CMS Releases Final Rule for 2026 Medicare Physician Fee Schedule

November 6, 2025

On October 31, the Centers for Medicare and Medicaid Services (CMS) released the final rule for the 2026 Medicare Physician Fee Schedule (MPFS).  

The AMA is working on a formal summary of the 2,000-page final rule. In the meantime, the MMA offers the following overview: 

Conversion Factors 

CMS finalized four conversion factors, all of which have increased since 2025: 

1. $33.5675 for Medicare payments to qualified providers (QPs) in advanced alternative payment models (APMs). This reflects a 3.8% increase from 2025. The 3.8% increase includes a permanent 0.75% update, a temporary 2.5% update, and a positive 0.49% budget neutrality adjustment. 

2. $33.4009 for Medicare payments to all physicians who are not QPs, including Merit-based Incentive Payment System (MIPS) eligible clinicians. This reflects a 3.3% increase from 2025, including a permanent 0.25% update, a temporary 2.5% update, and a positive 0.49% budget neutrality adjustment. 

3. $20.5998 for Medicare payments to QPs for anesthesia services. This reflects a 1.39% increase from 2025. 

4. $20.4976 for Medicare payments to non-QPs for anesthesia services. This reflects a 0.88% increase from 2025. 

In a letter sent to CMS on September 12, the MMA stressed that these increases do not sufficiently account for increasing practice costs, citing that “Medicare payments to physicians have declined by 33% since 2001, based on…data reported by CMS.” The MMA continues to urge CMS to work with the Trump Administration and Congress to implement permanent, inflation-based updates to Medicare physician payments. 

The AMA is disappointed that Congress continues to neglect the AMA’s standing request for permanent baseline updates to conversion factors that account for practice cost inflation, which CMS projects will be 2.7% in 2025. 

Relative Value Units 

CMS finalized the following adjustments to relative value units (RVUs): 

1. Adoption of 90% of the 2025 RUC Recommendations. Each year, the Relative Value Scale Update Committee (RUC), a body maintained by the AMA and national specialty societies, recommends changes to RVUs. This year, CMS accepted 90% of the RUC recommendations.  

2. Efficiency Adjustment. CMS adopted a 2.5% decrease in work RVUs for non-time-based services. CMS argues that this decrease accounts for, what they posit to be, increased physician efficiencies in providing non-time-based services over time (i.e., due to increase in volume and/or improved experience, technology, and operations). The AMA estimates that this adjustment impacts most specialties by reducing overall payment by 1%.  

In the September 12 letter to CMS , the MMA stated that it values CMS’ commitment to ensuring payments account for changes in practice efficiencies, but urges CMS to do so “deliberately, using quantitative evidence corroborated by physician input.” The MMA highlighted that “at least one study of over 1.7 million surgeries between 2019 and 2023 suggests that the efficiency adjustment may not be supported by empirical surgical time data (Childers et al., 2025).”  

3. Indirect Practice Adjustment. CMS adopted changes to practice RVUs that will result in a 7% decrease in payment to physicians for facility-based services and a 4% increase in payment to physicians for non-facility-based services. CMS argues that these adjustments will incentivize more physicians to work in private practices and reduce, what they posit to be, duplicative payments to facilities under MPFS and other payment systems (e.g., the outpatient prospective payment system).  

In the September 12 letter to CMS, the MMA appreciated CMS’ interest in narrowing this pay differential, but asked CMS to consider how the rule might fail to address the root cause(s) of the pay differential and lead to adverse consequences. Specifically, the MMA emphasized that the pay differential is at least partially attributable to the  fact that, “while a private practice physician’s income is limited to billable physician services (that do not receive annual, inflation-based updates in Medicare payments), an employed physician’s income is determined by the hospital’s total revenue, inclusive of physician and hospital services.” Moreover, the rule might lead to further consolidation, since many private practice physicians necessarily provide some services in outpatient departments or ambulatory surgery centers.   

Telehealth Codes 

CMS’s final rule permanently lifts the frequency limits on telehealth services provided to patients in hospitals and skilled nursing facilities and permanently allows virtual direct supervision for most services that require supervision.  

The final rule also extends CMS’ current policy that allows teaching physicians to provide virtual supervision to residents providing telehealth services in all training sites, regardless of rurality.  

Merit-Based Incentive Payment System (MIPs) 

The final rule maintains the 2025 MIPS performance threshold at 75 points for the calendar 2026 performance year through the 2028 performance year (i.e., MIPS-eligible clinicians at or below 75 points will avoid a MIPS penalty of up to 9%). The AMA has urged Congress to address fundamental problems with MIPS with more significant, lasting changes to the program.  

Mandatory Payment Model 

Starting in 2027, physicians treating patients with heart failure or low back pain in select geographic regions will be required to participate in a new Ambulatory Specialty Model (ASM). The model incentivizes collaboration between specialists and primary care physicians to avoid unnecessary surgeries and hospitalization and imposes a +/- 9% award/penalty for physicians required to participate. 

The MMA will continue to monitor AMA analyses of the final rule and share findings with MMA members. For more information in the meantime, please contact Adrian Uphoff, manager of health policy and regulatory affairs.