New payment policy, coding, and reimbursement changes set forth in the calendar year (CY) 2026 Medicare Physician Fee Schedule (MPFS) final rule took effect on January 1.
The MPFS, which the Centers for Medicare & Medicaid Services (CMS) updates annually, lists payment rates for Medicare Part B services and introduces or modifies other policies and regulations that affect physician reimbursement and quality measurement.
The ACS submitted comments on September 12, 2025, in response to the CY 2026 MPFS proposed rule issued by CMS earlier in the year.1 Some provisions in the final rule, released October 31, 2025, incorporate the College’s recommendations.2 Although the final rule includes important policy changes that impact all physicians, this article focuses on those that are particularly relevant to general surgery and its related subspecialties.
Efficiency Adjustment
CMS finalized a so-called “efficiency adjustment” to the work relative value units (RVUs) and corresponding intraservice times of nearly all non-time-based services. In 2026, this efficiency adjustment is cutting work RVUs by 2.5%, and additional reductions are expected every 3 years indefinitely.
The adjustment is based on CMS’s erroneous belief that physician time and work complexity decrease as providers develop expertise in their services. However, recent research published in the Journal of the American College of Surgeons has demonstrated that this assumption is inaccurate. Rather, operative times have increased by more than 3% since 2019, as have all measures of patient complexity.3
There are many implementation concerns with this policy as well. The adjustment applies to nearly all non-time-based codes, even if they have been recently revalued or are low volume. (CMS is exempting newly created codes from this policy, based on ACS comments.) Additionally, the policy further devalues global codes, which already did not receive the corresponding adjustments to evaluation and management (E/M) services applied in 2021 and 2023, while at the same time exempting E/M codes, even though the same factors that CMS states drive efficiency in non-E/M services apply equally to E/M services.
Finally, the adjustment will surely have unintended consequences. For patients, it risks safety, given that it rewards fast, rather than high-quality surgeries. For physicians, there will be severe consequences regarding physician compensation. Many physician employment contracts are based on work or total RVUs, and reductions in these values will decrease reimbursement despite no reduction in work.
In addition to the ACS comment letter opposing the proposal, the College is actively lobbying Congress to undo the harmful effects of this policy. ACS staff is advancing a comprehensive grassroots strategy and spearheading a coalition of surgical and physician organizations.
Practice Expense Methodology
CMS finalized its proposal to reduce the portion of practice expense (PE) RVUs based on work RVUs allocated to facilities to half that of non-facilities. CMS cited concerns that equal allocation of PE RVUs between settings may no longer be correct due to the growing number of employed physicians whose overhead costs may be carried by their facility.
The ACS strongly opposed this change for several reasons. For one, hospitals, rather than physicians, are the beneficiaries of this perceived imbalance, so the MPFS is the wrong approach by which to address it. Further, the policy applies to all facility services, even if delivered by a nonemployed physician who has no employer to pay their overhead costs. This change will thus incorrectly overhaul an extremely large and fundamental portion of the MPFS.
The ACS urged CMS to withdraw its proposal and instead provide real data on how indirect costs for physician services change when delivered by an employed physician. The ACS also provided two alternative policies that would better enable CMS to address its concerns:
- Employed physician modifier and PE RVU adjustment factor
- Employed physician modifier and third PE RVU component
However, despite the ACS’s advocacy-related efforts, the change in PE methodology was finalized.
Valuation of Surgical Services
The ACS made numerous recommendations to CMS regarding new or revised values for surgical Current Procedural Terminology (CPT)* codes for CY 2025. In particular, the ACS advocated for increased reimbursement for PE inputs related to lower extremity revascularization, and the College’s comments were incorporated into the final rule.
Conversion Factor
Beginning in 2026, two separate conversion factors apply: one for items and services furnished by a qualifying Alternative Payment Model participant (QPs) and another for items and services furnished by non-QPs. The final CY 2026 MPFS conversion factor for QPs is $33.57, which is a 3.77% increase relative to the CY 2025 conversion factor of $32.35. The final CY 2026 MPFS conversion factor for non-QPs is $33.40, which is a 3.26% increase relative to the CY 2025 conversion factor.
*All specific references to CPT code and descriptions are © 2025 American Medical Association. All rights reserved. CPT is a registered trademark of the American Medical Association.
References
- American College of Surgeons. Response to the CY 2026 MPFS Proposed Rule. 2025. Available at: https://www.facs.org/media/coeb2ce2/2026-mpfs-comments.pdf. Accessed November 6, 2025.
- Centers for Medicare & Medicaid Services. CY 2026 MPFS Final Rule. 2024. Available at: https://www.govinfo.gov/content/pkg/FR-2025-11-05/pdf/2025-19787.pdf. Accessed November 6, 2025.
- Childers CP, Foe LM, Mujumdar V, et al. Longitudinal trends in efficiency and complexity of surgical procedures: Analysis of 1.7 million operations between 2019 and 2023. J Am Coll Surg. 2025;241(5):741-744.
Kate Murphy is the Regulatory and Quality Assistant, and Vinita Mujumdar is the Senior Manager of Regulatory Affairs in the ACS Division of Advocacy and Health Policy in Washington, DC.
