News: CMS PFS proposed rule contains +0.25% conversion factor for APM physicians

CMS released its calendar year (CY) physician fee schedule (PFS) proposed rule, according to the American Hospital Association (AHA).

Per the fact sheet, CMS is proposing a number of critical modifications in three domains:

1. PFS rate setting and conversion factor: According to CMS, in CY 2026, there will be two separate conversion factors for providers participating in alternative payment models (APM) and those who are not. For CY 2026, the proposed conversion factor for qualifying APM physicians is +0.75%; for non-qualifying APM physicians, the proposed conversion factor is +0.25%. According to CMS, “[t]he proposed CY 2026 qualifying APM conversion factor of $33.59 represents a projected increase of $1.24 (+3.83%) from the current conversion factor of $32.35. Similarly, the proposed CY 2026 nonqualifying APM conversion factor of $33.42 represents a projected increase of $1.17 (+3.62%) from the current conversion factor of $32.35.”
2. Efficiency adjustments: CMS is proposing an efficiency adjustment of -2.5% for work relative value units (RVU) and the “corresponding intraservice portion of physician time of non-time-based services.” According to CMS, this modification would “periodically apply to all codes except time-based codes, such as evaluation and management (E/M) services, care management services, behavioral health services, services on the Medicare telehealth list, and maternity codes.” In addition, CMS has suggested moving away from the type of “low-response rate survey data” usually used to determine service valuation toward utilizing “empiric studies of time.”
3. Practice expense: CMS is also proposing to not implement the American Medical Association’s Physician Practice Information Survey data to further determine specialty-specific practice costs. “Due to several limitations with the data as described in the CY 2026 PFS proposed rule,” CMS noted in their fact sheet, “we are not proposing to implement the PE/HR data or cost shares from the AMA’s PPI and Clinician Practice Information (CPI) Survey data for 2026 rate setting.” The concerns are of a methodological/statistical nature related to “small sample sizes and sampling variation, low response rates and representativeness, potential measurement error, and incomplete data submission.” Instead, CMS proposes to “recognize greater indirect costs for practitioners in office-based settings compared to facility settings.”

The proposed rule also modifies the definition of “direct supervision” to include virtual visitations, allows federally qualified health centers to bill for telehealth services, reduces Medicare spending waste for skin substitutes, develops a new payment model with respect to chronic conditions, amongst others.

The 60-day comment period for the CY 2026 PFS proposed rule ends on September 12, 2025. 

Editor’s note: To read the AHA coverage, click here. To read the CMS fact sheet, click here. To read the CMS press release, click here.