The 2026 Medicare Physician Fee Schedule Final Rule Is Here: Summary & Actionable Takeaways

The Centers for Medicare and Medicaid Services (CMS) has released the 2026 Medicare Physician Fee Schedule (PFS) final rule. Let's dive into this 2,500+ page mega rule and understand the opportunities coming in 2026. 

Reimbursement & Value-Based Care Changes

As proposed, CMS has finalized the two-tier conversion factor, providing 3.77 percent for qualifying alternative payment model participants (QPs) and 3.26 percent for non-qualifying participants (Non-QPs), with most PTs, OTs, and SLPs falling into the latter group. CMS finalized a reimbursement reduction described as an “efficiency adjustment,” a 2.5 percent cut to most untimed codes. CMS also finalized a site of service differential, which would reduce the practice expense portion of reimbursement for some facility-based services. 

The AMA believes these two changes will financially undermine facility-based physician-practices, calling out that 37 percent of OB-GYNs would get a cut, stating: “We’re concerned that, at a time of increasing consolidation in health care, this rule will make it harder for independent practices to remain viable parts of our health system.” At issue is how CMS calculates practice expenses, which would normally be informed by a survey conducted by the AMA; however, regulators at CMS feel the AMA has too much influence on the valuation of codes. AMA President Dr. Bobby Mukkamala is urging CMS to base its adjustments on “verifiable data.”

Physical Therapy Set for Widespread Adoption of Remote Therapeutic Monitoring

As eagerly anticipated by the rehab therapy community, new codes for remote therapeutic monitoring have been finalized! The two new codes available for musculoskeletal monitoring are:

98985: Remote therapeutic monitoring (e.g., therapy adherence, therapy response, digital therapeutic intervention); device(s) supply for data access or data transmissions to support monitoring of musculoskeletal system, 2-15 days in a 30-day period

98979: Remote therapeutic monitoring treatment management services, physician or other qualified health care professional time in a calendar month requiring at least 1 real-time interactive communication with the patient or caregiver during the calendar month; first 10 minutes

Later in the rule, CMS designates these codes as “sometimes therapy” codes, which would need to be part of a therapy plan of care to be used by a physical or occupational therapist, consistent with the existing RTM codes. 

Keen observers of the proposed rule commented to CMS that some of the changes adopted by the AMA CPT editorial board were not displayed in the proposed rule. CMS addresses this discrepancy in the finalized rule, stating: “We will be adopting all descriptors, guidelines, prefatory language, and parenthetical changes made to the Remote Monitoring section of the 2026 edition of the CPT codebook. Please refer to the CPT codebook for additional information.” This is a critical piece of instruction for those wishing to stand up an RTM program in 2026. The rule misses many of the three pages of instructions that are available in the 2026 AMA CPT Manual, including that 98975 can be reported after only two days instead of the previously required 16-day threshold.  

CMS Finalized New Innovation Models

With the Transforming Episode Accountability Model (TEAM) poised to take effect on January 1, 2026, CMS has finalized the new Ambulatory Specialty Model (ASM), which will take effect on January 1, 2027, and will include episodes for low back pain and heart failure. The model is mandatory for outpatient providers meeting the threshold and will run for five years. 25 percent of Core Based Statistical Areas (CBSA) will be selected, and the list will be announced in December. More details are available at CMS’s ASM Homepage.

Telehealth Changes Finalized—PT & OT Are Left Out

Telehealth codes used by PTs, OTs, and SLPs have been added on a permanent basis to CMS’s List of Telehealth Services. However, PTs, OTs, and SLPs are not able to be reimbursed for outpatient therapy delivered via telehealth since the waiver expired on October 1, 2025. For this to change, Congress must pass legislation allowing outpatient therapy to be provided via telehealth and for PTs, OTs, and SLPs to be approved providers. Until this happens, many providers are pausing their telehealth programs.

While CMS removed frequency limitations on telehealth, they are choosing not to renew other key flexibilities. Since 2020, CMS has allowed telehealth practitioners to report and bill services using currently enrolled practice locations, even when offering services from home or another location. That rule has not been extended, which now means that providers will have to enroll each location they wish to provide service from, adding to their administrative burden going forward.

To learn more about the finalized changes, please consult the 2026 Medicare Physician Fee Schedule Final Rule (rule, factsheet).