Published: November 2024 | Based on CMS-1832-F Final Rule
Quick Summary
- Payment Increases: 3.26-3.77% increase in conversion factors
- Efficiency Adjustment: -2.5% reduction in work RVUs for many procedural codes
- Protected Services: E/M, behavioral health, and telehealth services exempt from cuts
- New Opportunities: Behavioral health integration codes and permanent telehealth flexibilities
The Good News: Payment Increases
For the first time in years, physicians will see meaningful increases in Medicare reimbursement rates:
| Participant Type | 2025 Rate | 2026 Rate | Change |
|---|---|---|---|
| Qualifying APM Participants | $32.35 | $33.57 | +$1.22 (3.77%) |
| Non-Qualifying APM Participants | $32.35 | $33.40 | +$1.05 (3.26%) |
The Controversial: Efficiency Adjustment
Important: CMS is implementing a -2.5% efficiency adjustment to work RVUs for non-time-based services, affecting many procedural codes but protecting cognitive services.
✅ Exempt Services
- Evaluation and Management (E/M)
- Care management (CCM, PCM, RPM)
- Behavioral health services
- All telehealth services
- Maternity care with global periods
❌ Subject to Adjustment
- Most surgical procedures
- Diagnostic procedures
- Non-time-based technical services
Practice Expense Methodology Updates
CMS is modernizing how it calculates practice expenses:
- Increased indirect costs for office-based settings vs. facility settings
- New data sources from hospital outpatient systems for radiation and remote monitoring
- Recognition that fewer physicians maintain separate practice locations
Telehealth Expansions Made Permanent
🎉 Permanent Telehealth Flexibilities
- Streamlined process for adding services to Medicare Telehealth List
- No frequency limitations for hospital and nursing facility visits
- Virtual direct supervision allowed for many services
- Teaching physicians can maintain virtual presence
Major Changes to Skin Substitute Payments
Dramatic Change: Skin substitutes moving from ASP-based payment (averaging $1,000s) to bundled rate of ~$127.28. This is a response to a 40-fold spending increase ($252M to $10B from 2019-2024).
Action Items for Your Practice
📋 Immediate Steps
- Revenue Impact Analysis: Calculate how efficiency adjustment affects your top 50 codes
- APM Evaluation: Consider qualifying for higher conversion factor
- Behavioral Health Integration: Explore new add-on code opportunities
- Telehealth Strategy: Update policies based on permanent flexibilities
- Fee Schedule Updates: Prepare billing systems for changes
Bottom Line
While the efficiency adjustment creates challenges for some specialties, the overall payment increases and new opportunities in behavioral health integration and telehealth represent positive movement for Medicare physician payment.
Prepare for 2026 with RVU Tracker
Use RVU Tracker to monitor how these changes affect your productivity in real-time.
Download the AppDisclaimer: This summary is based on the CY 2026 Medicare Physician Fee Schedule Final Rule. Providers should consult the complete rule and their professional advisors for specific guidance.