CMS Releases Proposed Rule for 2026 Medicare Physician Fee Schedule

July 24, 2025

On July 14, the Centers for Medicare and Medicaid Services (CMS) released the proposed rule for the 2026 Medicare Physician Fee Schedule (MPFS).  

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

Conversion Factors 

CMS proposes four conversion factors, all of which have increased since 2024: 

1. $33.5875 for Medicare payments to qualified providers (QPs) in advanced alternative payment models (APMs). This reflects a 3.8% increase from 2024. The 3.8% increase includes a permanent 0.75% update, a temporary 2.5% update, and a positive 0.55% budget neutrality adjustment. 

2. $33.4209 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 2024. The 3.3% increase includes a permanent 0.25% update, a temporary 2.5% update, and a positive 0.55% budget neutrality adjustment. 

3. $20.6754 for Medicare payments to QPs for anesthesia services. This reflects a 1.8% increase from 2024. 

4. $20.5728 for Medicare payments to non-QPs for anesthesia services. This reflects a 1.3% increase from 2024. 

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 proposes 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 proposes the adoption of 90% of the RUC recommendations.  

2. Efficiency Adjustment. CMS proposes 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%. 

3. Indirect Practice Adjustment. CMS proposes changes to practice RVUs that would 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).  

Telehealth Codes 

The proposed rule does not include current procedural terminology (CPT) telemedicine evaluation and management (E/M) codes in the Medicare Telehealth List effective for 2026. CMS made this decision despite their receipt of an AMA letter urging them otherwise. Therefore, Medicare will expect physicians to code telemedicine E/M services as if the services were provided in person. 

Merit-Based Incentive Payment System (MIPs) 

The proposed rule maintains the 2024 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 proposed rule and share findings with MMA members. For more information in the meantime, please contact Adrian Uphoff, manager of health policy and regulatory affairs.