On July 14, the Centers for Medicare & Medicaid Services (CMS) released the 2026 Medicare Physician Fee Schedule (PFS) proposed rule. Your ACOI team has begun an in-depth analysis of the rule, and, in the interim, offers a few critical highlights:
Physician Fee Schedule Conversion Factor
For CY 2026, CMS’ proposed conversion factor for CY2026 will vary depending on whether a physician is participating in an Advanced Alternative Payment Model (AAPM).
The conversion factor for physicians not participating in an AAPM is estimated to be $33.42 (projected increase of $1.07). The increase is the result of:
- A statutory update to the conversion factor for CY 2026 of +.25% under the Medicare Access and CHIP Reauthorization Act (MACRA);
- A +2.5% adjustment recently passed by Congress and signed into law as part of H.R. 1, the ‘One Big Beautiful Bill’ Act.
- An estimated +0.55% adjustment to account for changes from a new proposed “efficiency adjustment” to work relative value units (RVUs) for some services.
For AAPM participating physicians, the estimated conversion factor is $33.59 (projected increase of $1.24). The higher conversion factor reflects a +.75% update under MACRA.
Efficiency Adjustment
CMS proposes to establish an efficiency adjustment to work RVUs, as well as corresponding updates to the intraservice portion of physician time inputs for non-time-based services. The proposal is based on CMS’ assumption that both the intraservice portion of physician time and the work intensity would decrease as the practitioner develops expertise in performing the specific service. CMS’ stance is that the current RVUs may not reflect these efficiencies due to the infrequency of service revaluation under the PFS and the limitations of reliance on survey data. The adjustment would apply to all codes except time-based codes, including E/M visits, care management services, behavioral health services, services on the CMS telehealth list, and maternity codes with a global period of MMM. The result of the efficiency adjustment decreases procedure and diagnostic services.
Practice Expense
For each service valued in the facility setting, for CY 2026, CMS proposes to reduce the portion of the facility practice expense (PE) RVUs allocated based on work RVUs to half the amount allocated to non-facility practice expense RVUs for CY 2026.
Overall, specialties that practice primarily in the non-facility setting will see an increase in PE RVUs as a result of this redistribution, and specialties that perform services primarily in the facility setting will see a decrease. CMS says the original PE allocation methodologies that assumed physicians maintained separate practice locations even if they furnished some care in hospitals do not reflect the decline in the number of physicians working in private practice.
Telehealth
Certain telehealth flexibilities related to the COVID Public Health Emergency are expiring on Sept. 30, 2025, including the removal of statutory geographic and location limitations for most Medicare telehealth services. CMS is, however, proposing to permanently allow a physician to provide direct supervision through real-time audio and visual interactive telecommunications (excluding audio-only), except for services that have a global surgery indicator of 010 or 090.
CMS is not proposing to extend the current policy to allow teaching physicians to have a virtual presence for purposes of billing for services furnished involving residents in all teaching settings beyond Dec. 31, 2025.
Prevention and Management of Chronic Disease
CMS is issuing a request for feedback on how it could enhance its support for the prevention and management of chronic disease, including through separate coding and payment for intensive lifestyle interventions, medically tailored meals and motivational interviewing.
Quality Payment Program
CMS’ proposals are aimed at the continued transformation of the Merit-based Incentive Payment System (MIPS) through MIPS Value Pathways (MVPs). In addition to policy proposals, CMS is including several RFIs to obtain feedback from interested parties, including regarding adding well-being and nutrition measures in the Quality Payment Program (QPP), as well as developing core elements reporting requirement for MVPs. CMS is proposing to keep the QPP performance threshold at 75 points through the CY 2028 performance period/2030 MIPS payment year.
Your ACOI team will analyze and respond to policies in the proposed rule that could impact osteopathic internists, their practices and patients. Please refer to the following documents for more information:
CMS Press Release on CY 2026 Medicare Physician Fee Schedule Proposed Rule
CY 2026 Physician Fee Schedule Estimated Impact on Total Allowed Charges by Specialty
CMS CY 2026 Medicare Physician Fee Schedule Proposed Rule Fact Sheet