Overview of the 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F)
CMS finalized the 2026 Medicare Physician Fee Schedule (PFS) rule on October 31, 2025. The rule updates payment policies, practice expense calculations, telehealth rules, and other Medicare Part B provisions. This rule goes into effect January 1, 2026.
Conversion Factor and Payment Rates
CMS finalized two separate conversion factors for 2026: one for qualifying participants in Advanced Payment Models (APMs) and one for all other clinicians.
Conversion factor for APM participants: $33.57 (up $1.22 from 2025).
Conversion factor for non-APM participants: $33.40 (up $1.05 from 2025).
The updates reflect statutory payment adjustments and the removal of temporary adjustments that applied in prior years.
Efficiency Adjustment
A new efficiency adjustment of -2.5% applies to non-time-based services in 2026 to reflect productivity gains.
Excluded from the adjustment are:
Evaluation and management (E/M) visits
Care management and behavioral health services
Telehealth and maternity global services
Practice Expense (PE) Methodology
CMS will not adopt the AMA’s new Physician Practice Information (PPI) and Clinical Practice Improvement (CPI) survey data for CY 2026 due to limited sample size.
Updates were made to improve cost accuracy between office and facility settings. Hospital outpatient data were used to better reflect the cost of certain technical services, including radiation therapy and remote monitoring.
Telehealth and Supervision Policies
CMS simplified the telehealth service list process by eliminating the distinction between temporary and permanent categories.
Audio-only telehealth remains allowed for specific services through December 31, 2026, such as code G2025.
The rule finalizes policies for direct supervision of services furnished via telehealth in Rural Health Clinics and Federally Qualified Health Centers through 2026.
Skin Substitute Products
Starting in 2026, certain skin substitute products used in the office setting will be treated as incident-to supplies under the PFS rather than as biological products.
A single national payment rate of approximately $127.28 will apply to these products to encourage competition and reduce administrative burden.
Part B Drug and Biological Payment Updates
CMS finalized that starting January 1, 2026, drug units sold at the “maximum fair price” under the Inflation Reduction Act must be included in the calculation of the Average Sales Price (ASP).
CMS also established a methodology to remove 340B drug units from certain rebate calculations and created a repository to test related claims data reporting.
Conclusion
It is essential for every Medical Practice to read the CMS Final Rule if you see Medicare patients. The links to the fact sheet and final rule are listed below.
References
CMS Fact Sheet: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f
Federal Register Rule Text: https://www.federalregister.gov/documents/2025/11/05/2025-19787/medicare-and-medicaid-programs-cy-2026-payment-policies-under-the-physician-fee-schedule-and-other