CMS Finalizes 2026 Physician Fee Schedule, Changes Telehealth Rules & MSSP

Last Friday, the Centers for Medicare and Medicaid Services (CMS) issued a final rule for the 2026 Medicare Physician Fee Schedule. The rule includes a 2.5% pay boost for physicians but creates a 2.5% reduction for 7,700 billing codes for services. It also makes changes to telehealth reimbursement and the Medicare Shared Savings Program.

The 2026 Fee Schedule includes provisions from the One Big Beautiful Bill Act (OBBBA), President Donald Trump’s signature legislation for his second term. The bill mandated a pay raise and reversed physician reimbursement cuts. CMS  determined that the conversion factor for Medicare physician payments at 3.26%. The conversion factor for physicians participating in alternative payment models is 3.77%. The rule also includes a 2.5% payment reduction for thousands of billing codes including surgery, diagnostic imaging interpretation, outpatient care and more, Modern Healthcare reports.

CMS proposed the across the board “efficiency adjustment” for certain services because technological advances have improved efficiency and reduced the time and resources needed to perform those services. Inside Health Policy explains that the agency selected specific services likely to become more efficient over time, unlike time-based services like office visits or behavioral therapy.

Over 30 physician specialty organizations, led by the American College of Surgeons, sent a letter Monday to Congressional leadership raising concerns for the effects of the adjustment, urging Congress to intervene to block the rule, and blasting the idea that the services will continue to become more efficient indefinitely and that all physicians experience a seamless and similar rate of efficiency, Modern Healthcare reports.

While advances in medical technology and treatment protocols allow more patients to survive severe illnesses, these same patients often later require complex, high-risk procedural intervention. Highly experienced physicians may improve time efficiency, but undertake the most challenging cases, whereas newly trained or teaching physicians may treat less complicated patients but typically require more time.

The Fee Schedule also eliminates frequency limits on telehealth services inside hospitals and nursing facilities, but eliminates a policy that allowed providers to report and bill for remote services using the practice location. According to Health Leaders Media, the prohibition on using the practice location will include times that providers are meeting with patients from their homes during nights and weekends. Alliance for Connected Care explains why this will be disruptive:

This policy helped reduce administrative complexity in Medicare billing and strengthened continuity of care by allowing patients to continue seeing their existing practitioners… [By ending that allowance], those who continue providing such care would need to separately enroll and bill for each location from which they deliver telehealth services. This is administratively difficult…

The American Medical Association generally supported the final rule and pay bump for providers but warned that the one-time raise would not keep up with increasing costs. The AMA has repeatedly urged the Trump administration to tie the physician fee schedule to the Medicare Economic Index, “to prevent further erosion of physician practice stability.”

The rule also stabilizes the Merit-based Incentive Payment Program (MIPS) by maintaining the 75-point performance threshold needed to avoid penalties and qualify for positive payment adjustments through the 2028 performance year. The agency also finalized steps to accelerate the transition to MIPS Value Pathways, which will ultimately replace the current measure structure.

CMS approved program changes in the Medicare Shared Savings Program (MSSP) that are expected to expand participation and reduce Medicare spending, projecting $20 million in savings through 2035. Highlights include a lower membership minimum (below 5000) and shortened pathway to risk tracks from seven to five years. A CMS fact sheet explains the changes facing MSSP ACOs as a result of the new rule, which removes the health equity adjustment applied to an ACO’s quality score beginning in performance year 2026 and revising terminology used to describe the adjustment.