Understanding the Annual CMS Physician Fee Schedule Final Rules: A Healthcare Industry Primer 

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• The Centers for Medicare & Medicaid Services (CMS) Physician Fee Schedule (PFS) Final Rule updates Medicare payment policies, conversion factors, and service coding annually for physicians and certain nonphysician practitioners.  
• Key components each year may include changes to Relative Value Units (RVUs), conversion factors, geographic practice cost indices (GPCIs), telehealth policy, and newly defined service codes.  
• The CY 2026 PFS Final Rule introduces many components, including reforms to high-growth spending (e.g., skin substitutes).  

Each year, the Centers for Medicare & Medicaid Services issues the final rule for the Physician Fee Schedule (PFS) that governs how Medicare reimburses professional services in the outpatient and other non-institutional settings.¹

The PFS Final Rule is the regulatory vehicle through which CMS finalizes payment policies for physician and practitioner services under Medicare Part B.  

Key elements each year may include¹: 

• The conversion factor (CF) that translates RVUs into dollar payment amounts for each service code.  
• Updates to RVUs: work, practice expense, and malpractice components. Geographic practice cost indices (GPCIs) also adjust payments by region.  
• Policy changes in coding, such as new HCPCS or CPT codes (for example, caregiver training, behavior modification, or telehealth add-ons) and scope-of-practice refinements.  
• Telehealth policies: eligible services, locations, practitioner types, and supervision rules.  
• Relationship to broader Medicare programs (eg, the Merit-based Incentive Payment System (MIPS), the Medicare Shared Savings Program (MSSP), and alternative payment models (APMs)). 

Specifically in the CY 2026 PFS Final Rule (CMS-1832-F), skin substitutes were a major focus. CMS highlighted efforts to rein in “high-growth spending,” particularly in the skin substitute sector, noting Medicare spending rose from $256 million in 2019 to over $10 billion in 2024. CMS expects to reduce spending by $19.6 billion in 2026 via payment reclassification.¹

For physicians, coders, practice managers, and healthcare business stakeholders, understanding the PFS Final Rule each year is essential for several reasons: 

• Revenue forecasting: Changes in the conversion factor or RVUs can affect reimbursement for thousands of CPT/HCPCS codes. 
• Coding compliance: New or revised codes (eg, caregiver training, advanced primary care management) mean updating billing systems and staff workflows to ensure accurate claims. 
• Strategic positioning: Practices participating in APMs or QPs must monitor the dual-factor conversion model and alignment of services with value-based care incentives. 
• Clinical service design: Policies targeting high growth areas (such as wound care skin substitutes) signal payers’ attention and may impact supply-chain selection, documentation requirements and utilization review. 
• Regulatory alignment: The Final Rule’s tie-in with telehealth, behavioral health, and social-determinants-of-health initiatives means nontraditional services (like caregiver training or community health worker support) are increasingly part of the billing landscape. 

The CMS Physician Fee Schedule Final Rules offer a comprehensive annual roadmap of Medicare payment policy, coding changes, and practice-management implications. By staying current with each year’s rule, clinicians, coders, and healthcare business stakeholders can align operations, ensure compliance, and optimize revenue in a dynamic regulatory landscape. 

1. Centers for Medicare & Medicaid Services. Calendar Year (CY) 2026 Medicare Physician Fee Schedule Final Rule (CMS-1832-F). CMS Newsroom Fact Sheet. October 31, 2025. Accessed November 24, 2025. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2026-medicare-physician-fee-schedule-final-rule-cms-1832-f