Policy Briefs
July 25, 2025
CMS Proposes Physician Payment Rule for CY 2026
On July 14th, the Centers for Medicare and Medicaid Services (CMS) released the Physician Fee Schedule (PFS) proposed rule for CY 2026. Beginning in 2026, CMS is proposing to begin calculating two different conversion factors under the PFS: one for qualifying Alternative Payment Model (APM) providers and one for non-APM providers. Proposed conversion factors for 2026 are $33.59 for qualifying APM providers and $33.42 for non-APM providers. These include the 2.5% increase mandated in the July 2025 Tax and Spending bill (also known as the One Big Beautiful Bill Act). Despite this increase, CMS is proposing to implement an “Efficiency Adjustment” that would decrease payments for many specialists. Furthermore, there is a proposed change to the methodology for calculating practice expenses that would decrease reimbursements for services provided in hospital-based facilities and increase payments for services in office-based facilities. Click here for the full AHPA summary. Comments are due September 12th. Below are key issues impacting payments.
Efficiency Adjustment:
CMS is proposing to reduce work Relative Value Units (RVUs) for services that have become more efficient over time due to advances in technology, improved workflows, and increased physician experience. The services targeted include non-time-based procedures such as surgeries, imaging and diagnostics. Services valued on cognitive time, such as E/M codes, care management and mental health counseling, would be exempted. The current methodology relies heavily on the American Medical Association’s Relative Value Scale Update Committee (AMA RUC) surveys, which have a median response rate of only 2.2%. CMS argues that physicians may be overestimating the time or complexity of certain procedures to increase reimbursement. Under the new proposal, CMS would apply a Medicare Economic Index-based productivity reduction every three years to applicable RVUs – which means a decrease of 2.5% for 2026. Some of the specialties that will be most affected by this proposal include: radiology, surgical subspecialities, anesthesiology, gastroenterology and interventional cardiology.
Practice Expense:
CMS is also proposing to make changes to the methodology for calculating practice expense RVUs that would decrease payments for certain services provided in facility settings. Currently, practice expense calculations rely primarily on the AMA’s Physician Practice Information (PPI) Survey from 2008 that measures specialty-specific practice costs. CMS argues that current methodology fails to accurately account for indirect costs for office-based practitioners due to limitations in survey data and low response rates. Also, since the current methodology was established decades ago, CMS believes that it fails to account for the increased number of physicians who are hospital-based versus office-based. Under the new proposal, CMS would utilize data from the Hospital Outpatient Prospective Payment System (OPPS) to set relative rates and inform cost assumptions for some technical services paid under PFS. To view a list of total allowed charges by specialty and setting, click here.
If you have feedback, you would like AHPA to include in our comments to CMS, please email Thomas Melton at Thomas.Melton@adventhealth.com.