On October 1, 2025, CMS published the CY 2026 Medicare Physician Fee Schedule Final Rule. Because the MPFS is widely used as the basis for commercial insurance payment rates, there are notable changes that all providers should be aware of (even, if they do not participate in the Medicare program). Potentially, the most impactful of the 2026 Final Rule changes include:
a. CMS is implementing a new -2.5% “Efficiency Adjustment” to the Work RVU components of certain non-time based services. This adjustment will apply to all codes except time-based codes, such as evaluation and management (E/M) services; care management services; Behavioral Health care; telehealth services; and certain maternity care codes.
b. CMS finalized a new practice expense methodology (PE component of the RVU) that adopts changes to recognize higher indirect costs for office-based (non-facility) practitioners compared to those in facility settings. Under this policy, CMS is finalizing what equates to a 50% reduction to the indirect cost component of the PE RVUs for facility-based services and providing a corresponding increase to these RVUs for non-facility-based services.
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