Explore the major changes in Physician Fee Schedule and OPPS/ASC Final Rule, including conversion factors, behavioral health integration, and transparency requirements.
CMS is ushering in significant changes to Medicare for 2026 with two major final rules. On October 31, 2025, CMS finalized the CY 2026 Physician Fee Schedule (PFS), effective January 1, 2026, advancing a value-driven, patient-focused system through realigned incentives, stronger preventive care, and smarter spending. Then, on November 21, 2025, CMS released the CY 2026 OPPS/ASC Final Rule, updating payment policies for hospital outpatient and Ambulatory Surgical Center (ASC) services. These updates—impacting roughly 4,000 hospitals and 6,000 ASCs—aim to boost transparency, improve care quality, and provide greater flexibility in care delivery.
In addition, starting January 1, 2026 (with enforcement delayed until April 1, 2026), CMS will require hospitals to make pricing clearer and more standardized by posting actual, consumer-friendly prices—not estimates—in a machine-readable format. Hospitals must attest that all information is accurate, complete, and up to date. They are required to include all payer-specific negotiated charges that can be expressed as dollar amounts and provide sufficient detail for patients to calculate any charges that cannot be directly expressed.
Learn what these changes mean for your practice and how your organization can prepare now.
2026 Medicare Physician Fee Schedule (PFS)
Effective Date: January 1, 2026
Why It Matters: CMS is taking bold steps to realign incentives, reduce unnecessary spending, and strengthen chronic care management for millions of beneficiaries.
⏩ Conversion Factors
- $33.5675 for Advanced APM participants (+3.77%)
- $33.4009 for non-APM providers (+3.26%) – includes statutory updates, a one-time 2.5% increase, and RVU tweaks.
⚙️ Efficiency Adjustment
- –2.5% reduction in work RVUs for non–time‑based services, acknowledging productivity gains
- Exemptions include E/M, chronic care, behavioral health, telehealth, and maternity codes
- CMS plans to use empirical time studies, reducing reliance on surveys.
🏥 Practice Expense Updates
- No adoption of new AMA survey data due to quality concerns
- Recognizes elevated indirect costs in office settings vs. facilities
- Leverages audited hospital data to refine reimbursements for radiation therapy, remote patient monitoring.
📱 Telehealth & Care Expansion
- Streamlined additions to the Telehealth Services List
- Permanent removal of certain visit frequency limits
- Virtual direct supervision and remote presence for teaching physicians supported.
💡 Chronic & Behavioral Health
- New APCM add-on codes
- Expanded reimbursement for digital mental health treatments, including ADHD tools
- CMS is exploring broader coding and support for virtual behavioral health interventions.
🏥 RHCs & FQHCs
- Allows APCM behavioral health add-ons
- Requires individual code reporting for CoCM and CTBS services
- Continues telehealth flexibilities (audio-only) through Dec 2026.
Hospital Outpatient & ASC Updates
Effective Date: January 1, 2026
Why It Matters: These updates aim to improve care quality, expand patient choice, and control costs for Medicare and beneficiaries.
🗝️Key updates:
- Payment Rate Increases: OPPS and ASC rates rise 2.6% for facilities meeting quality reporting requirements.
- Site-Neutral Payment Expansion: PFS-equivalent rates for drug administration at off-campus departments, reducing OPPS spending by $290M.
- Inpatient Only (IPO) List Phase-Out: 285 musculoskeletal procedures removed over 3 years, expanding outpatient options.
- ASC Covered Procedures: 560 new procedures added, including 271 from IPO list.
Hospital Price Transparency Updates
Effective Date: January 1, 2026
Enforcement Begins: April 1, 2026
Why It Matters: CMS is raising the bar to ensure hospitals provide meaningful pricing information that consumers can trust, empowering patients with real, reliable data.
Key updates:
✅ Accurate Pricing Data
- All figures must be based on actual remittance data from the past 12–15 months for greater accuracy.
- Hospitals must replace estimated allowed amounts with:
- Median allowed amount
- 10th and 90th percentile allowed amounts
- Count of allowed amounts used in calculation
✅ Stronger Attestation
- Hospitals must attest that all data is true, accurate, and complete.
- The attestation must include the name of the CEO or designated senior official responsible for compliance.
✅ Standardized Identifiers
- Hospitals are required to add Type 2 National Provider Identifier (NPI) to machine-readable files.
- This step improves comparability across hospitals and health plans.
💼 Implications for Payers & Reimbursement
CMS’s structural changes in the CY 2026 rules don’t just impact Medicare—they set the tone for private payers and Medicare Advantage (MA) plans. These updates will influence reimbursement benchmarks, contracting strategies, and rate-setting methodologies across the commercial and MA markets. Here’s what payers need to watch:
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Two-Tiered Conversion Factors
- CMS now differentiates between APM-qualified and non-APM providers.
- Implication: Commercial and MA plans will need to mirror this approach in their rate-setting and contracting to stay competitive and compliant.
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RVU Adjustments & Efficiency Cuts
- CMS is introducing efficiency-driven RVU reductions, especially for non-time-based services.
- Implication: Payers relying on outdated RVU values risk underpaying or overpaying providers, which could impact margins and network stability.
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Practice Expense Redistribution
- Shifts in facility vs. non-facility cost allocations will change site-of-service reimbursement.
- Implication: Expect renegotiations for contracts covering hospital outpatient departments and physician clinics.
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Telehealth & Virtual Care Enhancements
- CMS is expanding virtual care reimbursement and telehealth flexibility.
- Implication: Payers must update coverage policies, extend benefits, and tighten audit processes to ensure compliance and prevent fraud.
🧪 Impact on Clinical Labs
Even though labs operate under a separate fee schedule, the CY 2026 PFS changes will still create ripple effects across the lab industry. These updates influence pricing strategies, contracting models, and operational priorities for labs that support outpatient care, telehealth, and value-based programs. Here’s what to watch:
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RVU-Based Diagnostic Codes
- Labs billing technical components may need to adjust pricing if CMS modifies practice expense (PPE) allocations or overhead assumptions.
- Implication: Revenue cycle teams should review RVU-based codes tied to diagnostics to prevent underpayment or compliance gaps.
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Growth in Telehealth & Remote Monitoring
- CMS’s expansion of telehealth services could drive new demand for remote sample collection and digital integration with virtual care platforms.
- Implication: Labs should explore partnerships with telehealth providers and invest in technology for seamless data exchange.
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Pressure from Value-Based Contracting
- Pay-for-performance models are gaining traction, linking reimbursement to diagnostic accuracy, efficiency, and turnaround times.
- Implication: Labs will need to demonstrate quality metrics and operational reliability to secure favorable contracts and maintain payer relationships.
🔎 Bottom Line
These updated rules mark a significant shift toward a more efficient, patient-centered Medicare program. Organizations that act now to modernize processes, strengthen compliance, and leverage technology will be best positioned to protect revenue, maintain operational efficiency, and deliver high-quality care in this evolving landscape. For providers, success will hinge on adapting clinical workflows and documentation to capture new codes and support expanded virtual services. For payers, the challenge lies in recalibrating reimbursement strategies—spanning claims processing, contract negotiations, and audit methodologies—to align with CMS’s new structure.
Dealing with reimbursement changes can be overwhelming. Quadax is here to help. If you are in need of a dependable partner to help simplify processes for maximum revenue results, reduce your stress, and effectively handle the complexities of the patient experience, request a strategy call with one of our revenue cycle experts.
Visit CMS.gov for more fact sheets, press releases and Federal Register links to read the final rules.
