The Tool Desk
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Medicare physician and practitioner payments in calendar year 2026
CMS’s Calendar Year (CY) 2026 Physician Fee Schedule (PFS) final rule took effect on or after January 1, 2026. The rule establishes separate national conversion factors for qualifying Advanced Alternative Payment Model (APM) participants and other practitioners. CMS’s figures are not a forecast of each clinician’s total payment: fee schedule amounts also depend on the service’s relative value units (RVUs), geographic adjustments, and applicable policies.
| CY 2026 PFS item | What CMS finalized | How to interpret it |
|---|---|---|
| Qualifying APM participant conversion factor | $33.57; CMS projected an increase of $1.22, or 3.77%, from the prior $32.35 factor. | National conversion factor for CY 2026, not a guaranteed change in an individual clinician’s payment. |
| Other practitioner conversion factor | $33.40; CMS projected an increase of $1.05, or 3.26%, from the prior $32.35 factor. | National conversion factor for CY 2026, not a guaranteed change in an individual clinician’s payment. |
| Efficiency adjustment | A −2.5% adjustment to work RVUs and the corresponding intraservice portion of physician time for specified non-time-based services. | Not a 2.5% reduction to every physician service. CMS excluded categories including evaluation and management, care management, behavioral health, services on the Medicare telehealth list, and maternity codes with a global period of MMM; it also updated the exempt HCPCS list. |
CMS attributed the conversion-factor changes to statutory updates, a one-year 2.50% increase, and an estimated 0.49% adjustment associated with finalized work RVU changes. These factors and projected increases are from CMS’s 2025 CY 2026 PFS final rule.
Other PFS workflow changes
- The rule includes changes affecting drugs and biological products, the Medicare Shared Savings Program, the Quality Payment Program, rural health clinics (RHCs), federally qualified health centers (FQHCs), and cell and gene therapies.
- CMS extended bundled payment treatment for specified preparatory procedures for autologous cell-based immunotherapy and gene therapy.
- Starting January 1, 2026, RHCs and FQHCs must report individual component codes for certain collaborative care and communications technology services.
Clinics and practices should identify the affected services and codes before changing charge capture or claims processes; the conversion factor alone is not enough to estimate a practice’s net revenue change.
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For hospitals that meet applicable quality reporting requirements, CMS finalized a 2.6% update to the Hospital Outpatient Prospective Payment System (OPPS) for CY 2026. CMS finalized the same 2.6% update for ambulatory surgery centers (ASCs) meeting relevant quality reporting requirements. CMS based both updates on a 3.3% market basket increase minus a 0.7 percentage-point productivity adjustment. These figures are from CMS’s 2025 CY 2026 OPPS/ASC final rule; they are system updates, not a promise that every service or facility’s payment will rise by that amount.
Site of service and procedure status
- CMS expanded a policy using the Physician Fee Schedule-equivalent rate for specified drug administration services furnished in certain excepted off-campus provider-based departments. Facilities should confirm whether a service and department fall within the policy before using it to project payment.
- CMS began a three-year phase-out of the inpatient-only list in CY 2026. In the first phase, it removed 285 mostly musculoskeletal procedures. A procedure’s removal does not by itself establish the correct site of care or payment; check the service’s current status and the rules for the specific setting.
Quality reporting dates
CMS finalized the Emergency Care Access & Timeliness electronic clinical quality measure for voluntary reporting in the CY 2027 reporting period, followed by mandatory reporting beginning with CY 2028 reporting for the CY 2030 payment determination. CMS also shortened the period for submitting certain extraordinary circumstances exception requests from 90 to 60 days after a qualifying event. The applicable deadlines and payment consequences depend on the program and facility type.
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Hospital inpatient and LTCH rule for fiscal year 2027
CMS and the Office of the National Coordinator for Health Information Technology published the FY 2027 Inpatient Prospective Payment System (IPPS) and Long-Term Care Hospital (LTCH) final rule in the Federal Register on August 4, 2026. It revises Medicare payment systems and rates for acute-care inpatient hospitals and LTCHs, and addresses graduate medical education, quality program requirements, and related health-information-technology policies. The rule’s overall scope does not amount to one across-the-board rate increase. Hospital operators need to identify their facility-specific rates and obligations in the final rule and applicable implementation materials.
Medicaid state-directed payment limits remain a proposal
On May 20, 2026, CMS announced a proposed rule that would limit certain Medicaid state-directed payment rates and targeted fee-for-service practitioner payments. As described in the announcement, the proposal would cap state-directed payments at 100% of Medicare payment rates in expansion states and 110% in non-expansion states, or at 100% of the Medicaid state plan rate when no comparable Medicare rate exists. CMS also proposed similar limits for certain targeted Medicaid fee-for-service payments and national transparency and accountability standards.
The May 20 announcement describes a proposal and request for comment, not a final rule. Any operational or financial effect should therefore be treated as conditional, and providers should check for subsequent rulemaking before acting. CMS estimated that the proposal could save more than $775 billion over 10 years, including $510 billion in federal savings; those amounts are CMS’s estimate for the proposal, not finalized or independently established savings.
Medicaid reimbursement depends on the state and provider type
Recent CMS Medicaid State Plan Amendment records illustrate why a national summary cannot substitute for checking state policy. Wyoming’s outpatient fee schedule update and Ohio’s transition of nursing facility reimbursement to the Patient Driven Payment Model were both approved on October 1, 2026, but their listed effective dates differ. Other recent amendments address state-specific hospital, behavioral health, home health, and supplemental payment methodologies. These examples are not a complete survey of state changes.
For a Medicaid service, confirm the state, provider category, reimbursement methodology, and effective date that apply. An approval date and an effective date are not interchangeable.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Medicare transmittals can change implementation details
CMS’s 2026 transmittal index lists operational updates alongside broader payment rules. Examples with October 5, 2026 implementation dates in the index include an update to hospice payment rates, the hospice cap, and the wage index, as well as the October quarterly durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) update. For claim handling, consult the relevant transmittal, Medicare Administrative Contractor instructions, and applicable billing guidance rather than relying on a headline summary.
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How to check which changes affect your organization
- Start with the payer. Separate Medicare, Medicaid, and other payer policies; a Medicare change does not establish how another payer will reimburse the same service.
- Match the provider and setting. Identify whether the rule concerns a clinician, hospital, ASC, RHC, FQHC, LTCH, or another supplier, and whether it applies to the specific service location.
- Confirm the policy status. Distinguish a proposed rule from a final rule, and a final national policy from state-specific Medicaid action.
- Check the date and jurisdiction. Record the effective or implementation date and, for Medicaid, the state. Do not assume an approval date is the date a payment method takes effect.
- Map the policy to claims and workflows. Review affected codes, reporting requirements, setting rules, and payer or contractor instructions before changing billing processes.
- Model the financial effect using your own mix. Account for service volume and mix, geography, coding, payer contracts, and quality reporting. A national update or conversion factor alone cannot establish a provider’s net revenue impact.
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