Understanding the 2026 Medicare Physician Fee Schedule Changes

Same CPT code. Same clinical service. Same patient outcome. Different building — and, in a growing number of cases, a genuinely different check.

That sentence should sound impossible. A code is supposed to mean a fixed thing. But under the CY 2026 Medicare Physician Fee Schedule final rule, where a service happens has become a genuinely consequential — and under-discussed — variable in a specialty practice’s annual revenue.

The headline number, and the number underneath it

CMS finalized a conversion factor for 2026 of $33.57 for clinicians participating in qualifying alternative payment models and $33.40 for everyone else — both higher than 2025’s rate. Read in isolation, that’s a modest win, the kind of number a practice manager might see in a newsletter and file away as “reimbursement is up slightly this year.”

But that headline number sits on top of a second, much less publicized change: an “efficiency adjustment” that cuts the work RVUs and intra-service time for most non-time-based codes by 2.5%. CMS’s rationale is that physicians have become measurably more efficient at delivering these services over a multi-year lookback period. CMS has also established a methodology for applying this adjustment periodically in future fee schedules, rather than treating it as a single one-time correction.

Importantly, this cut doesn’t apply everywhere. CMS explicitly excluded evaluation and management services, care management codes, behavioral health services, codes on the Medicare telehealth list, and maternity codes with a global period from the efficiency adjustment. That creates an important distinction between services subject to the adjustment and those exempt from it — a distinction that matters a great deal depending on a given practice’s service mix.

The second, quieter shift: facility versus non-facility

The final rule also changes the methodology CMS uses to allocate indirect practice expense between facility and non-facility settings. The financial effect varies by code, specialty, and site of service, which makes the 2026 methodology particularly relevant for practices with significant facility-based or office-based procedural volume — the direction and magnitude of the effect isn’t uniform, and it needs to be evaluated code by code rather than assumed.

Why this particular change is controversial inside medicine

Efficiency adjustments of this kind aren’t new in concept — CMS has periodically revisited RVU assumptions for specific codes for years, usually specialty by specialty, following recommendations from the AMA/Specialty Society RVS Update Committee. What’s different about the 2026 version is the scope: instead of adjusting individual codes one at a time based on a specific clinical review, CMS applied a single across-the-board percentage to a broad category of non-time-based services, based on an aggregate efficiency assumption rather than a code-specific one. Several specialty societies have pushed back on that approach, arguing that efficiency gains vary enormously by procedure and shouldn’t be assumed uniformly across a category as broad as “non-time-based services.” Whatever the merits of that debate, the practical result for 2026 is the same regardless of a practice’s position on the policy: a meaningful share of procedural codes are now valued differently than they were the year before, independent of anything that changed clinically.

What the AMA is already saying

The American Medical Association’s own analysis of the final rule is direct: for procedural and diagnostic specialties, the 2026 conversion factor increase is, in the AMA’s assessment, largely offset by the efficiency adjustment sitting underneath it. In the AMA’s specialty-level modeling, 81% of infectious disease physicians were projected to face cuts of 5% or more once the full combination of 2026 changes was applied — a useful, concrete illustration that the topline conversion factor number and a specific practice’s actual year-over-year reimbursement can move in different directions, depending entirely on that practice’s service mix.

Turning this into an actual planning exercise

For specialties built around procedural volume — orthopedics, cardiology, interventional radiology, pain management, gastroenterology, and other outpatient-heavy practices — this is worth translating into three concrete questions rather than absorbing as background noise:

First, what share of this practice’s revenue comes from codes explicitly excluded from the efficiency adjustment — E/M, care management, behavioral health, telehealth-listed codes — versus codes that are subject to it? A practice heavy on the former carries less exposure to this particular cut than one heavy on the latter.

Second, for the procedural codes that make up the bulk of billed revenue, has the facility-versus-non-facility differential shifted under the 2026 indirect practice-expense methodology, and by how much for this practice’s specific codes?

Third, does the practice’s current site-of-service pattern still reflect the most current reimbursement picture, or was it set years ago under an older methodology that’s since changed underneath it?

None of these are questions a physician should have to answer alone, buried in CMS addenda and RVU conversion tables at the end of a clinical day. They’re exactly the kind of specialty-specific, code-level modeling a revenue cycle partner should already be running — ideally before the practice evaluates its 2026 service mix and site-of-service economics, not months later when the pattern shows up as a lower-than-expected number on a remittance advice. WCH Service Bureau works with specialty practices to map exactly how the 2026 fee schedule changes intersect with their specific service mix, so the shift becomes a planning conversation instead of a quarterly surprise.

Sources