Regulatory update
What changed for medical billing and reimbursement in 2026
CMS issued the CY 2026 Medicare Physician Fee Schedule final rule (CMS-1832-F) on October 31, 2025, effective for services on or after January 1, 2026. After years of cuts, physician payment rose — but the rule also introduced a new downward adjustment, a two-track conversion factor, and a telehealth timeline that briefly lapsed before Congress restored it. This is the practical version: what changed, who it helps, and what to load before your next claim batch.
Two conversion factors, both higher
For the first time, Medicare pays on two conversion factors. Qualifying participants in advanced alternative payment models (QPs) are paid on a $33.57 conversion factor — up 3.77% from the 2025 figure of $32.35. Everyone else is paid on $33.40, up 3.26%. The split reflects MACRA's differential update structure, which rewards APM participation with a slightly higher baseline.
The increase is welcome, but read the fine print: the largest piece of it is a one-year statutory +2.5% update that expires after 2026 unless Congress acts again. The AMA notes practice costs are rising roughly 2.7% a year with no permanent inflation adjustment — so treat the 2026 bump as temporary relief, not a trend.
The new -2.5% efficiency adjustment
CMS finalized a new "efficiency adjustment" that reduces work RVUs and intra-service time by 2.5% on non-time-based services — affecting close to 7,000 codes. For procedure-heavy specialties, this partly offsets the conversion-factor increase, and a few specialties still face a net cut.
The exemptions matter. Evaluation and management (E/M) visits, behavioral health services, care management, maternity global codes, and services on the telehealth list are not subject to the adjustment. The net effect tilts in favor of primary care, psychiatry, and cognitive specialties — and against some procedural fields.
Telehealth: a scare, then a reprieve
Pandemic-era Medicare telehealth flexibilities lapsed after January 30, 2026 when continuing-resolution funding expired — a real disruption for practices mid-quarter. On February 3, 2026, the FY2026 appropriations bill extended the flexibilities through December 31, 2027.
That means patients can still be seen by telehealth in any location, including their home, and PT/OT/SLP/audiology telehealth continues. CMS also permanently streamlined the Medicare Telehealth Services List, removed frequency limits on subsequent inpatient and nursing-facility visits, and permanently allows direct supervision via real-time audio-video.
Coding updates to load before January 1
The AMA's CPT 2026 code set has 418 changes — 288 new codes, 84 deletions, and 46 revisions — effective January 1, 2026. New codes cover remote patient monitoring, hearing devices, and AI-enabled services, with proprietary lab analyses and Category III codes leading the additions.
CMS also finalized three new G-codes as advanced primary care management add-ons for behavioral health integration and psychiatric collaborative care, and changed how skin substitute products are paid — now treated as incident-to supplies, a change CMS projects will cut Medicare spending on those products sharply. Verify your EHR and clearinghouse have loaded the new code set, and re-check fee schedules for any service you bill frequently.
Frequently asked questions
- Did Medicare physician pay go up or down in 2026?
- Up. The conversion factor rose 3.26% for non-QPs and 3.77% for QPs. A new -2.5% efficiency adjustment offsets some of that gain for non-time-based services, so the net effect varies by specialty.
- Why are there two conversion factors now?
- Starting in 2026, qualifying participants in advanced alternative payment models are paid on a higher conversion factor ($33.57) than non-participants ($33.40), reflecting MACRA's differential update structure.
- Can we still bill telehealth from the patient's home?
- Yes. Telehealth flexibilities briefly lapsed after January 30, 2026, then were extended through December 31, 2027 by the FY2026 appropriations bill.
- Will the 2026 pay increase stick?
- No. The +2.5% statutory portion is a one-year update and expires after 2026 unless Congress passes another adjustment.
- What coding changes do we need ready for January 1?
- The CPT 2026 set — 288 new codes, 84 deletions, 46 revisions — plus three new behavioral-health G-codes. Confirm your EHR and clearinghouse are updated and re-check fee schedules for frequently billed services.
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