On July 14, 2025, CMS released the CY 2026 Physician Fee Schedule (PFS) Proposed Rule. Below is a summary of the most relevant updates impacting payment, practice operations, and telehealth policies.
Conversion Factor (CF)
- Proposed CY 2026 CF:
- $33.4209 for most physicians
- $33.5875 for those in Advanced APMs (new in 2026).
- Both represent increases over the CY 2025 CF of $32.3465 (3.3% and 3.8% increases, respectively).
- These increases are based on:
- Medicare Access and CHIP Reauthorization Act (MACRA) update (+0.25% for non-APMs, +0.75% for APMs)
- +0.55% budget neutrality adjustment
- +2.5% one-time payment boost from the One Big Beautiful Bill Act
Separate Conversion Factor (CF) for anesthesia services:
- $20.6754 for clinicians in APMs (+1.8% from 2025’s $20.3178)
- $20.5728 for non‑APM clinicians (+1.26%)
CMS also proposes a –2.5% efficiency adjustment to work RVUs on non-time-based services. This will greatly impact most specialties/codes with the exception of ED E&M codes.
Efficiency Adjustment
CMS proposes a 2.5% reduction for certain services based on a 5-year review of Medicare Economic Index (MEI) productivity data. This cut would apply to non-time-based services and impact work RVUs and intraservice physician time.
Implication: Hospitalists treating inpatient beneficiaries could face decreased reimbursement from both efficiency and practice expense adjustments, despite nominal CF increase.
Specialty Impacts
Anesthesia
- Slight CF increase (+1.8% APM / +1.3% non-APM).
- Estimated work RVUs flat, practice expense (PE) –1%, malpractice flat → net impact ≈ –1% (excluding CF changes)
Radiology
- Overall impact: –2% (diagnostic), –1% nuclear medicine, +2% interventional, –1% radiation oncology.
Hospitalist/Inpatient
- Benefit from general CF increase, but efficiency adjustment applies.
- CMS is updating PE methodology, shifting indirect cost recognition away from facility settings—hospitalists likely to see reduced PE RVUs
Emergency Medicine
CMS hasn’t provided a specialty-specific estimate yet, but EM will be affected by the same overarching changes:
- CF bump (+3.8% APM or +3.3% non-APM)
- –2.5% efficiency cut affecting non-time-based EM components (e.g., observation, procedures)
- PE rebalancing, disadvantaging facility-based EM (e.g., emergent observation, procedures in ED)
Net likely impact: CF increase provides a boost, but efficiency and PE adjustments may offset gains—potentially leading to modest net decline or flat reimbursement, especially for hospital-employed emergency physicians.
Comparative Summary
| Specialty | CF Change (APM / Non‑APM) | Efficiency Adj. | PE Shift | Estimated Net |
| Anesthesia | +1.8% / +1.3% | –2.5% | –1% PE | Slight negative |
| Radiology | +3.8% / +3.3% | –2.5% | Redistribution | –2% overall |
| Hospitalist (Inpatient) | +3.8% / +3.3% | –2.5% | Less PE in-facility | Negative pressure |
| Emergency Medicine | +3.8% / +3.3% | –2.5%* | Less PE in ED | 1% to 2% increase (of note, -2% for Critical Care) |
*Excluding ED E/M codes but will impact procedures, Critical Care & Observation
Timeline & Actions
- Comment period ends September 12, 2025
- Final Rule expected around November 1
- Effective on January 1, 2026
Practical Takeaways
- Across the board, conversion factors rise—especially for APM participants.
- However, efficiency RVU cuts and practice expense methodology shifts place downward pressure, disproportionately affecting facility-based and non-time services.
- Emergency medicine, particularly ED-based services in hospitals, will need careful coding and PE strategy to protect revenue, as net gains may be minimal or null.
Urgent Care Center Payment
CMS is considering separate billing codes or add-on payments for urgent care visits, aiming to reduce emergency department overcrowding from low-acuity cases. They are seeking stakeholder input on how to define and reimburse urgent care E/M services appropriately.
Telehealth Proposals
CMS plans to permanently add ED E/M codes (99281–99285), critical care, and observation services to the telehealth list. Frequency limits on telehealth for inpatient, nursing facilities, and critical care visits would be permanently removed. Virtual (audio-video) supervision would be permanently allowed for services requiring direct oversight.
Teaching Physician Supervision
CMS will end virtual supervision policies in urban areas after December 31, 2025. Starting in 2026, teaching physicians must be physically present during key parts of resident care in urban locations, though rural exceptions will continue.
Quality Payment Program (QPP) Updates
MVPs (MIPS Value Pathways): Two new MVPs are proposed: one each for diagnostic and interventional radiology.
Performance Threshold: The performance threshold remains at 75 points through 2028 (payment year 2030).
Quality Category: Introduced in 2025, the 10-point benchmarks will apply to specialties with limited measure options, impacting radiology, anesthesia, and pathology.
Cost: CMS proposes changes to the Total Per Capita Cost (TPCC) measure’s attribution rules. In addition, a 2-year feedback-only period for new cost measures will allow clinicians to review and improve without penalty.
Improvement Activities: CMS suggests adding 3, modifying 7, and removing 8 improvement activities. A new “Advancing Health and Wellness” subcategory would be created, and the “Achieving Health Equity” subcategory would be removed.
Promoting Interoperability: Updates are proposed for the SAFER Guide and Security Risk Analysis measures. A new optional/bonus TEFCA measure is proposed under the Public Health and Clinical Data Exchange objective.
Learn More
AHA: CMS issues CY 2026 physician fee schedule proposed rule
