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On Friday, October 31, 2025, the Centers for Medicare and Medicaid Services (CMS) released the CY 2026 Medicare Physician Fee Schedule (PFS) Final Rule, incorporating several recommendations CSRO made in its September 2025 comment letter.
Conversion Factor. Consistent with requirements established in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS finalized the following two conversion factors (CFs) for 2026:
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$33.5675 for items and services furnished by Qualifying APM Participants, reflecting a 3.77% increase relative to the 2025 CF
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$33.4009 for other items and services, reflecting a 3.26% increase relative to the 2025 CF
As a reminder, MACRA provides a 0.75% base payment update for items and services furnished by Qualifying APM Participants and a 0.25% base update for all other services. Additionally, the CF includes a budget neutrality adjustment of +0.49% and a temporary 2.5% increase provided under the One Big Beautiful Bill Act for CY 2026.
Efficiency Adjustment. CMS finalized its proposal to apply a 2.5% “efficiency adjustment” reduction to the work RVUs and intraservice time of non-time-based services that are assumed to accrue productivity gains over time (excluding E/M). Under the finalized policy, the adjustment – based on a 5-year lookback period tied to the MEI productivity factor – will be applied every three years. In its comments, CSRO emphasized that assumed productivity gains are not appropriate for rheumatologic care, particularly the provision of office-based medication therapy. As a direct result of CSRO advocacy, CMS exempted time-based drug administration codes from the policy – a major win for the specialty! Other rheumatologic services, however, may still be affected under the finalized efficiency adjustment (services impacted are listed here).
Practice Expense Data and Methodology. CSRO supported CMS’s decision not to rely on the flawed AMA Physician Practice Information (PPI) Survey for CY 2026 and urged the agency to ensure that future data sources are empirically validated and representative of specialty practices. CSRO also noted potential access implications of CMS’s new facility practice expense (PE) reallocation, which reduces the indirect PE weight tied to work RVUs for facility-based services by 50%. According to the final rule, this policy will shift Medicare spending toward the office setting, resulting in a 4% overall increase for rheumatology, and more specifically, a 12% decline for facility-based services, and a 6% increase for office-based services.
Provisions Related to Drugs and Biologics. CSRO commented extensively on CMS’s proposed changes to Average Sales Price (ASP) reporting and urged caution in implementing policies that could further suppress reimbursement for biologics. CMS finalized new documentation requirements for manufacturers related to bona fide service fees (BFSFs), requiring submission of supporting materials describing reasonable assumptions and fair market value (FMV) methodologies and certifying that fees are not passed through to clients. CMS also clarified that, effective January 1, 2026, units of selected drugs sold at the Maximum Fair Price (MFP) will be included in manufacturers’ ASP calculations, and the Part B Drug Payment Limit File will display MFP-based payment limits for applicable quarters. CSRO remains concerned that this policy could depress ASPs below acquisition cost for many rheumatology biologics, particularly in smaller practices, and continues discussing challenges associated with the ASP payment methodology and utilization management with CMS and Congressional lawmakers. Finally, CMS finalized new policies under the Inflation Rebate Program, including a claims-based method to exclude 340B units from Part D rebate calculations beginning January 1, 2026, and the creation of a voluntary 340B claims data repository for usability testing.
Telehealth. CSRO supported CMS’s proposal to make virtual direct supervision a permanent option, which the agency finalized, allowing real-time audio/video technology to satisfy the “immediate availability” requirement for incident-to services. CMS also simplified the telehealth list review process, eliminating “provisional” versus “permanent” designations, and retained several services, including G0136 (physical activity and nutrition risk assessment), on the Medicare Telehealth List. CMS further reiterated that practitioners furnishing telehealth from home may suppress their street address information while using the enrolled practice location.
Merit-Based Incentive Payment System (MIPS). CMS finalized several policies expected to stabilize MIPS participation and scoring. The performance threshold will remain at 75 points for 2026 through 2028. In addition, CMS finalized revisions to improve the benchmark methodology for administrative-claims quality measures beginning with the 2025 performance period, and to refine the Total Per Capita Cost (TPCC) attribution method beginning with 2026 to ensure more accurate clinician attribution. CMS also adopted a two-year informational-only feedback period for new cost measures beginning in 2026.
MIPS Value Pathways (MVPs). CMS continues to plan for the eventual transition away from traditional MIPS, though MVP participation remains optional for 2026. Regarding the Advancing Rheumatology Patient Care MVP, CSRO again opposed inclusion of the COST_RA_1: Rheumatoid Arthritis cost measure in the MVP, noting that it penalizes physicians for drug costs outside their control and offers limited value for improving care. CSRO emphasized that underlying barriers such as step therapy, the SAD Exclusion List, restrictive formularies, non-medical switching, and inadequate biosimilar reimbursement must be addressed for any cost measure to be meaningful. CMS responded that removal of cost measures may be considered through the MVP Maintenance Process and future rulemaking.
To calculate CY 2026 Medicare national average payment rates, use the applicable relative values (RVUs) in Addendum B and the conversion factors listed above.
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