When the Centers for Medicare & Medicaid Services (CMS) released the 2026 Medicare Physician Fee Schedule (MPFS) Proposed Rule this July, the headline was straightforward: there is an anticipated 3.62% – 3.82% increase to the 2025 conversion factor.
However, as anyone who follows these rules knows, the real story is in the details. Beneath those modest increases to the CF are new adjustments to relative value units (RVUs) and site-of-service payments that could have significant downstream effects on physician reimbursement, practice margins, and revenue cycle performance.
The total RVU for each service is determined based upon three components:
- Physician work
- Practice expense (PE)
- Malpractice expense
Adjustments to the site-of-service, known as a site-of-service differential, can affect physician reimbursement by changing the PE RVU. For example, a service provided at a site with a lower PE has a lower total RVU amount, which results in decreased reimbursement.
With reimbursement already under pressure, especially in the case of specialists, understanding these changes and shoring up compliance practices will be essential for financial stability in the year ahead.
Conversion factor: A split path in 2026
For the first time, CMS proposes two separate conversion factors: one for qualifying Alternative Payment Model (APM) participants and one for all other providers. Both proposed conversion factors (CFs) include an increase of 2.5% and a .55% budget neutrality adjustment increase. However, non-qualifying APM participants will receive a .25% increase to the CF, while qualifying APM participants will receive a .75% increase. This results in the following increases to the 2025 CF.
- Qualifying APM CF: $33.59 (a 3.82% increase)
- Non-qualifying APM CF: $33.42 (a 3.62% increase)
On paper, these updates suggest an across-the-board bump in reimbursement. However, CFs don’t operate in isolation. They interact with RVUs, and that’s where practices need to pay attention.
For years, there has been a focus on developing an APM for Radiation Oncology. The proposed 2026 changes highlight CMS’ shift towards value-based care and APM participation, with significant reimbursement implications depending on billing arrangement.
RVU adjustments: Efficiency and site-of-service cuts
Two major proposals in the 2026 rule directly affect RVUs:
Efficiency adjustment
CMS is applying up to a 2.5% reduction to physician work RVUs and intra-service times for all non-time-based services provided in CY 2026. This adjustment may have a major impact on specialties. For example, the proposed efficiency adjustment would include most, if not all, interventional radiology services.
- The rationale: As providers perform certain procedures more frequently, they become more efficient, requiring less time and intensity on each individual service.
- Time-based services like E/M visits are excluded, but technical and procedural services in fields like oncology, radiology, and surgery will feel the impact.
Site-of-service differential
CMS proposes to cut practice expense RVUs in facility settings, reflecting concerns about duplicative payments when hospitals already cover much of the overhead. For example, hospitals employ clinical personnel such as RNs, RTs, and RTTs whereas non-facility physician offices do pay these expenses.
- This disproportionately affects hospital-based specialties, while office-based practices may see relative gains.
The result? Some specialties see sharp contrasts depending on where care is delivered. The 2026 MPFS proposed rules indicates hematology/oncology faces a +6% adjustment for physician office (Place of Service 11) services, but -11% for facility services (Hospital Place of Service 22). Interventional radiology shows +7% in non-facility (POS 11) settings but -7% in facility (POS 22) settings.
For practices operating across multiple sites, the divergence in reimbursement rates could create operational and financial challenges that will need to be addressed.
What this means for practices and revenue cycles
The 2026 MPFS proposed rule showcases a long-term trend: CMS is tying reimbursement more tightly to efficiency, setting, and cost alignment. Even with a higher conversion factor, practices may still see declining reimbursement for many services due to RVU adjustments.
This is a critical time for individual specialties. A systematic review of the CPT® codes commonly used at your organization is necessary to ensure financial and operational stability for the coming year. Relevant CPT codes should be closely examined for values up or down from an RVU perspective. Any discrepancies should be addressed by engaging with the Relative Value Committee (RUC), national specialty societies, providing proposed rule comments to CMS, and writing to your state and federal government representatives.
Being proactive and involved in the update processes will work towards ensuring all services are appropriately reimbursed.
The revenue cycle implications are clear:
- Tighter margins: Practices may see unexpected payment shortfalls, particularly those reliant on hospital-based services.
- Cash flow variability: Differences between office and facility settings add complexity to forecasting and payment reconciliation.
- Denial risk: Payers in value-based models require detailed clinical documentation to justify medical necessity and quality of care. As reimbursement models shift toward value-based care, gaps in documentation are more likely to trigger denials.
Compliance as a revenue protection strategy
When reimbursement is squeezed, compliance becomes more than just a regulatory requirement — it’s a revenue protection strategy. Every claim must be supported by documentation that verifies the billed service, particularly as CMS focuses on efficiency and eliminating duplicative costs. Companies like RCCS provide tailored solutions focused on individual organizational needs, point out missed opportunities for revenue, provide industry exposure and guidance, and can help develop a plan to reach your organizational goals.
Key compliance considerations for 2026:
- Documentation Integrity: Ensure clinical notes fully support the medical necessity, intensity, and time for services, particularly non-time-based codes affected by the proposed efficiency adjustment.
- Coding Accuracy: Stay on top of RVU changes and code-specific revisions. Even small missteps can lead to denials or underpayments.
- Audit Preparedness: Conduct internal or external audits now to identify risk areas before new rules take effect.
- Education and Training: Keep physicians and coding teams aligned on documentation requirements.
- Denial Monitoring: Strengthen denial management workflows to quickly spot and correct reimbursement issues.
A checklist for practices preparing for 2026
To help organizations protect their bottom line, here’s a quick checklist:
- Review your top 20 billed services vs. the 2026 proposed efficiency adjustment list.
- Model reimbursement differences between office and facility settings.
- Update documentation templates to support high-risk codes.
- Train providers and coders on specialty-specific changes.
- Establish routine denial trend analysis to catch underpayments early.
Proactive strategy is the best defense
The FY 2026 MPFS Proposed Rule highlights CMS’ intent to refine reimbursement around efficiency and cost alignment. While conversion factor increases may sound like good news, the deeper reality is more complex. Many specialties could see reimbursement decreases that challenge financial stability.
The good news is that practices can prepare. By doubling down on compliance, improving documentation, and monitoring site-of-service impacts, leaders can safeguard reimbursement and ensure their teams capture every dollar they are owed.
For physician practices, the message is clear: reimbursement is evolving, and compliance isn’t just about avoiding penalties — it’s about protecting your financial future.
About our partnership with RCCS
Relias offers a robust library of online courses that allows you to invest in your staff’s coding education, which can positively impact your overall revenue cycle. If you require additional assistance, RCCS offers expert revenue cycle analysis and optimization to help improve your processes.
Through the partnership between Relias and RCCS, healthcare organizations gain access to invaluable expertise and resources to improve their revenue cycle and ensure compliance. Explore more insights or connect with us to learn how we can help your organization thrive in a technology-driven healthcare landscape.
About RCCS
RCCS has provided specialty medical coding, revenue cycle, and compliance consulting services, as well as educational and training materials, to the healthcare industry for over 25 years. RCCS has an extensive team of specialized coding experts and industry leaders who create and implement customized revenue cycle solutions, including billing reviews and assessments, coding compliance/documentation reviews, in-depth process mapping, and customized outsourced options.
