2026 conversion factor

$33.4009 ($33.5675 for qualifying APM participants) – updated 11/4/2025

Payment policies in the 2026 Physician Fee Schedule

Conversion Factor

For the first time, there are two conversion factors for services paid under the Physician Fee Schedule. This is a result of a law passed in 2015. The Medicare Access and CHIP Re-authorization act (MACRA) disposed of the sustainable growth rate formula. Unfortunately, in its place we got budget neutrality and beginning in 2026, two separate conversion factors. The budget neutrality provision requires that the total part B Medicare payments not increase more than $20 million in a year. These might increase because of new CPT and HCPCS codes, or because certain procedures are performed more frequently, or because the increase valuation of a subset of codes such as Evaluation and Management codes. When the increases in Medicare B expenditures occurs, the conversion factor will decrease in the next year to maintain budget neutrality. Many years, Congress subverted the decrease by adding in a percentage increase so that physician fees would not go down in the next year.

The “re-open the government” bill that passed in November of 2025 gave physician fees a 2.5% increase.

Back to MACRA. MACRA stipulated that Qualifying Practitioners (QPs) who didn’t participate and meet certain thresholds in alternative payment models (APM) such as Merit-based Incentive Payment System (MIPS) and MIPS Value Pathways (MVP) would see a lower update to the conversion factor then those who did. Quoting the press release from CMS about the final rule:

“The final CY 2026 qualifying APM conversion factor of $33.57 represents a projected increase of $1.22 (+3.77%) from the current conversion factor of $32.35. Similarly, the final CY 2026 nonqualifying APM conversion factor of $33.40 represents a projected increase of $1.05 (+3.26%) from the current conversion factor of $32.35.”[1]

Practice Expense Update

The valuation of CPT and HCPCS codes consists of three components: work relative value units (wRVU), practice expense relative value units (peRVU) and malpractice expense relative value units (mpRVU). Practice expense differentiates between services provided in a facility setting and in a non-facility setting with different values. The sum of the three values multiplied by the conversion factor is the national fee.

CMS uses practice expense values from the American Medical Association physician practice information (PPI) survey. CMS opted not to use this data for 2026 rates because they are concerned with sample size and methodology. CMS believes that the indirect costs assigned in the facility settings in the fee schedule may be too high, and they are using a different methodology. CMS will value the indirect peRVUs for facility-based care at 50% of the indirect peRVU valuation in non-facility places of service. This is resulting in lower payments under the physician fee schedule for services provided in a facility setting in 2026.

CMS Efficiency Adjustment

• CMS is decreasing the work relative value units (wRVU) (not the total fee) by 2.5% for about 7,600 services in 2026
• This includes procedures in both the surgical and medical section of the CPT book, certain diagnostic services, and a few HCPCS codes
• Services that will not have this decrease, that is, are excluded from the wRVU decrease, include time-based services, care management, behavioral health, maternity codes, services on the telehealth list and, for 2026 valuations, any new codes made effective Jan. 1, 2026
• Physicians whose productivity and income are tied to wRVUs, and who perform a significant number of procedures, should expect a decrease in total RVUs

The list of codes with a wRVU decrease can be downloaded via CMS’ efficiency adjustment file (ZIP): https://www.cms.gov/files/zip/cy-2026-pfs-final-rule-codes-subject-efficiency-adjustment-updated-11-03-2025.zip

When looking at the Spreadsheet, the existing wRVU is in column C and the adjusted wRVU (for 2026) is in column E. There are also two corresponding columns showing adjusted time that it takes for the procedure to be performed.

You can see the effect on four selected codes. The higher the wRVU, the bigger the decrease in payment.

Effect of 2.5% wRVU efficiency adjustment on payment
	wRVU without adjustment	Total RVU without adjustment	Payment without adjustment	wRVU with adjustment	Total RVU with adjustment	Payment with adjustment	Decrease
11200	0.82	2.09	$       27.53	0.80	2.07	$      26.86	$    0.67
29888	14.3	26.99	$     480.05	13.94	26.63	$    467.97	$  12.09
49540	10.74	19.55	$     360.54	10.47	19.28	$    351.48	$    9.06
58150	17.31	28.37	$     581.10	16.88	27.94	$    566.66	$  14.44

Why CMS Is Implementing an Efficiency Adjustment

The American Medical Association (AMA) RVS update committee (commonly referred to as the RUC) develops relative value units for new CPT codes. The committee also can suggest changes to the values of these services. CMS reviews those recommendations and with or without adjustments sets the RVUs for new codes. CMS itself has a process to review potentially misvalued codes. All of this is discussed in the proposed and final physician fee schedule rules.

In the 2026 final rule, CMS described its reasoning for the decrease in wRVU. The estimate of the time spent in performing a procedure is based on survey data, and the RUC surveys are distributed by specialty societies. CMS has two concerns about this. The response rate for the surveys is very low, and CMS questions whether those who respond to the survey are representative of the profession as a whole. They are concerned the time may be over-reported. CMS also believes that there may be efficiencies in the work of the practitioner and the team as these new procedures are performed more frequently.  The CMS press release describes it this way: “In the CY 2026 Physician Fee Schedule (PFS) final rule, CMS is finalizing a modest -2.5% efficiency adjustment to select services to better recognize that some services are likely to become more efficient over time, as compared to time-based services like office visits or behavioral health therapy. The efficiency adjustment targets services that have likely become able to be furnished more efficiently over time but still retain valuations based on outdated assumptions.” [2]

As you can see from the chart above, the decrease in revenue for one procedure is relatively small. However, if a physician or other practitioner performs a high volume of procedures over the course of a year, the decrease in revenue can be significant.

Telehealth

The bill that reopened the government on November 12, 2025, allowed for the extension of flexibilities for telehealth through January 30, 2026.

It permanently removed the frequency limitations on telehealth services for subsequent hospital visits, subsequent nursing facility visits, and critical care consultations using HCPCS codes G0508 and G0509 that were in place prior to the pandemic.

The telehealth news in the final rule added five new services to the telehealth list:

G0473 Group behavioral counseling for obesity, 2-10 members

G0545 Visit complexity inherent to hospital inpatient or observation care associated with a confirmed or suspected infectious disease by an infectious diseases specialist, including disease transmission risk assessment and mitigation, public health investigation, analysis, and testing, and/or complex antimicrobial therapy counseling and treatment. (add-on code, list separately in addition to hospital inpatient or observation evaluation and management visit, initial, same day discharge, subsequent or discharge)

90849 Multiple family group psychotherapy

92622 Diagnostic analysis, programming, and verification of an auditory osseointegrated sound processor, any type; first 60 minutes)

92623 (Diagnostic analysis, programming, and verification of an auditory osseointegrated sound processor, any type; each additional 15 minutes (List separately in addition to code for primary procedure))

It reinstated the teaching physician requirement that a teaching physician be present for the key and critical components of a service performed jointly with a resident. The only exception is if the resident, the patient, and the attending are all joining the encounter virtually.

Incident to—big news, big change in policy

Included in the telehealth section of the rule was a change to supervision for incident to services. Direct supervision is required for incident to services performed. Direct supervision is traditionally defined as the physician or supervising non-physician practitioner (NPP) being in the suite of offices and immediately available to provide assistance when the incident to services are performed.

During the pandemic, CMS allowed that direct supervision could be provided through real-time, two-way, audiovisual communication. In the 2026 Final Rule, CMS is making that permanent. Supervision of incident to services in a non-facility setting may be met through real-time, audiovisual telecommunication equipment. This does not apply to services with 10 or 90 day global periods. Audio only is insufficient. Keep in mind that this is for non-facility settings only.

In the facility setting, shared services are possible but the rules for those are completely different and unchanged in 2026.

Expanded sites of care for add-on code G2211

Since Jan. 1, 2024, CMS has allowed practices to report add-on “visit complexity” code G2211 with office/outpatient codes 99202-99215. As of Jan. 1, 2026, they will revise the code descriptor and allow providers to report G2211 with home visit codes 99341-99345 and 99347-99350).

The revised code descriptor for G2211 is: Visit complexity inherent to evaluation and management associated with medical care services that serve as the continuing focal point for all needed health care services and/or medical care services that are part of ongoing care related to a patient’s single, serious condition of a complex condition. (Add-on code, list separately in addition to home or residence or office/outpatient evaluation and management service, new or established.

Revised descriptor, focus for code G0136

For two years, providers were eligible to report HCPCS code G0136 when assessing and capturing a patient’s social determinants of health (SDOH). Revised with an effective date of Jan. 1, 2026, the code and descriptor will no longer focus on SDOH but instead will be used to monitor physical activity and nutrition.

The revised code descriptor for G0136, effective Jan. 1, reads: Administration of a standardized, evidence-based assessment of physical activity and nutrition, 5-15 minutes, not more often than every 6 months.

Behavioral health integration add-on codes for Advanced Primary Care Management (APCM)

CMS has developed three new HCPCS codes that can be used in addition to APCM codes. These codes correspond to CPT codes 99492, 99493, 99484.  The full description of these codes can be found in our article on that topic. CMS believes that many patients with chronic medical conditions also have behavioral health conditions and can benefit from both types of care coordination. These are add-on codes to APCM. Unlike the CPT codes that they’re based on, time does not need to be tracked or documented in the medical record.

G0568: Initial CoCM in the first calendar month (similar to 99492)

G0569: Subsequent month (similar to 99493)

G0570: General behavioral health management (similar to 99484)

Marriage and Family Therapists and Mental Health Counselors may perform Community Health Integration (CHI) and Principal Illness Navigation (PIN)

CMS has added two groups of professionals who may now also personally perform CHI and PIN. An initiating visit is required for CHI and PIN, and these professionals may not perform E/M services. An initiating visit for these professionals includes CPT 90791 (psychiatric diagnostic evaluation) and CPT 96156, 96158, 96159, 96164, 96165, 96167, and 96168 (health behavior assessment and intervention services)

MFTs and MHCs join physicians, nurse practitioners, physician assistants, certified nurse midwives, and clinical nurse specialists as practitioners who are able to perform this service. When MFTs and MHCs are performing and reporting these services, it may only be for work that is personally performed by them. These professionals may not bill for the work of auxiliary staff because they don’t have incident two in their statutory benefit. Physicians and non-physician practitioners may either perform the service personally or include the work of auxiliary staff. While social workers and clinical psychologist could be the auxiliary staff that performed the services incident to a physician or NPP, clinical social workers and psychologists are not included as eligible professionals for the services.  (If I knew why, I’d say so.)

Ambulatory Specialty Model

The ambulatory surgery model is a mandatory CMS program that uses the Merit-based Incentive Payment System (MIPS) Value Pathway framework for physicians who treat heart failure and low back pain. Unlike MIPS and MVP, it is not a voluntary program. For Medicare, it is payment neutral. For individual physicians, it has the potential to increase or decrease payments.

The CMS fact sheet makes this clear: “CMS will use ASM participants’ final scores across the four performance categories to determine if they receive positive, neutral or negative payment adjustments on future Medicare Part B claims for covered services. In the first payment year, these adjustments will range from -9% to +9%. All participants will be subject to this risk. The payment approach will ensure that the total positive adjustments for high performers do not exceed the total negative adjustments for low performers.”[3]

What are the performance measures? There are four: Quality, Cost, Care Improvement Activities, Improving Interoperability. If you have participated or currently participate in MIPS or MVP, this will look familiar.

Who must participate? CMS will select geographic areas core-based statistical areas (CBSAs) or metropolitan divisions. As of December 2025, they have not selected these geographic regions. All cardiologists who treat 20 heart failure patients with Original Medicare in a 12-month period will be assessed, and low back pain specialists (anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation) who treat 20 Original Medicare low back pain patients in a 12-month period will be assessed and included in the model.

Physicians will be assessed individually for quality and cost performance, and at the group level for care improvement and interoperability.

The performance years start in 2027 and the payment years start in 2029, and each will run for five years. The proposed and final details of this program will be in the 2027 physician fee schedule rule. The proposed rule is released in July 2026 and the final rule in November 2026.

Until then, I think what most of us can do is worry about it. And, communicate with our specialty societies.

https://www.cms.gov/priorities/innovation/innovation-models/asm

Skin substitutes take uniform payment amount

Across 19 HCPCS supply codes, CMS is setting a uniform payment rate of $127.28 per square centimeter. The HCPCS codes are typically billed alongside skin graft CPT application codes 15271-15278. CMS’ payment determination on skin substitute supplies comes after the agency paid more than $10 billion on the supply codes in 2024 – up from about $250 million in 2019.

The HCPCS supply codes, typically used in the treatment of diabetic foot ulcers and venous leg ulcers, include A2001-A2002, A2005-A20013, A20015-A20016, A20018-A20019, A2021-A2022, A2024 and S2027. All codes will be paid at a rate of $127.28/sq cm.

[1] https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f

Accessed Dec. 12, 2025

[2] https://www.cms.gov/newsroom/press-releases/cms-modernizes-payment-accuracy-significantly-cuts-spending-waste

Accessed Dec. 11, 2025

[3] https://www.cms.gov/files/document/asm-model-fact-sheet.pdf

Accessed Dec. 11, 2025

 

---

Physician Fee Schedule Final Rule Archives 2021-2025 (old news)

2025 conversion factor

$32.3465 (updated 11/19/2024)

Coverage of new HCPCS codes

On November 1, CMS released the final 2025 Medicare physician fee schedule. The rule contains dozens of new HCPCS codes that will take effect Jan. 1, 2025. From cardiovascular disease assessment and caregiver training services to a suite of behavioral health services, the new codes offer new ways to gain reimbursement and provide care to your patients. The round-up below provides a closer look at the new codes, their full descriptors, 2025 fees and key billing details.