On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) issued the 2026 Medicare Physician Fee Schedule (MPFS) final rule, finalizing payment rates and policies for services beginning January 1, 2026. Download AAPM&R’s payment comparison chart to review the impact of payment changes on individual PM&R services.
CMS projects the finalized changes in the MPFS will result in an overall 2 percent decrease to payment for PM&R physicians. Analyzed more specifically, PM&R physicians in non-facility settings are expected to see a 6 percent payment increase and PM&R physicians in facility settings are expected to see a 9 percent payment decrease. This payment difference is closely tied to the efficiency adjustment and practice expense policies described in further detail below.
Conversion FactorCMS finalized an increased conversion factor for 2026, primarily due to the H.R.1 legislation which resulted in a one-year conversion factor increase of 2.5 percent. Most physicians will be paid under a conversion factor of $33.4009, which is a 3.26 percent increase over the 2025 conversion factor. However, due to requirements under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, physicians who are qualified participants of advanced alternative payment models will be paid under a higher conversion factor of $33.5675, which is a 3.77 percent increase over the 2025 conversion factor. While AAPM&R is relieved to see an increase to the conversion factor this year, much of the increase will expire at the end of 2026. We also note that a portion of the increase comes as a result of budget neutrality stemming from the efficiency adjustment policy described below, which we oppose.
Efficiency AdjustmentCMS finalized a 2.5 percent efficiency adjustment (decrease) to many work relative value units (RVUs) for non-time-based services that CMS believes are being provided more efficiently over time. AAPM&R strongly opposed this proposed policy in our September 2025 comments to CMS. While we are discouraged that CMS chose to move forward with the efficiency adjustment, we were relieved to see that CMS was persuaded exempt codes that are new for CY 2026 from the efficiency adjustment.
Practice ExpenseCMS finalized its proposal to update indirect practice expense methodology, such that some indirect practice costs from facility-based services are redistributed to non-facility-based services, resulting in a shift in payment between different sites of service. We anticipate this may be particularly impactful for physicians providing procedures in facilities such as ambulatory surgical centers. AAPM&R expressed concerns about the negative impact of this proposed policy in our September 2025 comments to CMS.
TelehealthCurrent restrictions around coverage for telehealth services are due to the government shut down, rather than policy in the MPFS. In the rule, CMS finalized several proposals related to telehealth coverage. The impact of some of these policies depends on extension of telehealth flexibilities, which remains an Academy advocacy priority.
CMS finalized lifting frequency limits on telehealth services for patients in hospitals and skilled nursing facilities. Further, CMS agreed to permanently allow for virtual direct supervision of most services that require supervision except for services that have a global surgery indicator of 010 or 090. Finally, CMS is continuing its current policy allowing teaching physicians to provide virtual supervision to residents providing telehealth services in all training sites.
Quality Program Updates and Ambulatory Specialty Model for Low Back PainCMS finalized updates to the Merit-Based Incentive Payment System (MIPS) program for the 2026 performance year. CMS also finalized the Ambulatory Specialty Model (ASM) for low back pain. The model, which is anticipated to be mandatory for specialists who treat low back pain within a selected group of geographic areas, is set for implementation in 2027. AAPM&R expressed concerns about this model in our September 2025 comments to CMS.
AAPM&R will continue to analyze the rule in the coming weeks and provide additional information, including an updated payment chart with details on national payment rates for PM&R services.
For more information about the rule, review the CMS Press Release. Members with questions can contact healthpolicy@aapmr.org.
On July 14, 2025 the Centers for Medicare & Medicaid Services (CMS) published the annual Medicare Physician Fee Schedule (MPFS) proposed rule. The rule describes proposed payment, policy, and quality program changes for 2026, including several proposals such as the negative efficiency adjustment, which will impact physiatry. AAPM&R submitted comprehensive comments to CMS regarding the proposed rule on September 12.
Effective January 1, 2024 the Centers for Medicare and Medicaid Services implemented payment for G2211, a HCPCS add-on code to be billed in conjunction with an office/outpatient evaluation and management (E/M) code in certain instances. Learn more about how to use this resource and applications for physiatry.
Medicare payment for physicians, and some non-physician practitioners (NPPs), is based on set rates under Medicare Part B. The system for payment, known as the Medicare Physician Fee Schedule (MPFS), is used when paying for: professional services of physicians and some NPPs; covered services incident to physicians’ services (other than certain drugs covered as incident to services); diagnostic tests (other than clinical laboratory tests); and radiology services. The MPFS also addresses various quality issues, fraud and abuse issues, and other issues that impact physicians. CMS updates the MPFS regulations annually, with comment periods open prior to implementation of the final rule.