The Centers for Medicare & Medicaid Services (CMS) released the Medicare Physician Fee Schedule final rule for 2026 on October 31, 2025.1 The rule finalizes physician reimbursement and policy reforms under the Physician Fee Schedule as well as changes to reporting requirements and policy updates for the Quality Payment Program.
The Association for Clinical Oncology (ASCO) will continue to analyze the final rule and its impact on cancer care before implementation on January 1, 2026. Initial takeaways from the final rule for cancer care providers are included below.
Conversion Factor
As required by statute, beginning in January 2026, there will be two separate conversion factors: one for qualifying alternative payment model participants (QPs) and one for physicians and practitioners who are not QPs. In 2026, the conversion factors will be $33.57 for QPs and $33.40 for non-QPs. These amounts represent increases of 3.8% and 3.3%, respectively, compared to the 2025 conversion factor of $32.35.
The conversion factor update is primarily based on three factors:
- A statutory update in the Medicare Access and CHIP Reauthorization Act that provides a 0.25% conversion factor increase for non-QPs and 0.75% increase for QPs
- A 0.49% budget neutrality adjustment increase
- A one-time 2.5% increase due to the budget reconciliation legislation
Efficiency Adjustment
CMS finalized its proposal to apply an efficiency adjustment to non-time-based codes and services. As such, the agency will apply a negative 2.5% reduction to the work relative value unit (RVU) and the corresponding intraservice portion of physician time for non-time-based services. The efficiency adjustment will not apply to evaluation and management, care management, behavioral health, new codes, and any services on the Medicare Telehealth Services List.
In response to ASCO’s comments on the proposed rule, CMS will exempt drug administration codes for 2026 only. ASCO will work closely with the agency to urge them to extend the exemption beyond 2026.2
Modifications to Indirect Practice Expense Methodology
CMS finalized its proposal to revise the methodology for allocating indirect practice expense costs for facility-based services by reducing the portion of facility practice expense RVUs by half the amount allocated to non-facility-based services. Previously, allocation was equal in both settings.
Indirect practice costs include expenses such as rent, administrative staff, scheduling, and billing and coding. CMS cites stakeholder concerns that paying both the physician and the facility for the same indirect costs may result in duplicative payment.
This shift in resources from facility to non-facility practices shifts reimbursement from one to the other. Non-facility practices will experience an increase in reimbursement while hospital-based practices will see a decrease in reimbursement.
Specialty Impact
As a result of these sweeping methodology reforms, on average, the hematology/oncology specialty will experience a payment differential based on the physician’s practice setting. Physicians that have practices in a facility setting will see a reimbursement decrease of approximately 11%, compared to physicians in community settings who will see a reimbursement increase of approximately 6%. These are averages for the specialty overall; individual reimbursement will vary based on practice location, geography, and service-mix billed.
Telehealth
CMS finalized most telehealth policies as proposed:
- Streamlined Telehealth Services List: CMS will simplify the process for adding services to the list by removing the “provisional” and “permanent” distinction and focusing the review solely on whether the service can be effectively delivered via two-way audio-video.
- Removal of Frequency Limitations: Frequency limits for subsequent inpatient, subsequent nursing facility, and critical care consultation telehealth services will no longer be in place.
- Permanent Virtual Direct Supervision: For services requiring direct supervision, CMS will permanently allow this supervision to occur through real-time audio and visual interactive telecommunications (not audio-only).
The agency did revise the provision on the teaching physician policy and will allow teaching physicians to have a virtual presence in all teaching settings, in clinical instances when the service was furnished virtually, on a permanent basis.
Average Sales Price: Units Sold at Maximum Fair Price: In the final rule, CMS affirms that it will incorporate Maximum Fair Prices for drugs selected for price negotiation under the Inflation Reduction Act into the calculation of Average Sales Price for those drugs effective January 1, 2026. ASCO supports the goal of reducing prescription drug costs, especially for cancer drug treatments; however, the Association has serious concerns this provision will have negative and unintended consequences for people with cancer and oncology clinicians.
Quality Payment Program
CMS’ proposed rule limited changes to the Quality Payment Progra in an attempt to provide stability to the program. As such, CMS finalized its proposal to keep the Merit-Based Incentive Payment System performance threshold at 75 points through the 2028 performance period/2030 Merit-Based Incentive Payment System payment year.
Stay tuned for additional analysis from ASCO and a webinar highlighting key changes in the 2026 Physician Fee Schedule for the cancer community.
ASCO asserts that the existing Medicare physician reimbursement system is unsustainable, and the Association is calling on Congress to reform it. Join ASCO’s call by using the Act Network to contact your lawmakers on this important issue.3
References
1. Centers for Medicare & Medicaid Services: https://public-inspection.federalregister.gov/2025-19787.pdf. Accessed November 7, 2025.
2. ASCO in Action: https://www.asco.org/news-initiatives/policy-news-analysis/2026-medicare-physician-hospital-outpatient-reimbursement-updates-comment-letters. Accessed November 7, 2025.
3. ASCO Act Network: https://asco.quorum.us/campaign/108832/?intcmp=ml_ascoorg_act_advocacy_site_ascoinaction%28aia%29newsletter_mem_Domestic_dom_103125____aware_text_. Accessed November 7, 2025.
