Background

On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) issued a rule finalizing changes for Medicare payments under the Physician Fee Schedule and other Medicare Part B policies, effective on or after January 1, 2026 (CY 2026 PFS Final Rule).

This topic summarizes selected items from the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) Final Rule that wound care providers may find relevant. For updates related to skin substitutes, also known as cellular and/or tissue-based products (CTPs) or Cellular, Acellular, and Matrix-like Products (CAMPS), refer to blog post "Skin Substitutes - What’s New in 2026? Navigating CMS Payment Changes".

Background on the Physician Fee Schedule

Since 1992, Medicare has paid for qualified healthcare providers’ (QHP)  professional services under the PFS across various settings (e.g., offices, hospitals, ambulatory surgical centers, skilled nursing facilities, etc). 

• Physician/Qualified Healthcare Professional (QHP) Offices and patient’s homes. (i.e. Non-Facilities): For most office-based services, a single rate based on full resources involved in furnishing the service is paid.
• Hospital Outpatient Departments (HOPDs) (i.e. Facilities): In facility settings, PFS rates only reflect the QHPs’ professional services. 

What is the Relative Value Unit (RVU) and how is it determined?  

• QHPs payments by CMS are based on relative resources, using Relative Value Units (RVUs) for work, practice expense, and malpractice. RVUs are converted to payment rates via a conversion factor and Geographic Practice Cost Indices (GPCIs) to adjust for area cost variations, with a statutory overall payment update.

What's New for 2026?

A Look at the Medicare PFS Two Conversion Factors and Payment Rates 

Starting in CY 2026, CMS will introduce two distinct conversion factors for QHPs, differentiating between qualifying Alternative Payment Model (APM) participants (QPs) and non-participants. The conversion factor is central as it determines the payment amount for a given service when multiplied by geographically adjusted Relative Value Units (RVUs).

Payment Rate Changes and Two Conversion Factors:

• APM Qualifying Participants (QPs): Average payment rates under the PFS are set to increase by 3.77% in 2026. The conversion factor for QPs will be $33.57, a rise from $32.35 in 2025.
• Non-Qualifying APM Participants: Average payment rates under the PFS will see an increase of 3.26% in 2026. The conversion factor for non-QPs will be $33.40, also up from $32.35 in 2025.

The conversion factors for CY 2026 already reflect several statutory changes.Specifically, these adjustments include:

• A positive 2.5 percent adjustment, which was enacted by Congress earlier this year.
• A positive 0.49 percent adjustment to maintain budget neutrality due to modifications in misvalued codes.
• A negative 2.5 percent efficiency adjustment.

What is the Efficiency Adjustment for CY 2026 Medicare PFS?

For CY 2026, CMS finalized a negative 2.5% efficiency adjustment to the work RVU and the corresponding intra-service time for specific procedure codes.

• The efficiency adjustment refers to a calculated percentage change applied to the work RVU and intraservice portion of physician time inputs for non-time-based services under the PFS. 
• It is designed to account for productivity gains and changes in medical practice over time, reflecting resources involved in providing services.
• Impacted Services: Most physician service procedure codes that are not time-based will be subject to this negative 2.5% reduction.
• Exempted Services: Several critical categories are exempt, including:
• Time-based codes (e.g., Evaluation and Management (E/M), care management, and behavioral health services).
• Services on the Medicare telehealth list.
• Maternity codes with a global period of MMM.

Why the Change?

• According to CMS, there has been a long-standing issue in how RVU are determined. The valuation process, which has relied heavily on survey data from the AMA Relative Value Scale Update Committee (RUC), may have resulted in overestimated time assumptions for many services. To address this concern, CMS is introducing this new efficiency adjustment.
• CMS stated that this new adjustment is based on a five-year lookback at the productivity component of the Medicare Economic Index (MEI) rather than the survey data from the AMA RUC.
• Going forward, CMS plans to recalculate and apply the efficiency adjustment every three years to ensure continued alignment with practice efficiencies and resource utilization trends.

How Does the Practice Expense Component of RVUs Result in Site-of-Service Differential?

CMS is revising how it allocates indirect practice expenses (PE) across different care settings. Starting in 2026, CMS will reduce by 50% the portion of indirect PE that is allocated based on work RVUs for services performed in hospital settings.

• According to the American Medical Association and the CY 2026 PFS Final Rule these changes will lead to QHP payment increases or decreases depending on the site of service, as follows : 
• Facility-based settings: Physician payments are expected to decrease by approximately 7% overall.
• Non-facility settings (e.g., physician offices, clinics): Payments are expected to increase by approximately 4%.
• For the estimated impact on total allowed charges for selected specialties commonly involved in wound care, see Table 1 below
• For 2026 physician fees for common wound care and hyperbaric oxygen therapy services, see topic "HCPCS/CPT Codes and Physician Fee Schedule Commonly Utilized in Wound Care and HBOT".

Why the change? 

• Citing the growing trend of hospital employment and physician practice integration, CMS concluded that many overhead costs for services delivered in hospital settings are now borne by the facilities themselves, rather than by individual physicians or group practices.

Table 1. CY 2026 PFS Estimated Impact on Total Allowed Charges for Selected Specialties Commonly Involved In Wound Care (CY 2026 PFS Final Rule)

* Allowed Charges: The aggregate estimated PFS allowed charges for the specialty based on CY 2024 utilization and CY 2025 rates. That is, allowed charges are the PFS amounts for covered services and include coinsurance and deductibles (which are the financial responsibility of the beneficiary). These amounts have been summed across all services furnished by physicians, practitioners, and suppliers within a specialty to arrive at the total allowed charges for the specialty.

Updates to Telehealth and Supervision Rules for CY 2026 Medicare PFS Final Rule

The CY 2026 PFS Final Rule introduces changes impacting telehealth, supervision, and teaching physician requirements:

• Originating site flexibilities for telehealth ended September 30, 2025 after Congress did not extend policies adopted during the COVID-19 public health emergency. For details on flexibilities, see blog post "Reimbursement for Telemedicine Services in Wound Care". 
• Frequency Limits Removed: Frequency restrictions have been removed for:
• Subsequent inpatient visits.
• Subsequent nursing facility visits.
• Critical care consultations.
• Virtual Direct Supervision: The definition of "direct supervision" for services requiring a physician or supervising practitioner has been permanently updated. This allows supervision to be provided through real-time audio and visual interactive telecommunications (excluding audio-only) for most services that do not have 10- or 90-day global periods.
• Permanent Virtual Teaching Presence: While CMS initially did not propose extending the policy allowing teaching physicians a virtual presence for billing services involving residents in all teaching settings (a policy set to expire December 31, 2025), CMS recognizes how integral this flexibility has become in clinical practice, and is finalizing the decision to allow teaching physicians a permanent virtual presence in all teaching settings, specifically when the service being furnished was provided virtually.

Updates to the Quality Payment Program (QPP) and Medicare Shared Savings Program (MSSP) for 2026

The Quality Payment Program (QPP) for 2026 focuses on aligning the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs) tracks. It aims to improve healthcare quality and outcomes for Medicare beneficiaries through continuous enhancements in care processes and health outcomes. The program rewards clinicians based on value and efficiency, with payment adjustments based on performance in categories like Quality, Promoting Interoperability, Improvement Activities, and Cost.

The Medicare Shared Savings Program (MSSP) for 2026 involves Accountable Care Organizations (ACOs) that are accountable for the cost and quality of care provided to Medicare beneficiaries. ACOs can receive shared savings payments if they meet specific quality and savings requirements. 

MIPS

• MIPS Performance threshold: In the CY 2026 PFS Final Rule, the performance threshold for MIPS payment years 2028, 2029, and 2030 is set at 75 points (i.e. minimum score that MIPS eligible clinicians must achieve to avoid negative payment adjustments and potentially earn positive adjustments). This decision aims to provide stability and predictability for clinicians as they transition to new policies, including the shift to MVPs (MIPS Value Pathways) and digital quality measures
• MIPS Categories: Minor changes the the Cost, Quality, Improvement Activities and Promoting Interoperability performance categories have been finalized. For the 2026 performance period/2028 MIPS payment year, the scoring weights are finalized as follows: 30% for the quality performance category, 30% for the cost performance category, 15% for the improvement activities performance category, and 25% for the Promoting Interoperability performance category
• Quality measures: CMS finalized a total of 190 MIPS quality measures for the 2026 performance period. CMS addressed substantive changes to 32 existing measures, removed 10 measures, and added five new measures, including three high-priority measures, one of which is a patient-reported outcome measure.
• Cost Measures: A two-year informational-only feedback period for new cost measures has been finalized, beginning with the 2026 performance period.

Advanced Primary Care Management (APCM) Services Model: Integrating Behavioral Health in CY 2026

Recognizing that behavioral health conditions are among the most common chronic health conditions nationwide, and that evidence demonstrates the benefits of integrating behavioral health with primary care (including reduced depression severity and enhanced overall patient experience), Medicare is finalizing several changes for CY 2026 to enhance this integration.

• For the Advanced Primary Care Management (APCM) services model, which began January 1, 2025, CMS is creating optional add-on G-codes for CY 2026:
• Advanced Primary Care Management (APCM): APCM is a new bundled payment model created to streamline reimbursement for comprehensive, team-based care, consolidating elements from services like Chronic Care Management (CCM), Transitional Care Management (TCM), and Principal Care Management (PCM). This model enables qualified health professionals to deliver a broader range of services tailored to patient complexity and to bill monthly under a single payment bundle, rather than tracking and billing each individual activity.
• These new add-on G-codes will facilitate the provision of complementary behavioral health integration (BHI) or psychiatric Collaborative Care Model (CoCM) services and are directly comparable to existing CoCM and BHI codes.
• Billing the Behavioral Health G-Codes: These new G-codes can be billed as add-on services to the APCM base codes below when reported by the same practitioner in the same month:
• G0556: For beneficiaries with no more than one chronic condition.
• G0557: For beneficiaries with two or more chronic conditions.
• G0558: For beneficiaries with two or more chronic conditions who are also Qualified Medicare Beneficiaries.
• The New G Add-on Services:
• GPCM1: Mirrors CPT 99492 (first month of CoCM services); covers complimentary BHI services.
• GPCM2: Mirrors CPT 99493 (subsequent months of CoCM services); covers CoCM services.
• GPCM3: Mirrors CPT 99484 (20 minutes or more of BHI services); covers combined BHI and CoCM services.

For Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs)

The CY 2026 Medicare Physician Fee Schedule (PFS) Final Rule includes several policy updates impacting Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs):

Care Management and Coordination Services

• Payment for Care Coordination: CMS is implementing a policy to compensate for services recognized and funded under the PFS, designated as care management services, as care coordination services for separate payment for RHCs and FQHCs. CMS believes this approach will enhance alignment of Medicare policy across care settings and increase transparency and predictability for RHCs and FQHCs.
• Behavioral Health and Collaborative Care Billing: RHCs and FQHCs can now optionally adopt the PFS add-on codes for Advanced Primary Care Models (APCM) to facilitate billing for Behavioral Health Integration (BHI) and Psychiatric Collaborative Care Model (CoCM) services when RHCs and FQHCs deliver advanced primary care.
• Required Individual Code Reporting (Effective January 1, 2026): RHCs and FQHCs must report the individual component codes for CoCM services, as well as for Communications Technology-Based Services (CTBS) (HCPCS G0512) and Remote Evaluation Services (HCPCS G0071).

Telehealth and Technology-Based Services

• Temporary Telehealth Billing Extension (Non-Behavioral Health): Policies are finalized allowing RHCs and FQHCs to bill for non-behavioral health services furnished via telecommunication technology by using HCPCS code G2025 on the claim. This includes services provided using audio-only communication technology, which is permitted through December 31, 2026.
• Permanent Definition for Direct Supervision via Telecommunication: For RHC and FQHC services requiring direct supervision (excluding behavioral health services), the definition of direct supervision is permanently adopted to allow the supervising practitioner to provide it through real-time audio and visual interactive telecommunications (excluding audio-only).

Resources

• CY 2026 PFS Final Rule
• CY 2026 Medicare Physician Fee Schedule Final Rule Fact Sheet 
• HCPCS/CPT Codes and Physician Fee Schedule Commonly Utilized in Wound Care and HBOT
• Skin Substitutes - What’s New in 2026? Navigating CMS Payment Changes
  
• Patient Education in Wound Care and Hyperbaric Oxygen Therapy
• Telehealth in Wound Care - Evidence and Best Practices
• Global Surgical Transfer of Care to the Wound Clinic