• CMS finalized a major increase to the PFS conversion factor, including a secondary conversion factor designed to encourage participation in qualifying alternative payment models.
• CMS will phase out the Inpatient Only (IPO) list over three years. In 2026, 285 procedures — largely musculoskeletal — will be removed.
• CMS introduced a new mandatory payment model, the Ambulatory Specialty Model, targeting early intervention and preventative care for conditions such as heart failure and lower back pain.
• CMS made significant changes to the reimbursement methodology for skin substitutes beginning in 2026. Most skin substitutes will be reimbursed at a standardized flat-rate of $127.28/cm² instead of having product-specific reimbursements.

Under the Medicare Access and CHIP Reauthorization Act (MACRA), CMS must implement two separate conversion factors for the PFS — one for qualifying APM participants and one for nonqualifying participants.¹ For the 2026 Medicare PFS, CMS has finalized conversion factors of:

• Qualifying APMs: $33.59 (up 3.77% from 2025)
• Nonqualifying APMs: $33.42 (up 3.26% from 2025)

Under the One Big Beautiful Bill Act (OBBBA), each conversion factor includes a one-year 2.5% temporary increase. Qualifying APMs will receive an additional 0.75% increase while nonqualifying APMs will receive an additional 0.25% increase. The PFS update also includes an estimated 0.55% increase to work RVUs, along with a -2.5% efficiency adjustment tied to changes in the methodology of the Medicare Economic Index.

For the 2026 Medicare PFS, CMS will expand QP determinations to include both entity-level and individual-level qualification in advanced APMs. This change could increase the number of clinicians who meet APM thresholds and qualify for QP status.

Currently, most QP determinations are made at the entity level, not individually. This means that some eligible clinicians who could earn QP status at an individual level may miss out if they are included in at the entity level instead.²

CMS will add QP determinations at the individual level for all advanced APM participants, starting with the 2026 QP performance period. Under the changes, a clinician will achieve QP status if they meet or exceed the appropriate threshold for patient count or payment amount during the performance year at either the entity level or the individual level.² To qualify as a QP, clinicians must receive either at least 50% of Medicare Part B payments or see at least 35% of Medicare patients through an advanced APM entity during the QP performance period.³

These changes are expected to result in more providers qualifying as QPs for the purposes of APMs. Currently, CMS estimates that between 375,000 and 482,200 eligible clinicians will qualify as QPs during the 2026 performance period.⁴

Beyond the PFS, CMS says it is implementing broader payment reforms to promote value, transparency, and proactive care — and will impact how providers are reimbursed across settings.

The new Ambulatory Specialty Model, which launches in January 2027, emphasizes early intervention, data sharing, and preventive care beginning with lower back pain.

CMS is also changing its practice expense methodology, including:

• Discontinuing reliance on the American Medical Association's Relative Value Scale Update Committee (RUC) survey.⁵
• Applying a 2.5% reduction to work RVUs for non-time-based services to reflect efficiency gains.⁵

CMS will utilize hospital outpatient data to inform for cost assumptions for technical services paid under PFS; therefore, reimbursement for office-based services could be significantly impacted.  This new data will be used for 2026 rate setting for radiation therapy and remote monitoring.

CMS moving away from the RUC's guidance, as well as the proposed changes to RVU, will likely negatively impact specialist reimbursement. The RUC previously faced criticism for favoring specialist reimbursement over primary care reimbursement. Overall, specialists will likely see reduced payments even as the top-line PFS payment update improves primary care reimbursement.

For the 2026 Medicare PFS, CMS is changing how accountable care organizations (ACOs) participate in the Medicare Shared Savings Program (MSSP), suggesting new limits for certain organizations.

For ACOs considered to be inexperienced with performance-based risk initiatives, participation in the MSSP under a one-sided model would be limited to five years, down from the current seven-year maximum.⁵ Inexperienced ACOs would also have to progress to higher levels of risk and potential reward through a glide path under a two-sided model by their second agreement period.

For ACOs experienced with performance-based risk initiatives, track participation is moved to BASIC track E or Enhanced for subsequent agreement period.

According to CMS, the goal of this change is to increase participation in two-sided risk arrangements.⁶

Under the 2026 OPPS rule, hospitals must update their machine-readable files to include percentile pricing starting Jan. 1, 2026. Hospitals will be required to publish 10th, 50th (median), and 90th percentile of the allowed amounts for services at their facilities when payer-specific negotiated charges are based on percentages or algorithms. They are also required to disclose the number of allowed amounts used to determine the percentiles to more accurately show the distribution of actual prices hospitals receive for an item or service.

CMS is also updating its quality reporting to prioritize measurable outcomes, such as chronic disease management and patient safety. Providers will also be required to submit more detailed data on quality measures. These changes will apply to the Hospital Outpatient Quality Reporting, Rural Emergency Hospital Quality Reporting, and Ambulatory Surgical Center Quality Reporting Programs.⁷

CMS is changing how skin substitutes are reimbursed, as well as aligning reimbursement for the OPPS/ASC and PFS.

Currently, Medicare reimburses skin substitutes using an average sales price model, which means that each product has its own unique billing code and payment limit. This has led to a wide variation in reimbursement for skin substitutes, with some products reaching as high as $2000/in².⁸ Between 2019 and 2024, Medicare spending on skin substitutes jumped from $252 million to over $10 billion.⁹

Starting in 2026, CMS proposed skin substitutes be reimbursed as incident-to-supplies instead of biologicals, with a proposed flat rate of $127.28/cm².⁸ According to CMS, this change could reduce spending on skin substitutes by an estimated 90%.⁹

CMS increased payment rates by 2.6% for both outpatient care facilities and ASCs in 2026. This payment increase includes a 3.3% market basket update, and a -0.7-percentage point productivity adjustment.

CMS expanded site-neutral payments to align drug infusion administration reimbursement with the PFS, which will lead to an estimated $210 million in savings for CMS.

Several telehealth enhancements were also made, including:

• Streamlining additions to the Medicare Telehealth List
• Permanently removing frequency limits for inpatient, nursing facility, and critical care visits
• Allowing virtual direct supervision via real-time audio-visual technology