CMS 2026 Physician Fee Schedule Final Rule: Key Implications for Billing
The recent announcement by CMS of the CY 2026 Physician Fee Schedule (PFS) final rule marks one of the more sweeping updates in recent years, especially for practices, billing operations, and specialty services. Below we break down what matters most for billing professionals and how you might prepare. Source: CMS press release (https://www.cms.gov/newsroom/press-releases/cms-modernizes-payment-accuracy-significantly-cuts-spending-waste)
Payment Accuracy & Efficiency Adjustment
CMS has finalized a modest -2.5% efficiency adjustment for select services that are deemed more efficient today than the underlying valuations assume. These include surgical procedures, diagnostic imaging interpretation, outpatient interventions, interventional pain management and orthopedics. In parallel, CMS is changing how it values certain technical services, leaning on data from hospital outpatient systems to improve payment accuracy, transparency and cross-setting comparisons.
What to do: Billing teams should analyze service mix to identify if their practice is heavily weighted in these targeted areas. Documentation and workflow should reflect efficiencies; review payer contracts where service valuations may drop; assess financial forecasting for potential reimbursement shifts.
Skin Substitutes: Big Change Ahead
Perhaps the most dramatic change: spending growth on skin substitute products has exploded from approximately $256 million in 2019 to over $10 billion in 2024 for Medicare Part B. CMS’s solution: reclassify skin substitutes under the PFS as incident-to supplies (rather than biologicals). The estimated program savings: about $19.6 billion starting 2026.Implications for billing/operations: If your practice uses or bills skin substitutes, immediately review documentation protocols (clinical evidence, prior wound care), supply/vendor contracts, reimbursement projections and coding pathways. Downward pressure is coming, better to be proactive than reactive.
Prevention, Behavioral Health & Chronic Disease Management
CMS is shifting focus: integrating behavioral health into advanced primary care, refocusing risk assessment coding toward physical activity and nutrition, dropping ten quality measures that did not clearly improve outcomes and adding five prevention-outcome measures for chronic disease. Additionally, changes in the Medicare Diabetes Prevention Program will allow more Medicare beneficiaries to access coaching, peer support and behavior change programs at no cost.
Action items: Ensure billing operations reflect codes for integrated behavioral health services, partner care pathways, and prevention-oriented workflows. Track how your practice reports on quality measures; some outdated ones are going away, new ones are coming. Align your teams accordingly.
New Payment Model – Ambulatory Specialty Model (ASM)
CMS is launching a mandatory payment model (starting January 2027 through December 2031) for specialists treating chronic conditions such as heart failure and low back pain. The aim is to reduce avoidable hospitalizations, improve function, enhance communication between specialists and primary care, and tie reimbursement to outcomes.
What this means for billing teams: If your specialty practice (or your clients) will be part of the model, begin now to align your billing systems, data-sharing workflows and documentation strategy around performance and outcomes rather than fee-for-service alone.
Bottom Line for Billing/Operations Teams
For practices and the teams that support them, this rule is less about incremental tweaks and more about structural shifts. Efficiency, supply-cost scrutiny, upstream prevention, behavioral health integration and outcome-based payment models are all front and center. Billing teams must ensure their documentation, coding, vendor/supply contracts and quality-reporting workflows align with the new expectations.
Medical Management & Reimbursement Specialists, LLC offers customized readiness assessments to help your billing and operations teams adapt to the new CMS updates with clarity and confidence. Contact us to schedule your review. Schedule your call today!
Source: CMS press release (https://www.cms.gov/newsroom/press-releases/cms-modernizes-payment-accuracy-significantly-cuts-spending-waste)