What Physician Practices Must Know: CMS CY 2026 Final Rule & Its Billing Impact

The Centers for Medicare & Medicaid Services (CMS) has officially released its Calendar Year (CY) 2026 Final Rule for the Physician Fee Schedule (PFS)—a major regulatory update that will directly influence how physicians deliver care, document encounters, and get reimbursed in 2026. Every year the PFS rule reshapes the financial and operational landscape for U.S. medical practices, but the CY 2026 update stands out as one of the most consequential in recent years.

From conversion factor changes to virtual supervision permanency, from skin substitute reimbursement overhauls to site-of-service payment shifts, the rule introduces changes that can boost or reduce practice revenue depending on how prepared your billing workflows are.

This blog breaks down everything physician practices need to know — and more importantly, how USMed Billing Solutions helps practices stay compliant, avoid revenue loss, and optimize billing outcomes under the 2026 final rule.

Understanding the CY 2026 Final Rule: Why It Matters

Every year the PFS rule determines:

• How much Medicare will pay for physician services

• How RVUs (Relative Value Units) are calculated

• Which telehealth or supervision policies remain valid

• How practice expense methodology is structured

• How new or existing supplies, drugs, and services are reimbursed

• How beneficiary cost-sharing affects collections and patient behavior

In short, the rule dictates how practices earn revenue, how billing teams operate, and how sustainable your business model is.

For practices that ignore regulatory updates, the consequences can be severe:

❌ Increased claim denials
❌ Underpayments
❌ Compliance risks
❌ Incorrect billing structures
❌ Margin pressure or revenue decline

For practices that prepare early, however, the final rule provides opportunities to:

✔ Increase reimbursement
✔ Reduce errors
✔ Strengthen compliance
✔ Adjust workflows proactively
✔ Improve documentation and coding
✔ Maintain financial stability

USMed Billing Solutions works closely with U.S. physician practices to interpret the rule, apply it correctly, and align billing workflows to prevent disruptions.

Major Updates in the CY 2026 Final Rule

1. Conversion Factor Increase: A Positive Start—But Not the Full Story

CMS introduced two separate conversion factors for 2026:

• 3.77% increase for clinicians in qualifying Advanced APMs

• 3.26% increase for non-QP clinicians

On the surface, this looks like good news for most physicians. However, the conversion factor is only one element of your total reimbursement. Other changes—like efficiency cuts—can offset these gains.

What this means for your practice:
USMed Billing Solutions evaluates specialty-specific code impacts, because some procedures will still see a revenue decrease despite the higher conversion factor.

2. The -2.5% Efficiency Adjustment: A Hidden Reduction Many Practices Will Miss

CMS has finalized a -2.5% “efficiency adjustment” affecting many non-time-based services such as:

• Imaging interpretation

• Diagnostics

• Outpatient interventional services

• Long-standing services CMS believes have become “more efficient”

Even with the conversion factor increase, these reductions may cause a net loss for certain specialties—including radiology, cardiology, orthopedics, and dermatology.

What this means for your practice:
USMed Billing Solutions performs RVU-level audits to help you identify affected services and revise revenue models accordingly.

3. Site-of-Service Payment Shifts: A Major Change for Multi-Location Practices

CMS has updated its Practice Expense (PE) methodology, altering how indirect costs are allocated between:

• Facility (hospital/outpatient) settings

• Non-facility (office) settings

In simple terms:

• Hospital/facility-based services may see payment decreases

• Office-based services may see relative increases

Specialties frequently affected include:

• Cardiology

• Orthopedics

• Pain management

• GI

• Ophthalmology

• Primary care offices employing hybrid delivery models

What this means for your practice:
USMed Billing Solutions helps you determine:

• Which services should be shifted to office settings (when appropriate)

• Whether current place-of-service billing is optimized

• How to document correctly to match clinical reality

4. Telehealth & Virtual Supervision: Permanency Brings Stability

CMS has now made permanent the allowance for:

• Real-time virtual supervision (audio/video)

• Virtual presence for teaching physicians

• Continued telehealth flexibilities for RHCs and FQHCs

This is a major win for practices leveraging hybrid care models or remote workflows.

What this means for your practice:
USMed Billing Solutions reviews documentation templates and builds supervision-compliant workflows to ensure:

• Accurate coding

• Fully auditable virtual supervision processes

• No compliance risks

5. Skin Substitutes Reimbursement Overhaul: The Biggest Disruption for Wound-Care Practices

This is one of the most impactful changes in the entire Final Rule:

• Skin substitutes will now be reimbursed as incident-to supplies

• CMS expects ~90% reduction in spending

• Medicare will save an estimated $19.6 billion in 2026

For wound-care practices, podiatrists, and specialty groups utilizing biologics, this shift drastically changes:

• Supply ordering

• Documentation

• Billing pathways

• Expected reimbursement

What this means for your practice:
USMed Billing Solutions conducts workflow redesigns specifically for:

• Skin substitute documentation

• Supply tracking

• Clinical documentation requirements

• Incident-to billing compliance

6. Higher Medicare Premiums & Deductibles: Impact on Collections

Medicare beneficiaries will face increased cost-sharing:

• Part B premium increases to $202.90

• Part B deductible increases to $283

Higher out-of-pocket responsibility affects:

• Patient payment behavior

• Collections

• AR aging

• Front-desk counseling needs

What this means for your practice:
USMed Billing Solutions helps practices update:

• Counseling scripts

• Financial policies

• Payment-plan options

• Estimation workflows

How Medical Billing Operations Should Respond

To stay ahead of the CY 2026 changes, practice billing teams must take proactive steps. Here are the most important actions:

1. Update Revenue Forecasting Models

Use new conversion factor values, account for efficiency cuts, and recalculate margins for:

• High-volume CPT codes

• Specialty-specific services

• Hospital vs. office-based encounters

USMed Billing Solutions provides code-level revenue impact reports for accuracy.

2. Analyze Your Site-of-Service Mix

Determine if shifting services from facility to office settings is:

• Clinically appropriate

• Operationally feasible

• Financially beneficial

We help practices model different care delivery scenarios to maximize reimbursement.

3. Audit Wound-Care & Skin Substitute Workflows

This change is too large to delay.
We redesign:

• Supply ordering systems

• Documentation templates

• Billing pathways

4. Leverage Telehealth & Virtual Supervision

Ensure billing documentation meets updated requirements for:

• Incident-to services

• Diagnostic services

• Rehabilitation services

• Teaching physician oversight

5. Update Patient Financial Policies

Improved patient counseling will reduce future AR issues.
USMed Billing Solutions helps practices build:

• Upfront payment workflows

• Clear communication templates

• Transparent estimate processes

6. Coordinate QPP, MIPS, and APM Reporting

With different conversion factors for QPs and non-QPs, correct classification is essential.

USMed Billing Solutions helps track:

• QP status

• Submission timelines

• Documentation requirements

Recommended Action Plan for Practices (Immediate Steps)

1. Conduct internal training on the Final Rule

2. Update EMR/PMS systems for new CFs and rules

3. Audit place-of-service accuracy

4. Revise patient-facing financial documents

5. Track APM/QP status carefully

6. Update wound-care and biologic workflows

Practices that act now will be more stable when the rule goes live on January 1, 2026.

Why These Changes Matter More Than Ever

The CY 2026 Final Rule is not just another regulatory update — it is a major restructure of reimbursement logic, especially regarding:

• Practice expense allocation

• Virtual supervision

• Biologic and skin substitute payment models

• Efficiency-based RVU adjustments

Practices that wait until Q1 2026 to adjust may face:

❌ Denials
❌ Underpayments
❌ Workflow interruptions
❌ Margin compression

Practices that partner early with USMed Billing Solutions will experience:

✔ Smooth transitions
✔ Better reimbursement outcomes
✔ Fewer operational disruptions
✔ Strong regulatory compliance

Billing is no longer just a back-office task — it is a strategic function that directly determines the financial future of your practice.

Partner With USMed Billing Solutions for CY 2026 Readiness

At USMed Billing Solutions, we specialize in:

• Regulatory interpretation

• Coding optimization

• Workflow redesign

• Revenue protection strategies

• Specialty-specific billing support

We work with U.S. physicians, clinics, and multi-specialty groups to ensure smooth navigation of regulatory updates like the CY 2026 Final Rule.

If you want to safeguard reimbursements and avoid surprises in 2026, now is the time to start.