CMS Finalizes CY 2026 Physician Fee Schedule Final Rule

CMS released the CY 2026 Physician Fee Schedule final rule, containing policy changes for Medicare payments under the Physician Fee Schedule and other Medicare Part B issues, effective on or after Jan. 1, 2026. The final rule provides two separate conversion factors, as required by statute: one for qualifying participants in alternative payment models (APMs), and one for those who are not qualifying participants (including a one-time 2.5% update). The final CY26 qualifying APM conversion factor of $33.57 represents a projected increase of $1.22 (+3.77%), and the nonqualifying APM conversion factor of $33.40 is a projected increase of $1.05 (+3.26%). The estimated impact on total allowed charges by specialty can be found in Table D-B7 of the final rule starting on Page 1,738. These updates provide short-term financial relief. The higher increase and bonus for APM participants signal CMS’ continued push toward alternative payment models, even as the incentive sunsets. Stakeholders should plan for a future in which APM participation remains a key strategy for maintaining revenue stability.

The final rule also includes a –2.5% efficiency adjustment to the work relative value units that would apply to all codes except time-based codes, including behavioral health services. Multiple-family group psychotherapy and group behavioral counseling for obesity are now added to the Medicare Telehealth Services list. CMS is also creating optional add-on codes for Advanced Primary Care Management (APCM) services to facilitate providing complementary Behavioral Health Integration (BHI) or psychiatric Collaborative Care Model (CoCM) services. The three new G-codes would be billed as add-on services when the APCM base code is reported by the same practitioner in the same month, and they are meant to be directly comparable to existing CoCM and BHI codes. The new APCM add-on G-codes (GPCM1, GPCM2, and GPCM3) can be billed by physicians and non-physician practitioners (NPPs) who serve as the patient's primary care provider.

Telehealth-Related Flexibilities

CMS will implement several policy changes that will collectively extend the footprint of telehealth services in Medicare and expand access for Medicare beneficiaries. These changes directly impact Traditional Medicare beneficiaries, physicians’ offices, hospitals, and Federally Qualified Health Centers (FQHC) and Rural Health Clinics (RHC).

  • All services on CMS’s Medicare telehealth coverage list are now permanently covered if they are separately payable and can be delivered via two-way audio-video.
  • CMS permanently removed frequency limitations on certain telehealth services, including follow-up inpatient and nursing facility services.
  • FQHCs and RHCs can serve as distant site telehealth providers for all services—not just mental health services—through December 31, 2026.
  • Virtual supervision is permanently allowed for nonsurgical services conducted in real time via two-way audio-video. This policy will apply across all settings, including FQHCs and RHCs requiring an on-site supervising physician.
  • Teaching physicians can be virtually present for resident services delivered in all training settings when care is provided via telehealth.
  • New services added to the Medicare telehealth coverage list, including certain psychological rehabilitation services, caregiver training services, and risk assessment services.

These changes solidify that telehealth has become an integral part of Medicare service delivery. By eliminating the distinction between temporary and permanent coverage, removing frequency limits, and allowing virtual supervision and teaching physician presence, CMS advances telehealth as a core component of its long-term strategy to improve access, care coordination, and efficiency. In addition, the change aligns with CMS’s commitment to modernizing payment policies to support virtual care models. Stakeholders should plan for continued growth and innovation in this space in future rulemaking cycles.

CMS has also provided a summary of major provisions within the rule.