Find Out Which Proposals Made the MPFS Final Rule
The final conversion factors are lower than what CMS initially proposed. The Centers for Medicare & Medicaid Services (CMS) final rule “Medicare and Medicaid Programs; CY 2026 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program” has been published, and providers should be aware of the two conversion factors (CFs), among other updates. Here's some of what you need to know about the calendar year (CY) 2026 Medicare Physician Fee Schedule (MPFS) final rule. See Final Conversion Factors In the proposed rule, Medicare announced they were going to adopt two CFs, “one for items and services furnished by a qualifying APM [Alternative Payment Model” participant … and another for other items and services (referred to as the nonqualifying APM conversion factor),” per the proposed rule. CMS has finalized the idea but lowered the amounts for both CFs. The original qualifying APM CF, projected as an increase of 1.2 percent from the current CF, will now be 0.75 percent; while the update to the nonqualifying APM CF for CY 2026 is 0.25 percent, down from the originally proposed 0.7 percent. The final rule announced there will be “a one-year increase of +2.50 percent for CY 2026 stipulated by statute, and an estimated +0.49 percent adjustment necessary to account for finalized changes in work RVUs [relative value units] for some services,” according to the MPFS final rule fact sheet. This results in a qualifying APM CF of $33.57 for CY 2026, which “represents a projected increase of $1.22 (+3.77%) from the current conversion factor of $32.35.” For CY 2026 nonqualifying APM participants, Medicare has finalized a CF of $33.40, which “represents a projected increase of $1.05 (+3.26%) from the current conversion factor of $32.35,” the fact sheet reports. The proposed rule also promised an increase in geographic practice cost indices (GCPIs) and malpractice (MP) RVUs, to reflect the differences between costs for work, practice expense (PE), and MP RVUs incurred by practices in different parts of the country. As it has been almost two years since CMS updated the GCPIs, they have promised to phase in half of the increase next year and half in 2027. The final rule does not specify the increases for MP or GCPIs; there should be a further announcement about them later this year. Find this and more information in section D.I. of the final rule. Here’s What Specialty Practices Need to Know In section C.II, CMS acknowledges that specialty practices have varying costs and uses a practice expense (PE) methodology based on the AMA’s physician practice information (PPI) survey to understand the differences. However, CMS chose not to incorporate this latest batch of survey results into their MPFS rate due to the survey results reflecting small sample sizes and low response rates. However, CMS says they’re moving to make big changes in their PE calculations. CMS is adjusting their methodologies to recognize greater indirect costs for physicians not working in facilities. The original methodologies assumed that even providers who furnished care in hospitals maintained separate practice locations; but more physicians are now employed by hospitals and health systems instead of working in private practice, meaning the allocation of indirect costs in the PE RVUs for facilities should maybe have a different rate than nonfacility settings, the CMS news release says. Skin Substitute Categorizations and Payments In II.K, CMS has decided to compensate for skin substitute products as incidental supplies when used in a covered application procedure under the MPFS in non-facility settings or the Outpatient Prospective Payment System (OPPS) in hospital outpatient departments. They are finalizing the categorization of skin substitutes to match their FDA regulatory status, asserting that this method acknowledges the clinical and resource differences in product types. For CY 2026, CMS is finalizing a single payment rate that reflects the highest average for these three skin substitute product categories, which will be approximately $127.28. Future proposed payment rates may differ among the three Food and Drug Administration (FDA) regulatory categories. No changes are currently being made to skin substitute payment rates for physician office or hospital outpatient settings, but CMS will be reviewing HCPCS Level II coding applications. Learn Which Services Will Be Added to the Telehealth Services List Starting Jan. 1, 2026, in II.D, CMS is consolidating the review process of adding services to the Medicare Telehealth Services List, removing the “provisional” and “permanent” designations and reviewing the services as to “whether the service can be furnished using an interactive, two-way audio-video telecommunications system.” New service additions: After reviewing comments from stakeholders, CMS is finalizing adding the following codes to the Medicare Telehealth Services List in 2026: After reviewing stakeholder feedback, CMS is not deleting G0136 (Administration of a standardized, evidence-based social determinants of health risk assessment tool, 5-15 minutes) from the Medicare Telehealth Services List. The agency is permanently removing the maximum number of times providers can use telehealth for subsequent inpatient visits, subsequent nursing facility visits, and critical care consultations. Direct supervision definition: Effective January 1, CMS will allow services that require direct supervision of a physician or other supervising practitioner to take place via real-time audio-video interactive telecommunications. The virtual direct supervision rules apply to services that do not have 010 or 090 global surgery indicators: applicable incident-to services under § 410.2, diagnostic tests under § 410.32, pulmonary rehabilitation services under § 410.47, cardiac rehabilitation services under § 410.49, and intensive cardiac rehabilitation services under § 410.49. CMS wants providers to use their professional judgement for appropriate supervision for each case. Virtual presence: CMS is finalizing the policy of letting teaching physicians have a virtual presence in all teaching settings on a permanent basis — but this policy only applies to “clinical instances when the service was furnished virtually,” according to the fact sheet. Turn Attention to Chronic Illness and Behavioral Health Care In II.I, CMS is finalizing creating optional add-on codes for advanced primary care management (APCM) services. These codes would make it easier to deliver complementary behavioral health integration (BHI) or psychiatric collaborative care model (CoCM) services. These proposed new G codes will be billed as add-on services with the appropriate APCM base code from G0556-G0558 (Advanced primary care management services …) when the APCM code is reported by the same practitioner in the same month, though they are directly comparable to existing CoCM and BHI codes: CMS is finalizing the expansion of payment policies for digital mental health treatment (DMHT) services in 2026. The greater support will include devices used to treat attention deficit hyperactivity disorder (ADHD). RHCs, FQHCs Get More Reporting Flexibility The final rule includes several updates for rural health clinics (RHCs) and federally qualified health centers (FQHCs). According to section III.B, CMS is finalizing the optional add-on codes finalized under the MPFS for APCM. This will allow RHCs and FQHCs to bill for BHI and psychiatric CoCM services when providing advanced primary care A new mandatory RHC and FQHC policy takes effect January 1, in which RHCs and FQHCs are required to report codes reflecting CoCM services — and communications technology-based services (CTBS) and remote evaluation services — via HCPCS codes G0512 (Rural health clinic or federally qualified health center (RHC or FQHC) only, psychiatric collaborative care model (psychiatric COCM) …) and G0071 (Payment for communication technology-based services for 5 minutes or more of a virtual (non-face-to-face) communication …). CMS is also finalizing three other policies concerning RHCs and FQHCs: Drug Rebate Program Using New Methodology According to section III.E of the final rule, CMS is finalizing policies for the Medicare Prescription Drug Inflation Rebate Program, which “include, but are not limited to, establishing a claims-based methodology to remove 340B units from Part D rebate calculations starting on January 1, 2026,” CMS reports. On January 1, CMS will also premiere its Medicare Part D Claims Data 340B Repository (340B repository). This repository is “for voluntary submissions by covered entities for Part D claims with dates of service on or after January 1, 2026.” RCI Editorial Team
