Medicare releases 2026 physician fee schedule, finalizing cuts opposed by radiology
Medicare on Friday issued the final physician fee schedule for 2026, incorporating policies doc groups say could threaten the financial viability of independent practices.
The final rule includes two conversion factors, used to calculate physician payments: one for most doctors and a second pertaining to Alternative Payment Models, rewarding providers for controlling costs. Most radiologists will see the conversion factor rise 3.26% (or $1.05) year over year, up to $33.40, while those in APMs face a 3.77% (or $1.22) increase, up to $33.57.
Medicare is finalizing a controversial “efficiency adjustment” radiology groups have opposed since the original fee schedule dropped in July. The federal payment program is planning a 2.5%, across-the-board cut for physician services, exempting most time-based offerings, such as 30-minute visits with primary care docs.
Federal authorities noted previously that only a small number of pay codes are considered for reevaluation annually. However, technology and other advancements have allowed physicians to achieve new “efficiencies” in care delivery, warranting Medicare pay cuts to account for these gains. Opponents contend the efficiency adjustment further devalues physician work after years of Medicare failing to keep up with inflation.
“We’re concerned that, at a time of increasing consolidation in healthcare, this rule will make it harder for independent practices to remain viable parts of our health system,” Bobby Mukkamala, MD, president of the American Medical Association, said in a statement Nov. 2. “We look forward to working with CMS to address that concern, so Medicare patients can continue to see their physicians.”
The AMA applauded aspects of the rule, including a “vital,” one-time 2.5% update and “critical” telehealth provisions. On the latter, the agency is finalizing its proposal to permanently allow virtual direct supervision for most healthcare services, a move radiology groups had lobbied for previously. The agency also plans to continue allowing teaching physicians to virtually supervise medical residents providing telehealth services across all types of training sites (and not just those in rural areas).
However, America’s largest physician lobbying group slammed two particular proposals finalized in the fee schedule, which it believes will “directly undercut private practice viability.” These include the efficiency adjustment, reducing payments for over 7,000 (or about 95%) of all services provided by physicians.
The Centers for Medicare and Medicaid Services also is finalizing a reduction in rates for physician services delivered in hospitals and ambulatory surgery centers, AMA added. With the agency failing to “reflect true resource costs incurred by physician practices in the facility setting,” it risks reducing competition and encouraging further consolidation, the association contends. Radiology groups also previously spoke against these “excessive” cuts to practice expense pay, contending they could harm independent interventional radiology groups.
Earlier this year, CMS cited estimates, showing a steady decline in radiologists and other docs working in private practice, with a corresponding uptick in hospital employment. The methodology for how Medicare calculates practice overhead expenses is the same regardless of whether a service is delivered in a physician office or other hospital department. That’s because CMS had assumed that radiologists and other physicians maintain a personal office, even when practicing in a facility
However, with the shift away from private practice, CMS now feels that indirect costs (i.e., rent, utilities and administrative staff) may be overstated, with some radiologists no longer maintaining their extra office.
“This one-time [2.5%] correction does not keep up with increasing costs, and private practices across the country are expressing concern this rule would further put them at a disadvantage merely for treating patients at a hospital or ambulatory surgery center,” Mukkamala said. “As the new rule is implemented and its changes are felt, we will share with CMS the real-world impacts—data and details not always easily available to policymakers in Washington.”
The Medical Group Management Association (MGMA) also criticized the final fee schedule Friday, noting that practices faced a 2.83% cut to the conversion factor last year. Finalized increases to next year’s fee schedule “barely” surpass 2024 figures and fail to remedy 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 (RVUs) that do not accurately reflect the cost of providing care and disproportionately impact certain specialties,” Anders Gilberg, senior VP of government relations for the MGMA, said in a statement Oct. 31. “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 American College of Radiology also released a preliminary summary of the final rule Friday but held off on offering any criticisms or commentary. ACR noted that the overall impact of the final fee schedule changes amounts to a -2% cut for diagnostic radiology, -1% for nuclear medicine, 2% for interventional radiology and -1% for radiation oncology. The college said it plans to release a detailed summary in the coming weeks.
For more on the 2025 physician fee schedule, you can read a summary from the American Hospital Association, this CMS fact sheet and press release, and the final rule itself.
Update Monday, Nov. 3: ACR issued the following statement, attributed to Gregory Nicola, MD, chair of the American College of Radiology Commission on Economics: "This new adjustment for so-called 'non-time-based services' is not based in modern care reality and is not helpful. Any efficiencies theorized by CMS are outweighed by the increased images and reconstructions now performed per study. Evolving standards of care and criteria require cancer and disease classification integration to the radiologist report. These factors demand more radiologist time, effort and particularly judgement than ever before. The payment system needs to reflect this real-world process. This move by CMS may impact availability of cancer screening tests like mammography and lung cancer screening—particularly in areas where this care may already be harder to access. CMS needs to reconsider this approach and work with radiologists and other stakeholders to ensure fair reimbursement that reflects the complexity and value of modern radiologic care."
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.