The Centers for Medicare and Medicaid Services (CMS) has finalized its 2026 Medicare Physician Fee Schedule, delivering a modest 2.5% reimbursement increase for physicians who treat Medicare beneficiaries.
At first glance, it looks like long-awaited good news after years of stagnant or declining rates. But beneath the surface, the regulation signals a structural reshaping of how—and for whom—Medicare dollars flow.
This year’s rule, which implements provisions from the tax law signed by President Donald Trump in July 2025, also introduces a new efficiency adjuster, a five-year bundled-payment pilot, and major steps toward telehealth permanence. Together, these changes redefine how CMS intends to balance equity, efficiency, and innovation across America’s physician workforce.
The Raise That Isn’t Quite Universal
Starting January 2026, Medicare’s conversion factor—the dollar value CMS applies to relative value units (RVUs)—will increase by 3.26% for most physicians and by 3.77% for those participating in alternative payment models under MACRA.
This reverses years of downward adjustments and aligns with Washington’s new “Make America Healthy Again” agenda championed by HHS Secretary Robert F. Kennedy Jr.
But while overall reimbursement edges upward, not every physician will feel the same relief.
The regulation introduces a new efficiency adjuster, trimming payments by about 2.5% across roughly 9,000 billing codes that span surgical procedures, imaging, pain management, and orthopedic services. CMS argues the measure will redistribute funds toward primary care—a long-standing policy priority—by rewarding efficiency and discouraging redundant services.
For office-based physicians, updated practice-expense methodology will increase reimbursement. Facility-based clinicians, however, may see corresponding decreases—a deliberate effort to rebalance site-of-service payments.
Bundled Payments: CMS Pushes Prevention Upstream
The final rule also launches a mandatory, five-year experiment: the Ambulatory Specialty Model (ASM).
Beginning in 2027, this bundled-payment initiative will focus initially on lower back pain and heart failure—two conditions that drive high chronic-care costs yet remain largely preventable through early intervention.
The model will leverage the MIPS Value Pathways framework to track outcomes, technology adoption, and spending patterns.
In practical terms, CMS is nudging specialists to move from reactive treatment to proactive disease management—a subtle but powerful shift that mirrors the broader march toward value-based care.
Telehealth Becomes a Permanent Pillar
CMS has also made several telehealth flexibilities permanent, reflecting lessons from the pandemic era.
Key highlights include:
- Permanent removal of visit-frequency limits for inpatient, nursing-home, and critical-care consultations.
- Allowing direct supervision of select services (such as cardiac rehab) via real-time audio-visual technology.
- Expanding eligibility to academic medical centers, which were excluded in earlier proposals.
By simplifying how new telehealth services can gain approval and reimbursement, CMS is laying the groundwork for virtual care as a default—not a temporary workaround.
Shared Savings Gets Sharper Teeth
To strengthen accountability, CMS will limit how long Accountable Care Organizations (ACOs) can remain in one-sided risk models—reducing the window from seven years to five beginning in 2027.
The agency also removed the requirement that ACOs cover at least 5,000 Medicare beneficiaries, lowering barriers for smaller, innovative care networks to participate in the Medicare Shared Savings Program.
This dual approach—tighter risk timelines but broader entry access—signals CMS’s intent to grow participation while accelerating maturity in risk-sharing arrangements.
Behavioral Health and Primary Care: Codes with a Cause
In alignment with the administration’s broader health agenda, CMS is introducing new billing codes for behavioral health and primary-care integration.
These codes aim to reward early detection, preventive interventions, and whole-person care—key pillars of the “Make America Healthy Again” platform.
While small in scope, these codes symbolize an important policy shift: behavioral health is no longer an afterthought in Medicare reimbursement design.
Final Thoughts
This final rule offers physicians a rare pay bump—but the deeper story lies in redistribution and redesign.
CMS is clearly moving from volume-driven adjustments to targeted incentives that reward prevention, efficiency, and integrated care.
For providers, the real challenge in 2026 will be navigating the new balance between short-term relief and long-term reform.
The message is unmistakable: value-based care is no longer experimental—it is becoming the default operating system of Medicare.
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