2026 Medicare Physician Fee Schedule: What to know about the rule

Most doctors of optometry will see a slight pay increase under the 2026 Medicare Physician Fee Schedule (PFS) as the AOA continues to stress a stable pay structure from the nation’s largest health insurer. 

Published by the Centers for Medicare & Medicaid Services (CMS) on Oct. 31, the Medicare PFS Final Rule announced a slew of changes taking effect on Jan. 1, 2026, to not only the Medicare conversion factor but also telehealth services, facility setting practice expenses, code valuations, quality payment program (QPP) measures and thresholds, and more.  

Last-minute advocacy by the AOA and other physician organizations ensured the 2.5% pay increase was included as part of H.R. 1, reversing an anticipated statutory cut for 2026. These efforts are the groundwork for long-term reforms that would mandate annual positive pay updates consistent with inflation. This legislation is reflected in the final rule.   

In addition, CMS finalized other provisions that also impact Medicare pay and made several other policy changes outlined by Medicare’s final rule. Below is a roundup of pertinent 2026 PFS changes and the AOA’s advocacy: 

Facility setting practice expense reduction 

CMS opted to reduce physician pay rates for services performed in facilities, e.g., hospitals or ambulatory surgical centers. Beginning in 2026, CMS will reduce the portion of the facility practice expense (PE) relative value units (RVUs) allocated based on work RVUs to half the amount allocated to non-facility PE RVUs. The AOA and other physician groups raised concerns with CMS’ proposed rule, yet the agency finalized the reduction. 

Telehealth services 

CMS streamlined the review process for adding services to the Medicare Telehealth Services List by removing the distinction between “provisional” and “permanent” services, making all services included on a permanent basis. The AOA has supported this proposal. 

Efficiency adjustment 

CMS will apply a 2.5% decrease to the work RVUs and physician intra-service time for nearly 9,000 physician services expected to see efficiency gains from technology and practice changes. As stated in its final rule, CMS believes time assumptions built into the valuation of many services are inflated and, therefore, finalized an “efficiency adjustment” that applies to all codes with a few exemptions: 

• Standalone evaluation and management (E/M) services are exempt regardless of whether the E/M visit is billed based on time or medical decision-making.
• Eye exam codes are exempt to this adjustment.
• Time-based codes, services on the Medicare Telehealth Services List and new codes for 2026 are exempt. 

The CMS will apply this efficiency adjustment to the intraservice portion of physician time and work RVUs every three years. The adjustment will impact most surgical specialties, radiology and pathology by reducing their overall payments. 

Code valuations 

CMS will use their proposed work RVU of 0.29 for CPT code 92284, as opposed to the RUC-recommended crosswalk to CPT 92282 with a work value of 0.32 RVU. The AOA supported the CMS proposal to accept the RUC-recommended direct PE inputs for CPT code 92284 but opposed the CMS proposed work RVU of 0.29 for CPT code 92284. 

QPP updates and MIPS 

CMS will maintain the Merit-based Incentive Payment System (MIPS) performance threshold to avoid a 9% penalty at 75 points for the CY 2026 performance period (2028 MIPS payment year) through the CY 2028 performance period (2030 MIPS payment year). 

CMS also adopted a two-year informational-only feedback period for newly implemented MIPS cost measures.  

Lastly, MIPS-eligible clinicians must adhere to updated cybersecurity requirements, including maintaining an inventory of connected devices and performing a security risk assessment.  

Primary open-angle glaucoma (POAG): Optic nerve evaluation 

CMS finalized an AOA-supported revision that would clarify that evaluations must occur during the measurement period, rather than “within 12 months.” 

Diabetes eye exam 

CMS will not remove the MIPS CQM collection type for this measure in order to support MIPS reporting for smaller and rural practices, in alignment with the AOA’s concerns over revision language. 

POAG reduction of IOP 

CMS finalized changes to measure Q141 with a 1-year delay in implementation. The change will be included in the measure specification for the CY 2027 performance period (2029 MIPS payment year). The AOA will provide additional information to affected physicians.