In July 2025, the Centers for Medicare and Medicaid Services (CMS) released the 2026 Medicare Physician Fee Schedule (MPFS) proposed rule, and after a comment period that ended in September, CMS will release the final rule this fall. PYA offers helpful answers to frequently asked questions (FAQs) about the proposed rule to help health systems prepare.
1. What is the efficiency adjustment to work relative value units (work RVUs), and who would be most affected?
CMS is proposing the implementation of a recurring efficiency adjustment applied to work RVUs and the intraservice portion of physician time of non-time-based services[1] to account for increased service efficiency through physician expertise, technology, and operational improvements:
- The proposed change introduces an initial 2.5% reduction to work RVUs with additional adjustments every three years.
- CMS estimates this reduction would lower overall payments to most specialties by up to 1%.
- Most impacted specialties:
- Dermatology
- Ophthalmology
- Orthopedics
- Cardiology
- Radiology
- Pathology
2. What changes are being made to practice expense (PE) RVUs, and who would be most affected?
To address concerns about the accuracy, utility, and suitability of the data from the American Medical Association’s Physician Practice Information Survey and Clinician Practice Information Survey as well as the potential for duplicative payments in facility settings, CMS proposes to adjust PE RVUs to better reflect overhead costs between office-based and facility-based settings:
- Facility-based PE RVUs will be half of non-facility amounts, resulting in a total decrease of 7% in the facility setting with many specialties seeing a larger impact. Non-facility-based payments would increase by 4%.
- Hospital-based procedural specialties will see decreases in reimbursement.
- CMS estimates most specialties will experience changes of +/- 1%.
- Most impacted specialties:
- Cardiology
- Urology
- Hospital-based E/M
- Surgical specialties
3. What are the updates to telehealth and supervision rules?
- On October 1, 2025, pandemic-era telehealth flexibilities for geographic location, originating site, and practitioner type expired. These flexibilities can be restored only through Congressional action; CMS does not have the authority to extend the flexibilities. The ability of Federal Qualified Health Centers and Rural Health Clinics to provide medical services using telehealth will be extended through the end of 2026.
- Providers will have to list their home addresses as their service locations when billing telehealth services from their homes rather than listing their practice locations.
- The proposed rule also simplifies and expands telehealth access:
- The Medicare Telehealth Services List process was reduced from five steps to three.
- Provisional status for services is eliminated with categories combined into one permanent list.
- Newly added codes to the telehealth list:
- 90849 (multiple family group psychotherapy)
- G0473 (group behavioral counseling)
- G0545 (inherent complexity, inpatient/observation visit, confirmed infectious disease by ID specialist)
- 92622 and 92623 (auditory osseointegrated sound processor programming)
- Frequency limits permanently removed for these codes:
- 99231–99233 (subsequent inpatient visits)
- 99307–99310 (subsequent nursing facility visits)
- G0508 and G0509 (critical care consults)
- Real-time audio and video supervision permanently allowed for “incident to” services.
- Audio-only supervision will not be eligible for reimbursement.
- Audio and video supervision will not be allowed for global surgery indicators 010 and 090 due to the higher risk associated with the services and potential need for in-person oversight.
- Teaching physicians will no longer be able to supervise residents virtually and will be required to maintain a physical presence to qualify for Medicare payment.
- Limited flexibility will remain in rural training sites.
4. How will these changes affect financial assistance and subsidies paid by hospitals?
If the proposed rule remains unchanged, certain specialties may require increased financial support. Facility-based specialties (e.g., emergency medicine, anesthesia, radiology) may see lower collections, which could lead to higher financial assistance/subsidies needed to maintain group compensation levels.
PYA emphasizes the importance of understanding and preparing for the proposed changes. If you would like additional guidance with the 2026 Medicare Physician Fee Schedule proposed rule or any matter related to provider compensation, compliance, valuation, or strategy and transactions, our experts are happy to assist.
[1] The adjustment targets non-time-based codes for procedures, radiology, and diagnostic tests and excludes evaluation and management (E/M) visits, behavioral health, telehealth, and maternity care under global periods.
