CMS Released the 2026 Fee Schedule, and Small Practices Need to Pay Attention
On October 31, 2025, CMS released the 2026 Physician Fee Schedule Final Rule, and it’s packed with significant changes that small practices can’t afford to overlook. CMS 2026 PFS rules typically exceed 2,000 pages, but the exact page count may differ once officially published that will take effect starting January 1, 2026.
For small practices already feeling the pinch from the 2.83% reduction in reimbursements in 2025, these new changes bring even more challenges. Add in the complexities of telehealth, prior authorizations, and quality reporting, and it’s clear that 2026 will be another year of adjusting to shifting rules.
The 2026 PFS also interacts with the broader Quality Payment Program (QPP), the legislative framework created under MACRA, and ongoing pilots from the CMS Innovation Center (CMMI). These entities collectively shape coding accuracy, reimbursement methodologies, risk scoring, and reporting obligations making it essential for small practices to align their revenue cycle systems early.
In this blog, we’ll break down what you need to know about the 2026 updates, how they’ll impact your practice, and what steps you can take to stay compliant, protect your revenue, and get ahead of the changes before they take effect.
Chronological Overview of Major CMS Rule Updates
To understand where CMS is headed in 2026, it’s crucial to look at the major updates from 2025. These changes set the stage for the updates coming in 2026 and have already begun to shape the healthcare landscape.
| Rule Title | Release Date | Key Highlights | Effective Date | Impact Areas |
|---|---|---|---|---|
| Medicare and Medicaid Programs: CY 2026 Home Health Prospective Payment System Rate Update | October 31, 2025 | Updates payment rates for home health agencies; includes a 2.7% increase in payments, refinements to the Home Health Resource Groups (HHRGs), and expanded telehealth flexibilities. Addresses staffing shortages with new quality incentives. | January 1, 2026 (with some provisions retroactive to CY 2025) | Home health, Medicare Advantage, rural providers |
| Medicare Program: Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System; FY 2026 Rates | August 28, 2025 | Sets FY 2026 payment rates with a 2.9% increase for IPPS; introduces new technology add-on payments for AI-driven diagnostics and expands bundled payments for joint replacements. Includes wage index adjustments for high-cost areas. | October 1, 2025 | Hospitals, LTCHs, Medicare payments |
| Medicaid Program: Eligibility and Enrollment in Medicaid and CHIP During the COVID-19 Public Health Emergency and Beyond | July 15, 2025 | Finalizes extensions for continuous eligibility through 2026; updates redetermination processes with AI-assisted verification to reduce administrative burdens. Responds to post-PHE unwinding data. | September 1, 2025 | Medicaid/CHIP enrollment, state flexibility |
| Medicare Program: CY 2025 Medicare Advantage and Part D Final Rule | April 22, 2025 | Caps prior authorization denials at 85% approval rate; increases Star Ratings transparency and adds $5 generic drug copay cap for low-income beneficiaries. Boosts plan bids by 1.2%. | January 1, 2025 | Medicare Advantage, Part D, consumer protections |
| Medicare Program: CY 2025 Physician Fee Schedule Final Rule | November 1, 2024 (effective 2025) | 2.8% cut in conversion factor (to $32.74); expands telehealth for mental health services permanently and adds new codes for chronic care management. Includes MIPS value pathways for oncology. | January 1, 2025 | Physicians, outpatient services, telehealth |
| Medicaid Managing Care: 2025 Managed Care Final Rule | April 2, 2025 | Strengthens network adequacy standards for behavioral health; requires states to report on social determinants of health (SDOH) screenings. Increases MLR standards to 85% for Medicaid managed care organizations. | July 1, 2025 | Managed care, behavioral health, equity |
Key Takeaways from 2025 CMS Updates for Small Practices
- 2025 Conversion Factor Cut
The 2.83% reduction in 2025 reimbursement rates directly hit small practices relying on Medicare Part B. Improving billing accuracy and operational efficiency is essential to offset this financial pressure (CMS 2025 PFS). - Expanding Telehealth Opportunities
Permanent expansion of telehealth services, particularly for mental health, offers new care delivery avenues. However, rigorous attention to qualifying services and coding is necessary to maximize benefits (CMS 2025 Updates). - Prior Authorization Caps and Challenges
While the 85% approval cap on denial rates provides some relief, administrative burdens persist. Optimizing prior authorization workflows remains a priority to avoid payment delays (CMS Quality Payment Program).
Looking Ahead: Major CMS Changes for 2026
The 2026 Physician Fee Schedule Final Rule, which came out on Oct. 31, 2025, outlines the new payment adjustments, quality measures, and telehealth regulations that small practices should prepare for. Let’s dive into what’s changing in 2026 and how it impacts your practice.
- Value-Based Care: Transition to MIPS Value Pathways (MVPs)
CMS is advancing the transition to value-based care by fully implementing MIPS Value Pathways in 2026. These pathways will reward quality and patient outcomes rather than volume of services. Small practices need to ensure they have systems ready to report on specific care pathways (such as oncology and chronic care) to avoid penalties and qualify for rewards.
MIPS Value Pathways (MVPs) were mandated under MACRA as part of the long-term transition toward outcome-based reimbursement. Unlike traditional MIPS, MVPs consolidate reporting into condition-specific tracks, which CMS states will become the dominant reporting model by 2027.
| 2025 MIPS | 2026 MVP |
|---|---|
| Broad quality reporting | Focus on specific care pathways |
| Penalties for non-reporting | Increased penalties and rewards for value-based care |
- Work RVU and Efficiency Adjustments
CMS finalized a -2.5% efficiency adjustment on work Relative Value Units for many non-time-based services, which will mostly impact office visits and related codes. This means while the overall conversion factor for 2026 increases slightly, many services may see a reduction in payments. Procedural services are largely unaffected by this cut. Small practices should evaluate which services are impacted and consider adjustments accordingly.
This –2.5% efficiency adjustment is directly tied to CMS’s internal cost-containment model and the recalibration of Work RVUs, which the AMA CPT Editorial Panel updates annually. Small practices must run reimbursement simulations using the CY 2026 Conversion Factor once CMS publishes the final number in the Federal Register.
| 2025 Work RVU Adjustments | 2026 Work RVU Efficiency Adjustment |
|---|---|
| Standard adjustments to work RVUs | -2.5% efficiency cut for non-time-based services |
| Procedural services largely unaffected | Major impact on non-time-based procedures |
- Telehealth Site-of-Service Restrictions
In 2026, CMS introduced restrictions on allowed originating sites for telehealth reimbursement, reversing the broad telehealth flexibilities of prior years. Some telehealth services will only be reimbursed if delivered from eligible locations, which means small practices must ensure compliance with these site-of-service rules.
CMS also added new 2026 POS codes and clarified “originating site” vs. “distant site” rules. While behavioral health maintains permanent telehealth coverage, many non-behavioral services now require claims to originate from CMS-approved locations to qualify for reimbursement.
| 2025 Telehealth Flexibility | 2026 Site-of-Service Restrictions |
|---|---|
| Broad telehealth coverage | Restrictions on eligible locations |
| Permanent coverage for mental health | Telehealth reimbursed only from certain sites |
Steps Small Practices Should Take Now
With the 2025 and 2026 CMS rules on the horizon, small practices need to be proactive in preparing for these changes. Here’s a roadmap for staying ahead of the curve:
| Priority | Description | Actionable Recommendations |
|---|---|---|
| Billing System Updates | Integrate 2025 CPT/HCPCS codes, remove retired codes | Collaborate with EHR vendors; test claim accuracy |
| Staff Training | Educate clinicians & coders on new policies | Conduct regular workshops; use CMS resources |
| MIPS Registration | Register for MIPS MVP if billing APCM codes | Use CMS value pathway registry portals |
| Telehealth Compliance | Ensure POS coding aligns with new rules | Audit telehealth claims; verify patient eligibility |
| Prior Authorization Workflow | Implement electronic, timely prior auth processes | Upgrade software; coordinate with payers |
How to Stay Updated on CMS Regulations
Keeping up with CMS’s changes is crucial for small practices. Here’s how you can ensure you’re always in the loop:
1. Sign Up for CMS Email Alerts
Stay informed about new rule releases, changes, and deadlines by signing up for email alerts from CMS on their official website.
2. Use the Federal Register API
The Federal Register API provides real-time updates on regulations, including CMS releases. This is a great tool for staying ahead of the latest CMS rule changes.
3. Attend Industry Webinars and Training
Many industry organizations host webinars and training sessions that cover updates to Medicare billing and compliance. Attending these will help ensure your practice is up-to-date on the latest rules.
Conclusion: Preparing for the 2026 CMS Changes
The 2026 shift also marks CMS’s acceleration toward predictive, AI-supported compliance. CMS has stated in multiple rule summaries that automated claim scoring, anomaly detection, and structured reporting APIs will shape future audits meaning practices must modernize now to avoid downstream penalties.
The timeline is set. The 2026 CMS rules are finalized, and the direction is clear. Value-based care is no longer a future concept; it is the operational reality for every practice billing Medicare. Success will be determined by how quickly and effectively you can align your workflows, reporting, and financial strategy with this new standard.
Let’s be honest: keeping up is exhausting. You entered medicine to care for patients, not to decode federal regulations.
CMS rule compliance is no longer just about avoiding penalties; it directly determines reimbursement speed, claim approval probability, audit exposure, and long-term eligibility under the Quality Payment Program (QPP). Small practices that adapt early will outperform slower adopters by a measurable margin in reimbursement stability and operational efficiency. At Dastify Solutions, we turn regulatory complexity into your strategic advantage. We handle implementation while you focus on patient care.
