Prognosticating on the CY 2026 Medicare Physician Fee ScheduleProposed Rule
It’s that time of year again as we anticipate the release of the annual update to the Medicare Physician Fee Schedule (PFS) by the Centers for Medicare and Medicaid Services (CMS). The proposed rule is usually published around July 1; however, rumors suggest that this year it will not be released until after July 4. Calendar year (CY) 2026 marks the first proposed rule for the fee schedule of the second Trump Administration — an administration that has taken unprecedented steps to reshape the Department of Health and Human Services (HHS). It is expected that HHS Secretary Robert Kennedy Jr. will continue in the same direction and attempt to put the “Make America Healthy Again” (MAHA) stamp on the CY 2026 Medicare PFS Proposed Rule.
Five Themes to Watch for in the
CY 2026 Medicare PFS Proposed Rule
Five key proposals, policies, or themes to watch for in the CY 2026 Medicare PFS Proposed Rule are outlined below.
1. ANNUAL PAYMENT UPDATE
The 2026 update to the Medicare conversion factor (CF) is expected to be complicated.
CY 2025 marked the fifth consecutive year of Medicare CF reductions. Due to multiple factors, CY 2026 could be a particularly complex year for the annual update to the Medicare CF.
The yearly update to the Medicare CF can be affected by various factors, including statutory requirements and budget neutrality rules. Budget neutrality is a federal rule that mandates any estimated increases of $20 million or more in the fee schedule be offset by decreases elsewhere.
By law in 2026, for the first time, Medicare must implement two separate updates to the Medicare CF, depending on whether the clinician is successfully participating in an advanced alternative payment model and thus qualifies for the higher 0.75% update versus the lower 0.25% update that applies to all other clinicians. The House version of the Reconciliation bill included a payment reform proposal to replace the two-CF update, which will begin in 2026 with a single update tied to the Medicare Economic Index (MEI). This was not included in the Senate version of the bill released last week. Therefore, potential Congressional action could alter the 2026 update.
Additionally, if the agency decides to rebase the MEI, a data update that has been postponed for multiple years, this could have a ripple effect on the Medicare CF, as well as triggering adjustments to practice expense (PE) relative value units (RVUs) and malpractice RVUs. Currently, MEI is based on a 2006 base year. Updating the MEI would help to ensure it better reflects current practice costs.
These multiple moving parts, which impact overall payment rates, may make it difficult to fully understand the overall impact of the fee schedule on CY 2026 payment rates.
2. TELEHEALTH AND REMOTE MONITORING SERVICES
Telehealth policies remain uncertain. Advocates urge the agency to make remote supervision permanent. Remote monitoring codes are expected to expand in 2026.
During the pandemic, Congress implemented several flexibilities to facilitate the widespread use of telemedicine. These flexibilities have been extended several times. Absent Congressional action, these flexibilities will expire on September 30, 2025.
While concerns have been raised about the costs of making telehealth flexibilities permanent, the expansion of telehealth has generally received bipartisan support.
In the CY 2025 Medicare PFS Final Rule, CMS extended through December 31, 2025, flexibilities that allowed physicians to provide direct supervision remotely. The agency made remote supervision permanent for a subset of services that it deemed to be low risk.
Telehealth advocates would like to see CMS make remote supervision permanent for all services. The agency may delay any decision until the final rule is issued to see if Congress acts.
On a related note, the CPT Editorial Panel approved several changes to expand and revise a family of remote monitoring codes. These changes will be effective on January 1, 2026. CMS is expected to publish proposed values for these codes in the upcoming proposed rule.
3. ARTIFICIAL INTELLIGENCE (AI)
The Medicare agency may outline its policies and priorities related to AI.
·Through executive orders and other actions, the Trump Administration has identified the advancement of AI in all sectors as a national priority. It is keen to take the lead on oversight of AI and create an environment light on regulations. Other HHS agencies, such as the Food and Drug Administration and the National Institutes of Health, have indicated their plans for using AI. Less has been heard from CMS.
In previous PFS rules, CMS has written about the challenges it faces in setting rates for AI-enabled medical services.
With the ongoing growth of AI in the healthcare sector, stakeholders are seeking insight into CMS’s plans for creating a reimbursement pathway for AI. The agency might also discuss how AI will be integrated into their operations and programs (e.g., claims review, payment models).
4. MAHA ALIGNMENT
Secretary Kennedy may try to align Medicare PFS policies with the priorities of the MAHA movement. The Secretary has raised concerns about the American Medical Association (AMA) RVS Update Committee (RUC) process not being aligned with MAHA priorities.
The MAHA movement, led by Secretary Kennedy, prioritizes addressing chronic disease with a focus on prevention, food quality, and reducing exposure to environmental toxins. The Secretary has been overhauling programs across HHS to better align with MAHA priorities. Recent examples include dismantling the Advisory Committee on Immunization Practices, efforts to remove petroleum-based dyes from food, and his initiatives related to autism.
It is anticipated that the upcoming proposed rule will include efforts to put the MAHA stamp on the Medicare program. In recent proposed rules, CMS has focused efforts on expanding codes and payment policies related to primary care and chronic care management. This trend may continue and be further expanded under the Trump Administration.
The AMA plays a significant role in yearly updates to the fee schedule. Historically, CMS has accepted the vast majority of recommendations for work relative value units (RVUS) and practice expense inputs from the RUC. In years past, CMS has also accepted and integrated data from the RUC’s Physician Practice Information Survey. The Secretary has been vocal in his criticism of the RUC’s influence, arguing that it is biased towards incentivizing costly surgeries rather than combating chronic disease.
Previous administrations have discussed reducing the role of the RUC but have failed to find alternatives. This administration has demonstrated its willingness to dismantle existing systems, even if alternatives are not yet in place. Stakeholders will be watching closely to see if the Secretary makes moves to alter the role of the RUC in the fee schedule process.
5. PURGING DIVERSITY MEASURES AND NEXT STEPS ON PAYMENT MODELS
On the quality front, continued removal of diversity, equity, and inclusion (DEI) measures promoted by the Biden Administration is expected. We may also see signaling on this administration’s approach to payment models.
In his first week in office, President Trump issued executive orders to roll back DEI efforts across the public and private sectors.
The Trump Administration cancelled key health equity elements within Medicare quality programs and payment models. In February, President Trump disbanded a health equity panel examining Medicare and Medicaid.
The administration has already made arrangements to remove DEI-related and climate-related measures in Medicare quality programs and payment models. Further announcements of the rollback and removal of DEI-related measures are expected in this proposed rule.
In May, the Center for Medicare and Medicaid Innovation (CMMI) leadership unveiled a new strategy aimed at better aligning with MAHA priorities. Also discussed were increased collaboration with private payors on payment models and establishing models with downside risk. It is anticipated that, although there may not be fully formed proposals for new payment models, CMMI may provide greater details on how it plans to move forward and implement its new strategic plan.
Timeline
The timeline for the CY 2026 Medicare PFS Proposed Rule is below.
CY 2026 Proposed Rule Release
On or around July 1, 2025
Proposed Rule Comment Period
60 days
CY 2026 Final Rule Release
On or around November 1, 2025
CY 2026 Effective Date
January 1, 2026
For more information or to discuss, please contact:
Sheila Madhani, MA, MPH
Madhani Healthcare Consulting
smadhani@madhani-health.com/202-679-2977