2025 MPFS final rule: CMS moves ahead with major change to physician reimbursement, skin substitute payments, and more

Part B reimbursement is set for significant changes starting January 1, 2026, according to the 2026 Medicare Physician Fee Schedule (MPFS) final rule, released October 31. The final rule includes numerous major changes to how CMS will calculate reimbursement, updates to telehealth services, and much more.

In 2026, CMS will use two separate conversion factors (CF). One CF will be used for participants in qualifying alternative payment models (APM) and one for physicians and practitioners who are not in APMs. For 2026, the non-APM CF will be 0.25% and the APM CF will be 0.75%.

CMS also finalized changes to how it values certain relative value units (RVU). The agency will implement an efficiency adjustment using the Medicare Economic Index (MEI) productivity adjustment percentages. CMS believes that the American Medical Association Relative Value Scale Update Committee to estimate practitioner time, work intensity, and aspects of practice expense, which the agency has historically used, is not accurate and leads to overinflation. Using the MEI productivity adjustment will result in an efficiency adjustment of -2.5% for 2026 and will apply to all costs that are not based on time.

CMS is moving ahead with its plans to reduce the practice expense (PE) RVU in the facility setting. The changes will better recognize the greater indirect costs incurred by physicians in office-based settings as opposed to those in facility settings, according to the final rule. However, these changes will lead to significant differences in reimbursement based on specialty and site of service, Part B News reported. These differences may be particularly stark for certain specialties. According to Part B News, in the non-facility setting, internal medicine providers are projected for a +6% pay boost based primarily around PE RVU revaluations; yet internal medicine providers furnishing care in the facility setting are on track for a -8% pay cut for those encounters, again attributed to PE RVU cuts.

Among numerous changes to telehealth services, CMS finalized proposals to:

• Streamline the process for adding services to the Medicare Telehealth Services List
• Remove frequency limitations for subsequent inpatient visits, subsequent nursing facility visits, and critical care consultations
• Adopt a definition of direct supervision that allows the physician or supervising practitioner to provide such supervision through real-time audio and visual interactive telecommunications (excluding audio-only)

CMS will move back to the pre-COVID-19 public health emergency policy regarding teaching physicians and telehealth. However, in response to numerous public comments, the agency will allow teaching physicians to have a virtual presence in all teaching settings, only in clinical instances when the service was furnished virtually, on a permanent basis, according to CMS’ fact sheet.

CMS finalized its proposals to pay for skin substitutes as incident-to supplies and to align skin substitute categorization consistent with their FDA regulatory status. To ensure it does not underestimate the resources involved, CMS finalized a single payment rate reflecting the highest average of the three categories of skin substitutes. The payment rate will be approximately $127.28. CMS anticipates setting different payment rates among the three categories in future years. These changes will apply to physician office settings and hospital outpatient settings. Details of the hospital outpatient skin substitute payment policy will be published in the 2026 Outpatient Prospective Payment System final rule.

Other major provisions include new codes and updates for behavioral health services, drugs and biologicals, and a new payment model—the Ambulatory Specialty Model. See the final rule for details of these and other changes.

Revenue integrity professionals should read the final rule carefully. Pay close attention to provisions that will directly affect your job duties, organization, and community. Reach out to colleagues you work with in other departments who may be affected by changes and collaborate with peers in HIM, CDI, and compliance to develop and provide education to clinical and revenue cycle staff. Ensure systems are updated and tested prior to January 1, 2026, and plan to conduct internal audits of any areas that may pose compliance risks.