2026 Medicare Physician Fee Schedule Final Rule: What you need to know and how to prepare

On October 31, 2025, CMS released its calendar year 2026 Physician Fee Schedule Final Rule, and with it comes a whole slew of changes that will impact medical practices in the coming year. In the wake of the Medicare physician fee schedule final rule, most medical practices will see a greater need to optimize coding, patient access, and alternative payment arrangements to maintain financial stability. In August, we reported on the proposed rule. In this article, we’ll provide highlights from the final rule that takes effect January 1, 2026 and explain how practices can prepare.

1. The Medicare conversion factor will increase, but it could be offset by a new efficiency adjustment. In its Medicare physician fee schedule final rule, CMS increased its conversion factor to $33.40–$33.57, depending on whether a physician qualifies for participation in an advanced payment model. However, it also applied a new ‘efficiency adjustment’ that reduces payment for many non–time-based services.

How to prepare: While the base payment rate may be higher in 2026, many physicians will still see lower payment for certain procedures depending on their service mix. A careful analysis may be necessary to prepare for this change outlined in the 2026 Medicare physician fee schedule final rule. Practices heavy in procedural CPT codes should identify financial risk areas, and all practices should strive to accurately capture time-based and cognitive services such as E/M, care management, behavioral health, and remote patient monitoring, when appropriate.

2. Reimbursement for indirect costs will be higher for practitioners in office-based settings compared to facility settings. In the Medicare physician fee schedule final rule, CMS finalized higher indirect practice expense values for office settings, recognizing that private practices carry more fixed overhead than hospital-based sites. While facility-based practice expense cuts may negatively affect some physicians, the outcome is generally favorable for independent physicians, including primary care physicians and some office-based specialists such as dermatologists, orthopedic physicians, and interventional pain doctors with strong E/M and care management mix.

How to prepare: Consider adding or upgrading in-office services (e.g., minor procedures, diagnostics, chronic care management workflows, and remote monitoring infrastructure) considering this change outlined in the 2026 Medicare physician fee schedule final rule. Also consider using the updated practice expense methodology outlined in the 2026 Medicare physician fee schedule final rule to justify higher reimbursement or better contract terms for office-based services.

3. Physicians can perform direct supervision using real-time audio/video communications (excluding audio only). This does not apply to services with a global surgery indicator of 010 or 090.

How to prepare: To accommodate this change outlined in the 2026 Medicare physician fee schedule final rule, update supervision policies to allow real-time audio/video (not audio-only) for eligible services, train staff on which codes are excluded, use reliable secure video technology, and document virtual supervision clearly and consistently to stay compliant.

4. Five new codes will be added to the Medicare Telehealth Services List. In the 2026 Medicare physician fee schedule final rule, CMS added the following five codes to its Medicare Telehealth Services List for 2026:

• 90849, multiple-family group psychotherapy
• G0473, group behavioral counseling for obesity
• G0545, infectious disease add-on
• 92622, auditory osseointegrated sound processor diagnostic analysis and programming, first 60 minutes
• 92623, auditory osseointegrated sound processor diagnostic analysis and programming, each additional 15 minutes
  

How to prepare: Audit which of the newly added telehealth services apply to your specialty and decide whether it makes sense to expand virtual services. If expansion makes sense, update clinical and billing workflows to support compliant delivery via real-time two-way audio-video, train clinicians and billing teams on eligibility and documentation requirements, and verify that telehealth technology meets CMS standards.

5. There’s a more streamlined process for telehealth approved services. In the2026 Medicare physician fee schedule final rule, CMS removes the distinction between provisional and permanent services and limits its review on whether the service can be furnished using an interactive, two-way audio-video telecommunications system.

How to prepare: Invest in reliable HIPAA-compliant video platforms and establish internal review processes to ensure telehealth services comply with the most up-to-date approved services list.

6. New add-on codes will promote integrated behavioral healthcare. In the 2026 Medicare physician fee schedule final rule, CMS finalized optional add-on codes for Advanced Primary Care Management (APCM) services that would facilitate providing complementary behavioral health integration (BHI) or psychiatric Collaborative Care Model (CoCM) services. These new enhanced care model management services codes are:

• G0568, initial month CoCM services when APCM base code is billed by the same practitioner in the same month
• G0569, subsequent month CoCM services when APCM base code is billed by the same practitioner in same month
• G0570, general BHI services when APCM base code is billed by the same practitioner in same month
  

How to prepare: Identify which patients would benefit from BHI or CoCM and confirm they meet APCM eligibility as stated in the 2026 Medicare physician fee schedule final rule. Then update care team workflows to clearly define roles for care managers, psychiatric consultants, and primary care leads. Also train clinicians and billing staff on the specific requirements and time thresholds for the new APCM add-on codes and adjust documentation templates to capture care coordination activities, BHI efforts, and collaborative consultations.

7. New payment policies will cover digital mental health treatment (DMHT) devices used to treat Attention Deficit Hyperactivity Disorder (ADHD). In the 2026 Medicare physician fee schedule final rule, CMS stated it will pay for these devices (i.e., HCPCS codes G0552, G0553, and G0554) when furnished incident to the billing practitioner’s professional services in association with ongoing behavioral health treatment under a plan of care by the billing practitioner.

How to prepare: Update behavioral health care plans to explicitly include device use and clinical goals and ensure the devices are furnished incident to professional services. When done correctly, this new payment policy outlined in the 2026 Medicare physician fee schedule final rule positions practices to expand their behavioral health capacity while capturing new Medicare revenue in a compliant, audit-ready way.

8. New payment model will improve the management of high-cost chronic conditions. In the 2026 Medicare physician fee schedule final rule, CMS finalized a new mandatory Ambulatory Specialty Model that rewards specialists who detect signs of worsening chronic conditions early and then take steps to enhance patients’ functions, reduce avoidable hospitalizations, and share data with patients and their primary care providers.

How to prepare: The model outlined in the 2026 Medicare physician fee schedule final rule doesn’t begin until January 2027. However, physicians can take steps now to prepare, one of which is to identify patients and service lines that will fall under the model. Then strengthen workflows for early detection of worsening chronic conditions (including standardized screening, risk stratification, and remote monitoring where appropriate) and build reliable processes to document functional assessments and proactive interventions. Being able to leverage the EHR and analytics tools to track outcomes will also be important.

9. New policies will expand the Medicare Diabetes Prevention Program (MDPP). In the2026 Medicare physician fee schedule final rule, CMS finalized policies to allow MDPP suppliers to deliver MDPP services online through December 31, 2029.

How to prepare: To leverage this expansion outlined in the2026 Medicare physician fee schedule final rule, identify Medicare patients with prediabetes who may benefit and build referral pathways to accredited MDPP suppliers that offer virtual programs.

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