In February, hospitals, health systems, and other entities who employ physicians will begin calculating work relative value units (wRVUs) for services performed during January 2026. And, if your institution calculates physician compensation based on wRVUs from the 2026 Medicare Physician Fee Schedule (MPFS), you will want to keep reading.
What’s Changed about wRVUs?
Among other more routine adjustments in the MPFS (e.g., conversation rates), beginning January 1, 2026, the 2026 MPFS finalized a structural shift in how physician work is valued. Specifically, the Centers for Medicare & Medicaid Services (CMS) finalized a 2.5% “efficiency adjustment” that reduces work RVUs and associated intra-service physician time for nearly all non–time‑based Current Procedural Terminology (CPT) codes, such as surgical, procedural, imaging, and diagnostic services. The CMS efficiency adjustment, however, does not apply to time‑based services such as evaluation and management, behavioral health, chronic care management, maternity global codes, and Medicare telehealth services.
What are the Implications of the wRVU Changes?
The most significant implication of this change is that some wRVUs are no longer the same (i.e., reduced) as they were in 2025. Accordingly, under existing physician compensation models based on wRVUs, certain physicians performing the same work on January 1, 2026, as they did on December 31, 2025, will generate fewer wRVUs despite identical clinical effort and output. This may create a perceived decline in measured productivity for many procedural and hospital‑based specialists, with larger impacts depending on specialty mix.
The impact will likely be unevenly distributed across specialties. Specifically, because time‑based services are exempt from the efficiency adjustment, primary care, psychiatry, and behavioral health physicians are largely insulated, while procedural, interventional, imaging, and diagnostic specialists will likely bear the brunt of the reduction.
What are the (Unintended?) Consequences of the wRVU Changes?
For physician employers, this disconnect has immediate and tangible consequences. While employers may experience a decline in physician collections as a result, of equal concern is that productivity‑based compensation plans that rely on wRVU thresholds or tiered bonus structures may fail to hit historical thresholds, miss incentive payments, and/or trigger guarantee reconciliations, even though their 2025 practice patterns have not changed in 2026. In effect, the CMS efficiency adjustment introduces potential pay reductions through a measurement of deflation rather than intentional physician compensation redesign.
What Should Organizations Immediately Do?
Forward‑looking organizations are already beginning to respond to the change in wRVU values. The first essential step is to quantify the impact by specialty and physician using actual CPT code mix. This analysis then allows an organization to distinguish true performance changes versus CMS‑driven valuation changes.
What are Some Long-Term Potential Solutions?
Compensation model adjustments should be considered. Some organizations are normalizing or “shadowing” 2026 wRVUs to 2025 values for internal compensation purposes, preserving historical productivity intent while continuing to report CMS wRVUs for external benchmarking. Others are considering an adjustment to compensation per wRVU conversion factors to offset the efficiency cut, taking into consideration all the facts and circumstances that would support fair market value and commercial reasonableness.
For example, would it make sense to adjust the compensation per wRVU conversion factor, which might buffer employed physicians from the corresponding financial impact of this change, when other private practice physicians may experience a decline in collections? Ultimately, given the complexity of the situation, systems are beginning to move toward hybrid compensation models that reduce sole reliance on wRVUs and incorporate access, panel management, quality, or citizenship measures alongside productivity.
What are the Benefits of Acting Now?
The 2026 MPFS changes represent yet another conundrum in physician compensation design when based solely on wRVUs. Work RVUs remain a useful tool, but changes like the efficiency adjustment spotlight the fact that they may no longer be stable, independent measures of physician work across time. Employers who do not address this item may be likely to experience unintended compensation disruption and/or workforce dissatisfaction. Those who recognize it as a governance and strategy issue—and respond deliberately—will likely be better positioned to maintain equity, competitiveness, and trust in an increasingly complex payment environment.
If you would like additional guidance related to the 2026 MPFS, provider compensation design, compensation valuation, commercial reasonableness, and/or compliance, our executives are happy to assist.
Learn more about PYA’s provider compensation and design services.
Watch PYA’s on-demand webinar on the 2026 Medicare Physician Fee Schedule final rule.
