The Centers for Medicare & Medicaid Services (CMS) released its CY 2026 Medicare Physician Fee Schedule (PFS) Final Rule on November 5, 2025, concluding one of the most significant rulemaking cycles since the pandemic. The July 2025 proposed rule outlined a plan for reshaping how Medicare pays for care—focusing on data modernization, digital health, and equity. The final rule, effective January 1, 2026, refined those goals, choosing stability where uncertainty remained and pursuing transformation where progress was already evident.
The July 2025 proposed rule laid out a blueprint for reshaping how Medicare pays for care—balancing data modernization, digital health, and equity. The final rule, now effective January 1, 2026, refined those ambitions, choosing stability where uncertainty still loomed and advancing transformation where readiness already exists.
Payment and Practice Expense
What CMS Proposed:
Two separate conversion factors were introduced—one for clinicians in Advanced APMs and one for those in traditional Medicare. The agency also floated the idea of replacing its 2008 Physician Practice Information Survey (PPIS) data with new AMA PPI/CPI survey data to update practice-expense cost shares
What CMS Finalized:
The final rule confirms two conversion factors—$32.74 for APM participants and $32.58 for non-APM clinicians—exactly as proposed
However, CMS declined to adopt the AMA’s new data, citing “concerns with accuracy and representativeness.” The agency will continue to use PPIS data to mitigate volatility across specialties.
What It Means:
Practices can expect near-flat year-over-year rate stability. The long-awaited cost-structure update is deferred until at least CY 2027, preserving predictability during inflationary uncertainty.
Care Management and Behavioral Health Integration
Proposed:
CMS sought to streamline overlapping care coordination codes by introducing Advanced Primary Care Management (APCM) services (G0568–G0570), effectively merging elements of Chronic Care Management (CCM) and Transitional Care Management (TCM).
Parallel efforts included expanding the scope of behavioral health integration, supporting digital mental health treatment, and continuing telehealth flexibilities.
Finalized:
CMS finalized all three proposals with modest refinements—clarifying time thresholds, supervision levels, and community-based team participation. Telehealth direct supervision via two-way audio/video remains in effect through CY 2026.
Impact:
Clinicians now have clearer, more flexible pathways for billing care-management time. This evolution signals CMS’s intention to reward continuity and complexity, not just encounters.
Value-Based and Specialty Care Initiatives
Proposed:
The Medicare Shared Savings Program (MSSP) proposed updates to beneficiary assignment, benchmarking, and shared-loss mitigation—with a goal of encouraging smaller ACOs to participate.
CMS also previewed a new Ambulatory Specialty Model (ASM) under CMMI to test bundled approaches for high-cost specialty episodes.
Finalized:
Both initiatives were finalized with minor clarifications. CMS retained flexibility for ACO ownership changes involving SNFs and confirmed the ASM will remain voluntary.
RHC and FQHC documentation parity policies were likewise adopted as proposed.
Impact:
By reaffirming these models, CMS advances its 2030 target—all Medicare beneficiaries aligned to value-based care arrangements.
Documentation, Surgery, and PE Refinements
Proposed:
CMS proposed halving the work-RVU weighting in indirect practice expense (PE) calculations for facility settings to rebalance disparities. It also outlined a Global Surgery Payment Accuracy study to validate post-operative time data.
Finalized:
The agency withdrew the PE methodology change after industry feedback warned of budget-neutrality distortions.
The global surgery project is progressing only through a data collection phase—no payment adjustments have been made yet.
Impact:
Practices will see no immediate RVU volatility. CMS is prioritizing precision data collection over aggressive recalibration.
Drug Inflation Rebate and Economic Index
Proposed:
Under the Inflation Reduction Act, CMS detailed how rebate benchmarks would be set for Part B and Part D drugs and proposed establishing a 340B data repository
Additionally, the agency requested feedback on adopting the 2017-based Medicare Economic Index (MEI) to rebalance work, expense, and malpractice cost shares.
Finalized:
Both programs were finalized largely as proposed, with minor formula clarifications. However, CMS deferred the MEI update, maintaining the 51 % work / 45 % PE / 4 % MP cost-share mix.
Impact:
Expect consistent payment distribution through 2026. The MEI deferral signals that future rulemaking could bring larger redistributive impacts once AMA cost data are validated.
Dental and Allied Services
Proposed:
Coverage was expanded for dental services “inextricably linked” to covered medical treatments—such as oncology, transplant, and cardiac procedures.
Finalized:
CMS finalized and broadened the rule to explicitly include head and neck cancer preparation.
Impact:
A small but meaningful win for multidisciplinary care teams, further embedding oral health within comprehensive medical planning.
Healthcare Inspired Perspective
CMS’s restraint in the final rule is deliberate. Rather than upending the payment system, the agency is fine-tuning it—giving practices time to align operations, documentation, and education to new expectations.
By deferring untested datasets and prioritizing integrated care management, CMS is steering toward “measurable modernization”—incremental changes that reflect readiness, not reaction.
For healthcare leaders, this means using 2026 as a year to:
- Audit E/M and care-management documentation;
- Recalibrate time-tracking workflows;
- Reinforce compliance education for new G-codes;
- Engage in ACO or specialty model pilots where possible.
Summary of Key Changes — Proposed vs. Final Rule (CY 2026)
(For readers who prefer a quick reference)
| Policy Area | Proposed Rule (July 2025) | Final Rule (Nov 2025) |
| Conversion Factors | $32.35 → +1.2 % (APM) / +0.7 % (non-APM) | $32.74 (APM) / $32.58 (non-APM) |
| Practice Expense Data | Replace PPIS with AMA PPI/CPI survey | Deferred; PPIS maintained |
| Indirect PE Weighting | Reduce work-RVU weight 50 % for facility | Withdrawn after feedback |
| APCM Codes | New G0568–G0570 to unify CCM/TCM | Finalized with refinements |
| Digital Mental Health | New service category proposed | Finalized coverage integrated into care-management |
| Telehealth | Extend video-based direct supervision | Finalized unchanged |
| ACO & Shared Savings | Modernize benchmarks, loss mitigation | Finalized with clarifications |
| Behavioral Health | Expand digital & community-based integration | Finalized |
| Dental/Medical Link | Include oncology, cardiac, transplant | Finalized + added head/neck cancer |
| Global Surgery | Validate post-op time data | Data collection only |
| Drug Inflation Rebate | Define Part B/D benchmarks + 340B repo | Adopted with formula clarifications |
| MEI Rebasing | Solicit feedback on 2017-based weights | Deferred |
| RHC/FQHC | Continue parity policy | Finalized |
Resources
- CMS CY 2026 PFS Final Rule – CMS.gov
- Federal Register No. 2025-19787 (Nov 5, 2025)
- CY 2026 PFS Proposed Rule, 90 FR 32352 (Jul 16, 2025)
Author Bio
Maya Turner, CPC, CPB, CPMA, CPCO, CRC, CFPC, CPC-I serves as Director of Auditing & Education at Healthcare Inspired LLC and sits on the AAPC National Advisory Board (2025–2027). She is a national speaker, consultant, and author of Billable: The Revenue Cycle Professional’s Guide to Branding.