CMS fee schedule updates! And what to do about it

While you were trick or treating, CMS released its CY 2026 Physician Fee Schedule Final rule. Here’s the link.

And the highlights:

+3.77% conversion factor
-50% PE allocation to RVUs for facilities
$127.28 flat reimbursement per cm2 for all skin subs
-2.5% efficiency adjustment for non-time based codes

There are some subtleties, but what we are importantly talking about today is what to do about it.

There are two options:

1. Do nothing and hope your financials magically improve anyways or don’t take a hit.

2. Breakout the spreadsheet, huddle the management team, quantify the impact, and make adjustments.

3. Ok, this one is a bonus… our Forward Slash / Health Operating System is specifically designed to address these changes so that you will never be caught off guard or wondering how to react to a reimbursement change again.

This is going to read like a checklist or step by step to get a basic model together. Once a model is built, you can see your shortfall or upside.

For a shortfall, you will want to adjust to make up for the gap.

For upside, decide how you will leverage the change to make you’re business stronger.

The baseline

• Pull your financials Year to Date

• Pull your operational metrics for November and December 2024

• Apply your current year financial results to your operational metrics from last year to project November and December

  • You can add a growth factor to the ops numbers if you have grown this year

• Drill down to Service Line and CPT code so you can apply changes

• Make sure you have payers listed as well

  • These are Medicare changes

• Great! Now you have your baseline

Adjustments

• Look to see which changes to the Fee schedule will impact you.

  • If you have an ASC, you will be getting an adjustment based on the PE factor changes

  • If you have procedures that will be impacted by the efficiency adjustment, identify those

  • Skin subs? Etc.

• If you anticipate any growth in 2026, determine that number

• At this point you should have everything mapped out so that you know where to make your adjustments

Scenarios

• Create a projected 2026 tab by month

• For each impacted CPT and service line, apply the relevant growth factor and CMS adjustment to the appropriate payer

And Voila! You have an impact scenario or scenarios for the CMS payment changes.

Skin subs have been hit the hardest, with some impact for heavy procedure based practices, especially those in facilities.

But now, with the scenario mapped out, you can make strategic decisions based on numbers and reality. Not just based on hope and gut feelings.

This has been a huge shift for the practices we work with and is the focus of the Forward Slash / Health Operating System. Creating systems to react strategically to shifts in the market, payer landscape, and unique business challenges.

Here’s to your success!

Wrapping up

CMS is gonna CMS. Make sure you are prepared to respond proactively and strategically to their changes. Create financial scenarios to see the impact to your practice. With the numbers in front of you, you can make operational adjustments to help meet your short and long term goals.

Disclaimer: The content provided is intended for educational purposes only and does not constitute financial or legal advice. This content is not intended to create, and receipt of the launch guide does not constitute, an attorney-client relationship. While efforts have been made to ensure the accuracy of the information presented, it may not necessarily reflect the most current legal developments or regulations and does not provide a complete representation of all associated legal and compliance considerations for any given topic. Therefore, readers are encouraged to seek professional legal advice or consult with appropriate professionals regarding specific legal issues or concerns related to their individual circumstances.