Key Changes in the 2026 Medicare Physician Fee Schedule Explained

In 2026, Medicare doctors will face significant changes in payment and policy. CMS finalized updates to the 2026 Medicare Physician Fee Schedule that adjust physician payments and introduce new participation models affecting specialty care and chronic condition management. These updates affect specific specialty physicians and primary care practices, particularly those involved in behavioral health integration and chronic disease management.

These policies aim to bring quality-focused care in the new Ambulatory Specialty Model, increase telehealth opportunities, and simplify behavioral incorporation. Physicians managing congestive heart failure and low back pain will face two-sided financial risk beginning in 2027 under new CMS models, while primary care practices gain simplified behavioral health billing options. Knowledge of such updates assists practices in attracting relevant reimbursements and addressing the emerging quality standards.

What Payment Increases Apply in 2026?

The 2026 Medicare Physician Fee Schedule includes payment adjustments that vary by participation status, with Advanced APM qualifying participants receiving higher positive updates compared to non-participants.

This addresses rising operational costs while keeping Medicare spending sustainable. Non-qualifying providers experience different payment impacts depending on specialty mix and policy adjustments, with variations driven by budget neutrality and efficiency factors.

How Does the Ambulatory Specialty Model Work?

The Ambulatory Specialty Model is a CMS Innovation Center initiative scheduled to begin on January 1, 2027, with mandatory participation for selected specialty providers. It makes individual specialists responsible for quality measures as well as cost performance in the management of chronic conditions. The initial payment changes will start in the year 2029, and this will allow providers two years to change their care delivery strategies.

Who Must Participate in ASM?

Specialists treating 20 or more Medicare fee-for-service patients with congestive heart failure or low back pain over 12 months must participate. This includes:

• Cardiologists managing CHF patients

• Anesthesiologists treating low back pain

• Orthopedists and neurosurgeons

• Pain management providers

• PM&R specialists

Participants operate under two-sided financial risk, meaning Medicare Part B payments tie directly to performance on quality metrics, cost reductions, and care coordination. The model exempts participants from traditional MIPS reporting during participation years, cutting administrative burden. ASM overlaps with certain Advanced APMs and Innovation Center models, with CMS indicating that reconciliation details will be clarified through future guidance.

What Behavioral Health Updates Are Included?

CMS introduces three new GPCM add-on codes that remove time-based restrictions for billing Collaborative Care Model services alongside Advanced Primary Care Management.

This simplifies documentation while expanding reimbursement for integrated behavioral health. Primary care practices are now capable of billing CoCM and behavioral health integration codes with APCM services without detailed time-based documentation requirements. The transition helps to make more of the behavioral health models available in primary care environments where patients require mental health services in addition to management of chronic diseases.

Related CMS Program Changes Affecting Physician Payment

Starting January 1, 2027, ACOs with fewer than 5,000 beneficiaries can participate in Benchmark Years 1 and 2, but must reach at least 5,000 beneficiaries in Benchmark Year 3. These smaller ACOs face reduced shared savings opportunities and capped financial exposure.

CMS eliminates the health equity adjustment for ACO quality scores beginning in performance year 2025, while maintaining existing benchmark methodologies. This aligns with administration priorities to streamline regulations, though the underlying benchmark adjustment methodology stays unchanged. The policy opens MSSP to smaller organizations while maintaining quality standards through the beneficiary threshold requirement.

What Telehealth and Digital Health Expansions Apply?

CMS broadens coverage for digital mental health devices, simplifies Medicare Telehealth Services List additions, and requests feedback on emerging technology payments.

The expansion includes broader consideration of digital mental health technologies, including those addressing conditions such as ADHD. CMS also seeks input on payment approaches for Software as a Service (SaaS) and artificial intelligence tools used in outpatient care settings. This digital health platform modernization promotes innovation while ensuring Medicare beneficiaries have access to advanced care delivery methods.

What's the New Skin Substitute Payment Policy?

CMS replaces varying Average Sales Price payments with a uniform $125.38 per square centimeter rate across three FDA-based categories.

Previously, individual product pricing often exceeded $1,000 per square centimeter. The uniform rate is aimed at incident-to supplies instead of the individual product pricing, which standardizes reimbursement and reduces pricing variability across products.

When Do These Medicare Changes Take Effect?

Wrap Up

The 2026 Medicare Physician Fee Schedule introduces payment adjustments, specialty participation requirements, and expanded behavioral health billing options that affect how physicians are reimbursed and evaluated. The two-sided risk structure of ASM increases specialist accountability for both cost and quality performance. It takes strategy planning in terms of quality measure, cost control, and care integration that integrates with the developing value-based care priorities of CMS.

Why Choose Persivia?

Persivia offers CareSpace®, an AI-powered platform with 15 years of proven expertise that transforms regulatory complexity into revenue growth. Real-time analytics processes clinical and financial data to optimize risk adjustment and capture appropriate reimbursements under the new fee schedule. Population health analytics identify high-risk cohorts, anticipate care needs, and implement interventions that meet CMS's care coordination requirements. As Medicare shifts to outcomes-based care management, Persivia’s platform delivers insights practices need to demonstrate quality improvements and maximize payments.