A pair of cuts in the 2026 Medicare physician fee schedule may have begun impacting payment for certain services delivered this calendar year, potentially leading to long-term effects on revenue for physicians with Medicare as a significant part of their payer mix.
While medicine applauded a one-year, 2.5% positive update for 2026 Medicare payment, it also expressed concern about a practice efficiency cut reducing physicians’ payment by 2.5% for the work relative value unit (RVU) for about 7,700 non-time-based services, including surgical procedures, biopsies, diagnostic imaging interpretation, and interventional pain management such as epidural injections.
The work portion represents approximately 50% of the RVU, which would equate to approximately a 1.25% reduction of impacted services. Download the full list of impacted services on the Texas Medical Association’s Medicare webpage.
The Centers for Medicare & Medicaid Services (CMS) previously asserted the efficiency cut was to address service codes that were “very likely overinflated.” In support of the work RVU cut, CMS contends it has been concerned for several years that the Medicare physician fee schedule has not accounted for efficiency gains achieved through physician experience and technological advancements.
Zeke Silva, MD, chair of TMA’s Council on Legislation, says the across-the-board practice efficiency cut could affect physicians’ bottom lines as payments for affected services are paid.
“We’re seeing the headlines saying conversion factors are going up, and we’re all feeling good about that, but if you peel that onion back a couple of layers, and you look at individual codes, there are a lot of codes that are not seeing that increase. They’re seeing a reduction because of changes in the methodology that are affecting payment for those services,” Dr. Silva said.
Additionally, CMS implemented a 50% indirect practice expense cut affecting numerous services performed in facilities such as hospitals and ambulatory surgical centers.
Physicians who perform services in facilities impacted by the indirect practice expense adjustment will experience a reduction compounded with the practice efficiency cut. The American Medical Association estimates physician payment for services performed in a facility will decrease overall by 7%.
Because CMS set up both adjustments to apply for the next three years, they’ll be in effect until the end of 2028, unless they are addressed through legislation or through regulatory means, such as a reversal of those policies in the next Medicare physician fee schedule.
Dr. Silva recommends physicians begin assessing how these cuts might affect them by doing year-to-year comparisons for each individual service’s payment between 2025 and 2026 to determine the difference in payment.
While the overall impact on a practice’s revenue is dependent in part on payer mix, Dr. Silva points out the payment comparisons might be surprising for physicians expecting a revenue increase as a result of CMS’ promised positive payment adjustment, and could help physicians project future revenues since the cuts could be in effect through at least 2028.
“It’s problematic for physicians in that they have to either adjust their budget for the next fiscal year, or they have to make adjustments in their operations to accommodate,” he said.
For more on the 2026 Medicare physician fee schedule and its impact on physicians, review the webinar TMA prepared upon the final rule’s release last November.
Phil West
Associate Editor
(512) 370-1394
phil.west[at]texmed[dot]org
Phil West is a writer and editor whose publications include the Los Angeles Times, Seattle Times, Austin American-Statesman, and San Antonio Express-News. He earned a BA in journalism from the University of Washington and an MFA from the University of Texas at Austin’s James A. Michener Center for Writers. He lives in Austin with his wife, children, and a trio of free-spirited dogs.