CMS Releases Proposed Rule for 2026 Physician Fee Schedule

The proposed rule would increase the conversion factor used to set physician payments by more than 3%.

The Centers for Medicare & Medicaid Services (CMS) has released the proposed rule for the 2026 calendar year Physician Fee Schedule.

The CMS Physician Fee Schedule (PFS) sets payments for the services of physicians and other healthcare professionals who can bill CMS. The payment policies set under the PFS are for services provided in several healthcare settings, including hospitals, physician offices, ambulatory surgery centers, skilled nursing facilities, and hospices.

Under the PFS, payments are based on the resources required to deliver services. Relative value units (RVUs) are applied for each service for work, practice expense, and malpractice expense. The RVUs become payment rates with the application of a conversion factor.

There are two conversion factors under the 2026 calendar year PFS: a conversion factor for qualifying alternative payment model (APM) participants and a conversion factor for clinicians who do not participate in an APM.

The proposed rule would increase the APM conversion factor by 3.83% in calendar year 2026 as compared to calendar year 2025. The proposed rule would increase the conversion factor for clinicians who do not participate in an APM by 3.62% in calendar year 2026 as compared to calendar year 2025.

The proposed conversion factors include a 2.5% increase included in the One Big Beautiful Bill Act that became law on July 4.

For the first time, the proposed rule for the 2026 PFS would make an efficiency adjustment for some RVUs based on the sum of the past five years of the Medicare Economic Index productivity adjustment percentage, which is calculated annually by the CMS Office of the Actuary. The proposed rule calls for an efficiency adjustment of -2.5% for calendar year 2026.

The AMGA says the one-time 2.5% conversion factor increase established by the One Big Beautiful Bill Act is not a substitute for meaningful reform of the PFS.

"Last-minute congressional interventions to avert further reductions to the conversion factor are unsustainable and obscure the need for lasting structural improvements," the AMGA said in a prepared statement.

AMGA President and CEO Jerry Penso, MD, MBA, called on CMS to modernize the PFS and make payment policy more consistent with value-based care.

"Health systems and medical groups continue to bear the brunt of an outdated and underfunded reimbursement model," Penso said in a prepared statement. "Without systematic reform, Medicare's current fee-for-service framework will remain misaligned with the shift toward high-value care."

In addition to the conversion factor and efficiency adjustment updates, the PFS proposed rule has several other components, including the following:

• The proposed rule would create the Ambulatory Specialty Model (ASM). The ASM would hold specialists financially accountable for the treatment of congestive heart failure and lower back pain. The ASM would reward specialists for effective disease management, adhering to clinical guidelines for care, and coordinating care with other providers.
   
• The proposed rule would make significant changes to CMS telehealth provisions. These changes include a proposal to streamline the agency's telehealth services list. Under the proposal, CMS would simplify the process of adding services to the list by removing the "provisional" and "permanent" distinction and focusing the review on whether a service can be delivered via two-way audio-video.
   
• The proposed rule seeks to improve access to behavioral health services, including expansion of digital therapeutics coverage for attention-deficit/hyperactivity disorder.

CMS will accept comments on the proposed rule through Sept. 12.