Medicare payment to physicians will be changing in 2026, and those providers who fail to adopt the change will leave money behind. The 2026 Medicare Physician Fee Schedule includes a 2.5% payment increase and new mandatory specialty codes that update how specialists bill Medicare. Cardiologists, pain specialists, and orthopedists treating certain chronic conditions must participate starting January 1, 2027.
These changes are significant. Providers must account for new risk models, behavioral health billing codes, and telehealth expansions. The providers must understand the involvement of participants, the time when the changes will be implemented, and the effect of payment adjustments on revenue. Understanding these changes now helps avoid compliance gaps and ensures proper reimbursement.
What Payment Increases Are Coming in 2026?
The 2026 Medicare Physician Fee Schedule delivers a 2.5% conversion factor increase for most providers, effective January 1, 2026.
Advanced APM participants receive higher adjustments:
➔ 3.83% increase for qualifying APM providers
➔ 3.62% increase for non-qualifying providers
Payment impact varies by specialty. Evaluation-focused specialties benefit most, while procedure-based practices may see small decreases due to efficiency adjustments.
Who Must Participate in the Ambulatory Specialty Model?
The Ambulatory Specialty Model (ASM) is mandatory for specialists managing specific chronic conditions, starting January 1, 2027.
Eligible Specialists
CMS targets six specialty groups:
➔ Cardiologists treating congestive heart failure
➔ Anesthesiologists managing low back pain
➔ Pain management physicians
➔ Orthopedic surgeons
➔ Neurosurgeons
➔ Physical medicine and rehabilitation specialists
Participation Threshold
Specialists treating 20 or more Medicare fee-for-service patients with congestive heart failure or low back pain over 12 months in designated geographic areas must participate.
Financial Implications
ASM introduces two-sided risk. Providers face payment adjustments based on quality metrics, cost performance, and care coordination. Payment reconciliation begins in 2029, giving practices two years to optimize performance before the financial impact.
What Changes Apply to Behavioral Health Billing?
CMS removes time-based restrictions for integrated behavioral health services billed alongside Advanced Primary Care Management (APCM).
Three new GPCM add-on codes allow:
➔ Collaborative Care Model billing without time requirements
➔ Behavioral health integration alongside APCM
➔ Reduced documentation burden for primary care practices
Such a change broadens the behavioral health access in primary care practices and enhances the reimbursement of integrated services.
How Are Telehealth and Digital Health Policies Expanding?
Medicare broadens coverage for digital health technologies in 2026.
Covered Services
➔ Digital mental health devices, including ADHD treatment tools
➔ Simplified additions to the Medicare Telehealth Services List
➔ Payment pathways for Software as a Service (SaaS) tools
CMS is also seeking input into AI tool reimbursement in outpatient care, a sign of future payment growth in the technologies of digital health platforms.
What MSSP Changes Affect Accountable Care Organizations?
Medicare Shared Savings Program rules shift for smaller ACOs starting January 1, 2027.
ACOs can participate with fewer than 5,000 beneficiaries in Benchmark Years 1 and 2, but must reach 5,000 by Benchmark Year 3. These smaller ACOs face:
➔ Reduced shared savings opportunities
➔ Capped financial exposure
➔ Eliminated health equity adjustment for quality scores (effective performance year 2025)
What Is the New Skin Substitute Payment Policy?
CMS standardizes skin substitute reimbursement at $125.38 per square centimeter across three FDA-based categories.
This replaces individual Average Sales Price payments that often exceeded $1,000/cm². The uniform rate applies to incident-to supplies, reducing payment variability and simplifying billing.
How Do ASM and Other Medicare Models Overlap?
ASM intentionally overlaps with Advanced APMs and Innovation Center models. Providers participating in multiple models receive ASM participation credit, but payment reconciliation methods to prevent double payments remain unclear.
CMS must clarify:
➔ How shared savings reconcile across models
➔ Whether ASM adjustments offset MSSP performance payments
➔ How quality reporting aligns between programs
When Do MIPS Reporting Requirements Change?
ASM participants receive exemption from traditional MIPS reporting during participation years. This exemption begins January 1, 2027, aligning with the ASM launch.
Non-ASM providers continue standard MIPS reporting under existing Quality Payment Program rules.
How Can Providers Prepare for These Changes?
Preparation requires immediate action across clinical and administrative operations.
Clinical Preparation
➔ Identify patient populations meeting ASM thresholds
➔ Review care coordination protocols for chronic conditions
➔ Assess quality metric performance gaps
Administrative Preparation
➔ Audit billing processes for new behavioral health codes
➔ Verify APM participation status for payment tier calculation
➔ Update telehealth service capabilities
Technology Requirements
Disease management and quality measures require a solid data system. Persivia CareSpace® is a real-time clinical and financial information processing platform that assists practices in identifying high-risk patients, monitoring quality indicators, and streamlining care management processes according to the new requirements.
Final Insights
The 2026 Medicare Physician Fee Schedule introduces payment increases, mandatory specialty models, and expanded digital health coverage to affect provider operations. The changes in the ASM participation, behavioral health integration, and MSSP are to be strategically planned now to embrace the revenue opportunities and prevent the compliance lapse when the rules become effective.
About Persivia
Persivia offers AI-powered population health solutions that transform regulatory complexity into revenue optimization. Its platforms provide real-time analytics on patient records, automated quality measure trackers, and care coordination solutions in compliance with CMS specifications. Further, they detect high-risk groups, preempts care requirements, and enforce proactive solutions that reflect the quality gains CMS compensates under value-based plans.
