2026 CMS Final Rule: Impact on Hospital Medicine
The CY ’26 CMS Physician Fee Schedule final rule went into effect – and it is not good news for Hospital Medicine!
The Summary: The 2026 changes will negatively impact RVUs for Hospital Medicine, which in turn will negatively impact reimbursement by ~6%. Although CMS has increased the Conversion Factor (CF) for 2026, it will be offset by downward changes to RVUs.
The Detail: The CY 2026 Conversion Factor (CF) increased for the first time in many years – to remind ourselves, CF decreased in CY ’24 and CY ’25 by -3.4 and -2.83% respectively; however, there were no substantive changes to RVU values, therefore making the -CF almost exclusively responsible for the overall revenue decline in previous two years. The final CY ‘26 CF is $33.4009 for most physicians, which represents a 3.26% increase over CY ‘25. CMS finalized a separate CF of $33.5675 for physicians participating in Advanced Alternative Payment Models (APMs), which is 3.77% increase from the FY ‘25 rate. So, this is POSITIVE adjustment!
Two NEGATIVE adjustments offsetting the POSITIVE: -2.5% efficiency adjustment that will cut RVUs for non-time-based services and will offset some of the CF benefits for Hospital Medicine providers and groups (the adjustment applies only to procedures and does not impact Hospital Medicine Evaluation & Management (E/M) codes) AND changes to the Practice Expense (PE) portion of RVUs will also impact revenue for hospitalists and other facility-based physicians.
The Table below distills the changes:
Source: CMS 2025 and CMS 2026 Medicare Fee Schedule
It has a lot of red ink! Which means the compensation conversations are inevitable – between physician enterprise leadership and hospital C-suit (in case of employed HM model) and contracted staffing HM companies and health system folks (in case of outsourced HM model).. Hospital Medicine practices should be 1) aware of these PFS changes 2) continue to innovate with care models aiming at improving efficiency The practical solutions will depend on the current HM care model – well-developed, versatile, multi-functional HM programs should be able to navigate these treacherous waters.
The big hairy question remains unanswered “How do we reconcile the physicians’ expectations of upward compensation movement Y-o-Y with the threat of dwindling down revenue felt by the health systems/hospitals?” (talk about the gusts of headwinds like this one!)
We, at Vantage Clinical Partners, thrive in such dynamic environment, and we are always available to partner with you to ensure the best possible outcome!
Val Akopov, MD MBA MHA
Principal & Chief Clinical Officer