Proposed 2026 Medicare physician payment rule would redistribute pay across specialties and practice types
Overall, most physicians would see a conversion factor increase of 3.3% in 2026, while qualifying physicians in advanced alternative payment models (APM) would see an increase of 3.8% in 2026, under the 2026 Medicare Physician Payment Schedule proposed rule (PDF) released on July 14.
These increases are primarily due to action by Congress to provide a temporary, one-year 2.5% pay boost for physicians. However, these updates would be offset by a proposed negative 2.5% “efficiency adjustment” that would be applied to all non-time-based services, including 8,961 physician services, and cuts to payments for physician services provided in the hospital or ambulatory surgery center (ASC) due to the Centers for Medicare & Medicaid Services’ (CMS) belief that those physicians no longer maintain a separate office with separate overhead and non-clinical staff expenses.
As detailed by the AMA in response (PDF) to a similar discussion by the Medicare Payment Advisory Commission (MedPAC), there are concerns that reducing physician payments for services provided in the facility setting could result in unintended consequences, including further exacerbating consolidation. Furthermore, the “efficiency adjustment” would reduce overall payment by 1% and only specialties that perform a more significant amount of telehealth services, which are excluded from the “efficiency adjustment,” would see an increase of at least 1%.
Other notable proposals include:
CMS proposes to accept nearly 90% of the AMA/Specialty Society RVS Update Committee’s (RUC’s) relative value recommendations for 2026.
Following ongoing advocacy by the AMA not to increase the Merit-based Incentive Payment System (MIPS) performance threshold, CMS proposed to maintain the threshold to avoid a MIPS penalty of up to 9% at 75 points for the next three years.
CMS is proposing to implement a new payment model in 2027 in select geographic areas that would be mandatory for physicians who treat patients with heart failure or low back pain.
The AMA has developed a detailed summary (PDF) and a brief summary (PDF) of the proposed rule and will share draft comments with the Federation before they are due to CMS on Sept. 12, 2025.
