November 10, 2025
As we approach 2026, the landscape of physician reimbursement and care delivery will not be business as usual. Between new legislation, major updates to the Medicare Physician Fee Schedule (PFS), and rapid advances in artificial intelligence (AI) and care technology, healthcare delivery is entering a period of significant transition. For healthcare professionals, this means proactive planning, strategic realignment, and a clear understanding of both regulatory and operational changes ahead. It is important to take steps now to remain compliant, efficient, and financially sustainable. This overview will focus on three core areas of transformation shaping the year ahead.
- Legislative reform under the One Big Beautiful Bill Act (OBBBA)
- Policy and payment changes within the 2026 PFS
- Technology and operational evolution driven by AI and digital health
Each of these areas carries opportunities and challenges and the need for strategic adaptation.
Legislative Reform: The OBBBA
Enacted in 2025, the OBBBA represents the most comprehensive legislative package in recent years to address fiscal policy, healthcare access, and program spending. Although much of the national focus has been on Medicaid and marketplace funding, the implications for physician reimbursement are significant.
Adjustments in federal funding for Medicaid and state programs will impact how states reimburse and contract with providers.1 Practices may see shifts in payer mix, reimbursement levels, and the financial profile of their patient population.
While the OBBBA does not directly set physician payment rates, it changes the financial landscape in which providers operate. The Congressional Budget Office estimates that roughly 10 million individuals could lose coverage by 2034, including 7.5 million Medicaid participants and approximately 2 million Affordable Care Act marketplace enrollees.1 Practices reliant on Medicaid or marketplace plans will need to monitor payer communication closely and be prepared for rate adjustments, prior authorization changes, and shifting enrollment patterns.
The 2026 PFS Final Rule
One of the most significant shifts coming in 2026 is how Medicare will calculate the conversion factor. Since the PFS began in 1992, there has always been 1 conversion factor for everyone, but starting in 2026, there will be 2. This change is tied to how practices participate in Alternative Payment Models (APMs). APMs are designed to encourage accountability for both quality and cost of care. Clinicians who participate in these models at a qualifying level are known as qualifying APM participants. Qualifying APM participants will use 1 conversion factor (+0.75%) and nonqualifying clinicians will use another conversion factor (+0.25%).2,3 While the percentage differences appear small, even a few tenths of a percent can translate into substantial reimbursement shifts across thousands of services. The difference in the update rates is intentional. It signals Medicare’s ongoing push toward value-based care and rewards clinicians who participate in models designed to improve outcomes and manage overall cost of care.2
Other highlights of the final rule include an efficiency adjustment (–2.5%).2,3 The Centers for Medicare & Medicaid Services (CMS) will reduce work relative value units (RVUs) for non-time-based services, assuming operational efficiencies from digital tools and automation. This adjustment does not apply to every service code. Time-based services, such as evaluation and management or behavioral health, are excluded since they are inherently linked to clinician time.
The final rule also addresses practice expense recalibration with greater indirect expense recognition for office-based settings, while facility-based procedures could experience modest RVU reductions. Telehealth and supervision flexibilities include permanent adoption of virtual direct supervision and continued coverage for behavioral health and remote care services. There are new add-on codes for Advanced Primary Care Management services, including behavioral health integration.2
These are just a few of the final rule highlights. This year’s changes expand flexibility while reinforcing CMS’s expectation of measurable efficiency.
Technology and AI
Technology is no longer an option, it’s an expectation. AI, automation, and remote care tools are now woven into the daily operations of medical offices. AI-driven documentation tools can automatically suggest ICD-10, CPT, and HCC codes from clinical notes and are rapidly becoming a standard for compliance and audit accuracy.
Predictive analytics can identify care gaps, forecast denials, and target interventions for chronic conditions. AI is increasingly being used in revenue cycle management. Automation reduces denial rates, flag errors, and supports audit readiness.
Preparing Your Practice for 2026
As the rules shift, preparation must be both strategic and operational. Taking steps to prepare now will ensure your success during this change. Start by assessing your payer mix. Identify how much revenue comes from Medicare, Medicaid, and commercial plans. Each payer will respond differently to the OBBBA and PFS changes.
Evaluate your value-based readiness. Advanced APM participants will benefit from the higher conversion factor. Practices should revisit their capabilities for reporting, risk management, and quality metrics.
Invest in technology and training. Consider adoption of AI-enabled tools that support documentation accuracy, coding integrity, and revenue cycle efficiency. These tools must be paired with human oversight and staff training.
Finally, engage your team. Communicate the “why” behind these changes and seek their input to develop updated policies and workflows.
Preparation Is Key
The intersection of policy, payment, and technology has never been more pronounced. The OBBBA reshapes the funding landscape; the 2026 PFS updates alter the financial mechanics of care; and AI is transforming what efficiency and quality mean in practice.
These changes allow us an opportunity to streamline operations and modernize care delivery. We can no longer think of reimbursement as payment alone. The future of physician reimbursement is about performance and partnership. Those who plan now will thrive as we approach this new healthcare environment.
Join me for a live educational session on December 16, 2025 exploring:
- Detailed breakdown of the CY 2026 PFS Final Rule
- How the OBBBA impacts provider payments and state and federal programs
- AI and technology strategies that enhance efficiency and compliance
- Operational checklists and discussion of practice readiness for 2026
- www.pmimd.com/live_webinar_training/. 20% discount code OPM25
References
- One Big Beautiful Bill Act, H.R. 1, 119th Cong. (2025–2026). Accessed November 10, 2025. www.congress.gov/bill/119th-congress/house-bill/1
- Centers for Medicare & Medicaid Services. Calendar Year (CY) 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F). November 1, 2025. Accessed November 10, 2025. www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f
- American Hospital Association. CMS Issues CY 2026 Physician Fee Schedule Final Rule. October 31, 2025. Accessed November 10, 2025. www.aha.org/news/headline/2025-10-31-cms-issues-cy-2026-physician-fee-schedule-final-rule