Key updates on 2026 Physician Fee Schedule proposed rule

On July 14, 2025, the Centers for Medicare and Medicaid Services (CMS) released the CY2026 Physician Fee Schedule Proposed Rule that announces and solicits public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2026.

As part of the rulemaking process, APA Services is analyzing the proposed rule and will submit a comment letter to CMS by September 12, addressing the agency’s proposed changes.

APA Services will keep psychologists up to date on the many proposed policy changes impacting behavioral health services for 2026. APA Services has been engaging with CMS on several specific proposals to promote access to behavioral health services. Here are just a few of the proposals CMS is putting forward that will improve care:

• A new MIPS Value Pathway (MVP) for Neuropsychology.
• Policy change to make services currently on the provisional telehealth list permanent.
• Policy change to permanently adopting a definition of direct supervision that allows “immediate availability” of the supervising practitioner via two-way audio/video communication.

Here are a few CMS proposals that APA does not support and will be recommending CMS not implement or change.

• Policy proposal to delete the Social Determinants of Health (SDOH) Assessment code.
• Proposal to continue to carrier price the Remote Therapeutic Monitoring (RTM) supply CPT code 98978 for Cognitive Behavioral Therapy (CBT). We recommend CMS adopt the RUC recommendation.
• Proposal to continue to carrier price the Digital Mental Health Treatment (DMHT) supply HCPCS code G0552.

Psychologists should see Medicare reimbursement increases for the vast majority of their outpatient services but may see decreases in facility reimbursement rates if all of the proposals in the rule are finalized. These changes in reimbursement may be impacted by a host of different factors and CMS proposals.

Efficiency adjustment

Referencing external research suggesting the time and intensity of provider work decreases as practitioners gain familiarity with certain procedures and services, CMS proposes a -2.5% efficiency adjustment for non-time-based services, which the agency proposes to apply to work relative value units (RVUs) and the corresponding intraservice portion of provider time. Examples of time-based services that would be exempted from this adjustment include behavioral health services, E/M visits, care management services, services on the CMS telehealth list, and certain maternity codes.

Indirect practice expense adjustment

CMS is proposing to modify the indirect practice expense methodology to redistribute indirect practice costs from facility-based services to non-facility-based services. The change in practice expense methodology, utilizing 50% of the physician’s work of facility-based services in the indirect cost method, will result in decreased facility reimbursement and more significant sites-of-service variation. As a result, CMS estimates specialties furnishing care in a hospital-based (or other facility) setting will experience a decrease in reimbursement on average, while those practicing in a freestanding (nonfacility) will generally receive increases, though the impact on any individual clinician or practice will depend on the mix of services provided.

Conversion factor

The conversion factor is used to turn code values into payment amounts and is applied to almost all services in the Physician Fee Schedule. Starting in 2026, there will be two conversion factors as required under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. Under MACRA, providers who are qualifying participants (QPs)opens in new window in advanced alternative payment models (APMs) will receive a slightly higher conversion factor update and, thus, slightly higher Medicare payments in 2026 compared to providers who are not QPs.

The conversion factor for psychologists that qualify as QPs will be $33.5875, an increase from the current 2025 conversion factor of $32.3465. The 3.8% bump reflects a permanent 0.75% update, a temporary 2.5% update required by H.R. 1 (P.L. 119-21), and a 0.55% budget neutrality adjustment to account for RVU changes. The conversion factor for psychologists that do not qualify as QPs will be $33.4209, an increase from the current 2025 conversion factor of $32.3465. The 3.3% increase reflects a permanent 0.25% update, a temporary 2.5% update required by H.R. 1 (P.L. 119-21), and a 0.55% budget neutrality adjustment to account for RVU changes.

APA Services will provide details on additional policy changes within the proposed rule, APA’s position on specific issues, as well as samples of comment letters to help members prepare individual messages to send to CMS.

More information on the proposed rule will be available on a dedicated action centeropens in new window page, through state psychological associations, and APA Services’ grassroots network. While the action center is still under construction, you can sign up to be notified when the page is officially launched and to receive ongoing action alerts by going to the APA Services advocacy “Stay informed” sign-up form.

Comments on the proposed rule are due September 12, 2025.