July 15, 2025
This week, the Centers for Medicare & Medicaid Services (CMS) issued its proposed rule for the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS). PALTmed is reviewing this proposed rule in detail, but here are the initial highlights:
Medicare Payment Updates
As required by statute, starting in 2026, Medicare will use two separate conversion factors for the PFS: one for providers in qualifying Alternative Payment Models (+0.75% increase) and one for those who are not (+0.25% increase). Including other statutory updates and RVU adjustments, the proposed conversion factor will rise to $33.5875 for qualifying APM participants and $33.4209 for non-participants, both up from the current $32.35. This amounts to an overall payment increase of about 3.8% for APM participants and 3.3% for non-participants.
The proposed CF update is primarily based on three factors:
- A statutory update in the Medicare Access and CHIP Reauthorization Act (MACRA): 0.75% increase for APMs and 0.25% CF increase for non-APMs.
- A 0.55% RVU positive budget neutrality adjustment.
- A 2.5% one-year payment increase due to the budget reconciliation legislation.
CMS plans to apply a new -2.5% efficiency adjustment to the work RVUs of non-time-based services under the 2026 PFS. This aims to correct possible overestimates of physician time and effort from AMA RUC survey data. Evaluation & Management (E/M) (including nursing home and assisted living codes), care management, behavioral health, maternity, and telehealth codes are excluded. CMS intends to shift toward using empirical time studies instead of surveys to better reflect real-world practice and keep payments more accurate over time.
Telehealth
- CMS proposes to permanently remove frequency limitations for subsequent nursing facility visits (99307-99310), as well as subsequent inpatient visits and critical care consultations.
CMS proposes to simplify the process for adding services to the Medicare Telehealth Services List by eliminating the distinction between “provisional” and “permanent” services. Going forward, all services listed, including those previously designated as provisional, will be treated as permanently included under the “maintain” category. For CY 2026, this means that the nursing home telehealth codes currently on the list will now be considered permanent. Here are the current nursing home codes included on the 2026 Medicare Telehealth Services List:
99304 Nursing facility care init Maintain 99305 Nursing facility care init Maintain 99306 Nursing fac care init Maintain 99307 Nursing fac care subseq Maintain 99308 Nursing fac care subseq Maintain 99309 Nursing fac care subseq Maintain 99310 Nursing fac care subseq Maintain 99315 Nursing fac discharge day Maintain 99316 Nursing fac discharge day Maintain 99317 Prolonged nursing facility evaluation and management service Maintain - CMS proposes to permanently allow direct supervision to be provided through real-time audio and video (not audio-only) for certain services.
- CMS will end virtual presence for teaching physicians after December 31, 2025, reverting to the pre-pandemic policy requiring physical presence for resident services in metropolitan areas, with rural exceptions maintained.
Other Notable Proposals
- APCM-Chronic Care & Behavioral Health: New add-on codes for Advanced Primary Care Management are proposed, supporting integrated behavioral health care.
- CY 2026 Quality Payment Program (QPP): CMS also released its proposed updates for the 2026 Quality Payment Program (QPP), focusing on stability for MIPS participants while adding six new MIPS Value Pathways (MVPs) and updating existing ones. The performance threshold to avoid penalties will stay at 75 points through 2028, providing predictability for clinicians. Small and multispecialty practices, including those serving nursing homes, will still have flexibility in how they report MVPs. CMS also seeks feedback on digital quality measures, wellness and nutrition measures, and other topics that could shape future reporting.
- Medicare Shared Savings Program: The CY 2026 Medicare PFS proposed rule includes updates to the Medicare Shared Savings Program that primarily affect how Accountable Care Organizations (ACOs) operate and report quality. Key changes shorten how long ACOs can stay in low-risk arrangements, adjust beneficiary count requirements, and update quality scoring and reporting rules. For nursing homes, the main impact is that Skilled Nursing Facilities (SNFs) that are ACO affiliates must now report ownership changes during the year to stay in the program without interruption.
PALTmed will continue reviewing the proposed rules and will share additional updates soon. Comments must be submitted by the September 12 deadline.
A CMS fact sheet is available here: Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Proposed Rule (CMS-1832-P) | CMS.
