The Centers for Medicare & Medicaid Services (CMS) has released the 2026 Medicare Physician Fee Schedule (PFS) final rule, which, as always, has a few key takeaways for ambulatory surgery centers (ASCs).
The agency says the rule is focused on modernizing payment accuracy by finalizing an “efficiency adjustment” for select services and a one-time 2.5% increase in physician payments.
“CMS is working to strengthen and transform Medicare for current and future generations while cracking down on waste and abuse that drive up costs,” CMS Administrator Dr. Mehmet Oz said in a press release. “The actions we are taking will improve seniors’ access to high-quality, preventive care that will help them live longer, healthier lives.”
The final rule includes two conversion factors used to calculate physician payments: one for most doctors and a second for alternative payment models that reward providers for controlling costs.
Several health care stakeholders have sharply criticized the developments.
Payment adjustments
In the PFS final rule, CMS is applying a -2.5% efficiency adjustment to certain services to reflect that some services are likely to become more efficient over time.
The efficiency adjustment impacts services that have likely become easier to deliver more effectively but still rely on outdated valuation assumptions, according to CMS. Examples include surgical procedures, diagnostic imaging interpretation, outpatient interventions, interventional pain management and orthopedic services.
These often benefit from technological advancements or standardized workflows that save time and resources, without adjusting payment rates accordingly, CMS notes. This action does not eliminate the use of American Medical Association (AMA) surveys to value services but aims to rebalance the approach.
Additionally, CMS says it is finalizing policies to use better data sources (for example, data from the Hospital Outpatient Prospective Payment System) to establish relative values for certain technical services in order to improve payment accuracy, promote payment predictability and make it easier to compare rates across different care settings.
New ambulatory specialty model
CMS is finalizing the new ambulatory specialty model, a mandatory payment system focused on specialty care for beneficiaries with heart failure and low back pain — key areas of Medicare spending.
The model aims to enhance care quality and reduce low-value services by increasing beneficiary and provider engagement, promoting preventive care and strengthening financial accountability for specialists, according to CMS.
It rewards specialists who recognize early signs of worsening chronic conditions, enhance patients’ function, decrease avoidable hospitalizations and use technology that facilitates electronic communication and data sharing with patients and their primary care providers.
The model will launch in January 2027 and operate for five performance years through December 2031.
Reactions
In a statement shared Nov. 3, the AMA warned that while the 2026 Medicare fee schedule includes important one-time 2.5% updates and essential telehealth provisions, other parts of the rule could have unintended effects on patients and private practices nationwide.
The association submitted comments to CMS in September, urging collaboration to preserve seniors’ access to health care and sustain physician practices.
“The fact that physicians are not facing a reduction in reimbursements – as we have in the past – is a significant positive for 2026 and a win for patients’ access to care,” AMA President Dr. Bobby Mukkamala said in the statement. “Yet, this one-time correction does not keep up with increasing costs, and private practices across the country are expressing concern that this rule would further disadvantage them merely for treating patients at a hospital or ambulatory surgery center (ASC). As the new rule is implemented and its effects are felt, we will share with CMS the real-world impacts — data and details that are not always easily accessible to policymakers in Washington. This exchange and collaboration are vital to keeping practices open during a physician shortage.”
The pay update will help protect seniors’ access to care, and the AMA has recommended linking payment updates for physician practices to the actual costs of providing care, a position shared by the Medicare Payment Advisory Commission (MedPAC).
The AMA also said it was pleased with the permanent extension of frequency limits on telehealth services provided to patients in hospitals and skilled nursing facilities and the permanent allowance of virtual direct supervision for most services requiring it.
However, the association noted that two CMS proposals finalized in the new rule will directly harm the viability of private practice.
The efficiency adjustment would lower payments for over 7,000 physician services, which accounts for 95% of all services provided by physicians.
CMS has also finalized a reduction in physician payment rates for services performed in facilities like hospitals or ASCs.
As proposed, these policies were estimated to cause 37% of oncologists to realize cuts between 10% and 20%. Additionally, 37% of obstetricians and gynecologists would also face cuts.
The AMA urged CMS to base policy changes on verifiable data, including results from the Physician Practice Information Survey, to ensure that payment adjustments reflect the actual costs of providing care.
“We’re concerned that, at a time of increasing consolidation in health care, this rule will make it harder for independent practices to remain viable parts of our health system,” Mukkamala said. “We look forward to working with CMS to address that concern, so Medicare patients can continue to see their physicians.”
The Ambulatory Surgery Center Association (ASCA) echoes many of those sentiments.
ASCA “joins much of the physician community in disappointment” over the CMS decision to finalize a significant reduction to indirect practice expense allocation for clinician services provided in facilities, Alex Taira, the organization’s associate director of public and regulatory affairs, told ASC News.
“As stated in ASCA’s comment letter responding to the proposed rule, CMS has extrapolated small amounts of evidence regarding utilization patterns and clinician employment into a drastic payment policy that could have severe unintended consequences for Medicare beneficiaries,” Taira said. “ASCA is committed to supporting the advocacy of [AMA] and our specialty organization partners in minimizing the effects of this policy on clinicians who work in surgery centers.”
Other groups have slammed the rulemaking as well.
The Medical Group Management Association (MGMA) criticized the final fee schedule, noting that practices faced a 2.83% cut to the conversion factor last year. Finalized increases for next year’s fee schedule “barely” surpass 2024 figures and fail to fix previous cuts “due to flawed policy,” along with future reductions related to budget neutrality.
“Further undermining the 2026 conversion factor increases are arbitrary cuts to work and practice expense relative value units that do not accurately reflect the cost of providing care and disproportionately impact certain specialties,” Anders Gilber, senior vice president of government relations for MGMA, said in a statement. “Taken together, these policies reflect systemic inadequacies in the payment structure. Congress must intervene and pass legislation to provide an annual inflationary update to physician payments, ensuring Medicare is on a sustainable trajectory.”
The CMS final rule is available here.
