direct supervision for most services that require supervision.
MIPS
The FMA has policies calling for the payment penalties associated with MIPS to be repealed, as these penalties have not been shown to assist physicians with providing patient care. Fortunately, CMS did not raise the performance threshold needed to avoid a MIPS penalty in PY 2026. This likely means that fewer physicians will be penalized in PY 2028.
Resources
• CMS Press Release
• Physician Payment Schedule Fact Sheet
• Medicare Shared Savings Program Fact Sheet