On October 31, 2025, the CMS issued a Final Rule that announces final policy changes for Medicare payments under the Physician Fee Schedule and other Medicare Part B issues effective on or after January 1, 2026.
Even though we have submitted numerous comments (ASIPP’s detailed comment letter), letters, and congressional requests, CMS has not made any changes in the Final Rule compared to the proposed rule. There are numerous misinterpretations, consequently resulting in errors to the payments.
PHYSICIAN PAYMENTS
Conversion Factor
- Beginning in January 2026, there will be two separate conversion factors (CF): one for qualifying alternative payment model (APM) participants (QPs) and one for physicians and practitioners who are not QPs.
- In 2026, the CF will be $33.57 for QPs and $33.40 for non-QPs. These amounts represent increases of 3.8% and 3.3%, respectively, compared to the 2025 CF of $32.35.
- The CF update is primarily based on three factors:
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- A statutory update in the Medicare Access and CHIP Reauthorization Act that provides a 0.25% CF increase for non-QPs and 0.75% increase for QPs
- A 0.49% budget neutrality adjustment increase
- A one-time 2.5% increase due to the budget reconciliation legislation
Efficiency Adjustment
CMS finalized its proposal to apply an efficiency adjustment to non-time-based codes and services. As such, the agency will apply a negative 2.5% reduction to the work relative value unit (RVU) and the corresponding intraservice portion of physician time for non-time-based services. The efficiency adjustment will not apply to evaluation and management, care management, behavioral health, new codes, and any services on the Medicare Telehealth Services List.
Modifications to Indirect Practice Expense Methodology
CMS finalized its proposal to revise the methodology for allocating indirect practice expense (PE) costs for facility-based services by reducing the portion of facility PE RVUs by half the amount allocated to non-facility-based services. Previously, allocation was equal in both settings.
Indirect practice costs include expenses such as rent, administrative staff, scheduling, and billing and coding. CMS cites stakeholder concerns that paying both the physician and the facility for the same indirect costs may result in duplicative payment.
This shift in resources from facility to non-facility practices shifts reimbursement from one to the other. Non-facility practices will experience an increase in reimbursement while hospital-based practices will see a decrease in reimbursement.
Specialty Impact
As a result of these sweeping methodology reforms, on average, the interventional pain management specialty will experience a payment differential based on the physician’s practice setting.
- Physicians that practice in a facility setting (hospitals and ASCs) will see a reimbursement decrease of approximately 11%.
- Physicians in independent practices and office settings will see a reimbursement increase of approximately 7% to 10% for services provided in office settings, including procedures and E/M services.
- Unfortunately, for independent physicians providing services in ASCs, which is mistakenly considered as a facility as ASCs do not provide any benefits for practice expenses, there will be reimbursement decreases of 8% to 11% for any services provided in ASCs.
Telehealth
CMS finalized most telehealth policies as proposed:
- Streamlined Telehealth Services List: CMS will simplify the process for adding services to the list by removing the “provisional” and “permanent” distinction and focusing the review solely on whether the service can be effectively delivered via two-way audio-video.
- Removal of Frequency Limitations: Frequency limits for subsequent inpatient, subsequent nursing facility, and critical care consultation telehealth services will no longer be in place.
- Permanent Virtual Direct Supervision: For services requiring direct supervision, CMS will permanently allow this supervision to occur through real-time audio and visual interactive telecommunications (not audio-only).
The agency did revise the provision on the teaching physician policy and will allow teaching physicians to have a virtual presence in all teaching settings, in clinical instances when the service was furnished virtually, on a permanent basis.
Quality Payment Program (QPP)
CMS’ proposed rule limited changes to QPP in an attempt to provide stability to the program. As such, CMS finalized its proposal to keep the Merit-Based Incentive Payment System (MIPS) performance threshold at 75 points through the 2028 performance period/2030 MIPS payment year.
Ambulatory Specialty Model (ASM)
CMS has proposed the Ambulatory Specialty Model (ASM) to hold specialists financially accountable for managing chronic conditions in Original Medicare, focusing on low back pain and congestive heart failure. The model begins January 1, 2027, and runs through 2031, with payment adjustments starting in 2029.
Specialists—including anesthesiology, pain management, neurosurgery, orthopedics, and PM&R—would face payment adjustments from –9% to +9%, based on performance in disease management, adherence to clinical guidelines, and care coordination. However, CMS plans to use a “redistribution percentage” of 85%, ensuring Medicare savings by reducing total physician payments, unlike MIPS or the Hospital VBP program.
CMS refused to make any changes to Ambulatory Service Model for low back pain management as we have requested.
Summary of CMS Payment Rules
This summary highlights the good, bad and the ugly.
Good:
- Conversion factor increase of 3.6% to 3.8%.
- Payment increases of approximately 10% for office procedures and 7%–10% for evaluation and management (E/M) services.
- 2.6% payment increase for Ambulatory Surgery Center (ASC) services.
Bad:
- No permanent extension of telehealth services, despite multiple established rules. However, our sources indicate telehealth is included.
- A 2.5% efficiency adjustment applied to work RVUs for non-time-based services.
Ugly:
- 8%–10% reductions in physician payments for services provided in hospitals or ASCs. Our sources indicate telehealth is included.
In addition, physicians continue to face increasing administrative burdens, including preauthorizations, expanding Medicare regulations through LCDs (which are adopted by Medicare Advantage Plans, Medicaid, and incorporated into private medical policies), and frequent audits. At any given time, approximately 30% of interventional pain physicians are under audit. This has resulted in significant time spent on documentation, preauthorizations, and adherence to the appropriateness criteria set by LCDs and medical policies.
This is not a realistic assessment, given that physician payments have already decreased by 33% since 2001. The situation is further compounded by an ever-growing number of rules, regulations, and administrative burdens associated with EMRs—and now AI. Physician workload continues to rise, not fall. Remember the concept of “pajama time,” as many physicians work late into the evening to complete their documentation.
- The proposed conversion factor increase is only a temporary measure and may be clawed back, similar to the post-COVID cuts that followed payment increases under the Trump Administration.
- ASCs are being grouped with hospitals, despite being overwhelmingly owned and operated by independent physicians.
- ASCs essentially function as extensions of office practices.
- Independent physicians providing services at hospitals and ASCs are inaccurately classified as hospital-based physicians.
ASIPP will be providing you with additional analysis and is considering providing a webinar to highlight the key changes in 2026 Physician Fee Schedule for interventional pain management community.
2026 Fee Schedules
2026 Final Physician Fee Schedule IPM Codes
2026 Proposed ASC Fee Schedule IPM Codes