The Centers for Medicare & Medicaid Services (CMS) released the calendar year (CY) 2026 Medicare Physician Fee Schedule and Quality Payment Program (QPP) final rule on Oct. 31, which updated payment rates for physicians and other health care professionals, addressed certain telehealth waivers and flexibilities, refined the Shared Savings Program for accountable care organizations, revised requirements under the QPP, created a new mandatory Ambulatory Specialty Model, among other policies.
As required by statute, the CMS implemented two separate conversion factors: one for qualifying participants (QPs) in alternative payment models (APMs) and one for physicians and practitioners who are not QPs. The conversion factor for QPs is $33.57, representing a 3.77% increase from CY 2025, and for non-QPs the conversion factor is $33.40, representing a 3.26% increase from CY 2025. QP status in CY 2026 is based on meeting APM participation thresholds for the 2024 QPP performance year.
The CMS will begin to apply an efficiency adjustment of -2.5% for CY 2026 to the work component values for non-time-based services, as the agency expects these kinds of services to accrue efficiencies over time with changes in medical practice. This adjustment will generally apply to all codes except time-based codes, such as evaluation and management services, care management services, behavioral health services, and services on the CMS telehealth list, as well as certain maternity care services.
Citing the steady decline in the number of physicians working in private practice, with a corresponding rise in employment by hospitals and health systems, the CMS finalized policy to revalue indirect practice expense costs for practitioners based on the site of service, increasing values for those services in office-based settings compared to facility settings.
Although the CMS initially proposed to end payment to teaching physicians who supervise residents virtually for telehealth services effective Dec. 31, the agency instead finalized a policy permanently allowing teaching physicians to virtually supervise residents delivering care via telehealth in all training locations.
Beginning 2027, the CMS will test a new mandatory Ambulatory Specialty Model for physicians who treat low back pain or heart failure in an outpatient setting in yet to be announced core-based statistical area or metropolitan division. The CMS will assess physicians individually on cost and quality measures to determine whether they will receive positive, neutral, or negative payment adjustments on future Medicare Part B claims.
The CMS also released several fact sheets, including a Physician Fee Schedule Fact Sheet, Medicare Shared Savings Program Fact Sheet, Ambulatory Specialty Model Fact Sheet, and updated resources for the Quality Payment Program.