Inside the 2026 MPFS final rule

Starting in 2026, CMS will implement two separate conversion factors for the MPFS: one for qualifying participants (QPs) in alternative payment models and one for non-QPs. The final rule increases the conversion factor by 3.77% and 3.26% for QPs and non-QPs, respectively. 

Payment updates include a 0.75% increase for QPs, a 0.25% increase for non-QPs, a 3.5% increase as required by the One Big Beautiful Bill Act, and a 0.49% increase to account for changes in the work relative value units (RVU).

The final rule also implements an efficiency adjustment of -2.5% to the work RVUs for non-time-based services. The reduction applies to around 9,000 billing codes, including those for surgery, diagnostic imaging interpretation, interventional pain management, and orthopedic services. Notably, new services will be exempt from the adjustment even if they otherwise meet the criteria.

According to CMS, the efficiency adjustment will redistribute payments among different types of physicians and better support primary care. CMS also finalized an update to the practice expense methodology that will increase payments to office-based doctors and decrease payment to facility-based doctors.

The final rule also establishes a new mandatory five-year bundled payment program called the Ambulatory Specialty Model, which will launch in 2027. The new model aims to promote preventive care and early management of chronic conditions and will initially focus on lower back pain and heart failure.

Commentary

According to HHS Secretary Robert F. Kennedy Jr., the final rule "delivers a major win for seniors, protects hometown doctors, and safeguards American taxpayers. It realigns doctors' incentives and helps move our country from a sick-care system to a true health care system."

"CMS is working to strengthen and transform Medicare for the current and future generations while cracking down on waste and abuse that drives up costs," said CMS Administrator Dr. Mehmet Oz. "The actions we are taking will improve seniors' access to high-quality, preventive care that will help them to live longer, healthier lives."

However, several healthcare groups previously criticized the rule, saying the payment increase for 2026 was "underwhelming." The payment updates in the proposed rule remained largely the same in the final rule.

"Insufficient Medicare payments are exacerbating the financial burden on doctors created by decades of cumulative reimbursement cuts and rising costs -- placing patients at risk and jeopardizing their access to care," said Carol Langford, president of the American College of Rheumatology. "While this proposed rule includes a boost, it is very underwhelming and doesn't come close to correcting the 33% decline in reimbursements for care since 2001."

There have also been mixed reactions to the new efficiency adjustment, with primary care providers favoring it and specialty groups arguing that it devalues their services and could lead to worse care for patients.

The efficiency adjustment is an "important step to address methods that have long diverted funding away from the whole-person, relationship-based primary care Americans need," said Ann Greiner, CEO of the Primary Care Collaborative.

Meanwhile, Qihui Zhai, president of the College of American Pathologists, said that "[t]hese reductions to physician work ignore the realities of modern medicine, including rising patient complexity and evolving technologies that demand more from physicians, not less."