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LUGPA Policy Alert: CMS Releases 2026 Medicare Physician Fee Schedule Final Rule

November 2025

The Centers for Medicare & Medicaid Services (CMS) has released the CY 2026 Medicare Physician Fee Schedule (MPFS) Final Rule, updating reimbursement rates, RVU valuations, telehealth policies, and underlying payment methodologies for Medicare Part B services. While the rule includes modest conversion factor increases and long-term telehealth stability measures, it also introduces substantial efficiency and practice expense (PE) adjustments that may negatively affect revenue predictability for many surgical and procedural specialties.

Impact on Urology

CMS projects a net 0% impact on overall Medicare charges for urology. However, the details reveal significant variation:

  • Non-Facility Settings (office/ASC): Expected payment increases due to CF updates and redistribution from efficiency adjustments—benefiting independent urology groups.
  • Facility Settings (hospital-based): Significant downward pressure from PE and wRVU reductions will widen the gap between office and hospital reimbursement.

Key Provisions

1. Conversion Factor (CF) Increases

  • The qualifying APM CF increases by +0.75%, and the non-qualifying APM CF increases by +0.25%.
  • This incorporates a statutory +2.50% increase for CY 2026 and an estimated +0.49% for finalized wRVU updates.
  • Final CFs:
    • $33.5675 (QPs)
    • $33.4009 (non-QPs)
      Overall change: 3.26–3.77%.
  • Anesthesia CFs:
    • $20.600 (QPs)
    • $20.498 (non-QPs)

These increases will provide modest margin improvements for frequently billed, non-facility urology services such as cystoscopy, active surveillance, and diagnostic testing.

2. Efficiency Adjustment and Practice Expense Changes

-2.5% Efficiency Adjustment

CMS finalized a -2.5% productivity adjustment applied to work RVUs for approximately 7,700 non-time-based codes, including many core urology procedures. CMS based this cut on five-year retrospective Medicare Economic Index (MEI) productivity measures.

Notable exclusions:

  • E/M services, care management, behavioral health, maternity services (MMM global periods)
  • Telehealth-listed services
  • New CY 2026 codes
  • Diagnostic/infusion codes and certain drug administration, rehab, and remote monitoring codes

This will disproportionately affect procedural specialties, including urology, by lowering RVU values tied directly to reimbursement.

50% Reduction in Indirect Practice Expense (PE) for Facility Settings

CMS is implementing a 50% reduction in the indirect PE allocation for facility-based codes, citing evidence that current rates overstate indirect resource use in hospital and ASC settings.

  • This reduction has no phase-in period, despite substantial stakeholder opposition.
  • It may lower wRVU benchmarks used in physician compensation contracts and commercial payer negotiations.
  • CMS again declined to adopt 2024 AMA PPI/CPI data due to small sample sizes, low response rates, and incomplete cost categories, retaining 2017 PE/hour rates for CY 2026.

These combined changes could push mixed-site and hospital-based urology practices toward lower margins.

3. Professional Fee Efficiency Review Cycle

CMS will repeat the efficiency review every three years, with the next cycle scheduled for CY 2029. Office-based services generally gain under this redistribution, while facility-based services lose ground—further widening site-of-service disparities that complicate practice planning and physician compensation.

4. Telehealth Policy Changes

CMS finalized several long-term policies that solidify telehealth as a permanent tool within Medicare:

  • Consolidates permanent and provisional categories for adding new telehealth services.
  • Establishes a formal evaluation framework for future telehealth list expansions.
  • Increases the originating site facility fee to $31.85.
  • Permanently removes frequency limits on subsequent inpatient, nursing facility, and critical care telehealth visits.
  • Permanently allows direct supervision via real-time audio/video for incident-to services, diagnostic tests, pulmonary/cardiac rehab, and RHC/FQHC services (audio-only not permitted except where specified).
  • Permanently allows teaching physician virtual presence in select telehealth encounters.
  • Extends audio-only telehealth billing in RHC/FQHCs (G2025) through December 31, 2026.
  • Expands G2211 (complex E/M add-on) to home/residence visits.

These policies support hybrid care models for independent practices and safeguard access for medically complex patients.

5. RVU and Code-Specific Impacts for Urology

Key urology services affected by the -2.5% efficiency reduction include:

  • CPT 52000 (Cystourethroscopy):
    wRVU 1.49 (down from 1.53)
  • CPT 52356 (Cysto + ureteroscopy + lithotripsy):
    wRVU 7.80 (down from 8.00)
  • CPT 52649 (Laser enucleation of prostate):
    Finalized at 13.00, significantly below the RUC-recommended 14.56, due to CMS lowering intraservice time
  • CPT 55869 (Laparoscopic prostatectomy):
    wRVU 27.41, crosswalked to CPT 50543
  • New codes like CPT 52597 and the updated biopsy family (CPT 55705–55715) were accepted at RUC-recommended values.

PE updates include:

  • Added inFlow supplies for CPT 0596T/0597T
  • Revised clinical staff, equipment, and cleaning inputs for CPT 52443

6. Additional Provisions

  • CMS is seeking input on improving global surgery data accuracy, but made no major changes for 2026.
  • New post-op billing flexibility using modifier -54 and HCPCS G0559 reflects CMS’s finding that only ~28% of expected global period visits occur in practice.
  • Updated social determinants of health codes (e.g., G0136, G0019) may support expanded population health documentation.
  • The QPP introduces additional MVPs, subgroup reporting, and clarified participant definitions.
  • A new mandatory Ambulatory Specialty Model (ASM) launches in 2027 for heart failure and low back pain. Payment adjustments begin in 2029:
    • ±9% initially, scaling to ±12% by 2033.
      While not specialty-specific to urology, overlapping diagnoses may influence participation and episode attribution.

Impact on LUGPA Members

Positive Developments

  • Increased non-facility reimbursement aligns with LUGPA’s ongoing advocacy for site-neutral payment reform.
  • CF increases provide incremental financial support for high-volume office-based urology services.
  • Stable telehealth coverage is essential for chronic disease management, postoperative monitoring, and rural patient access.

Challenges

  • Facility-based cuts could intensify the financial divide between independent and hospital-employed urologists.
  • The -2.5% wRVU cut will reduce reimbursement for numerous procedural codes central to urology revenue.
  • The 50% indirect PE reduction threatens compensation structures tied to wRVUs and may impact commercial payer negotiations.
  • These factors are likely to exacerbate consolidation trends, undermining independent practice viability.

Why It Matters

The 2026 MPFS Final Rule advances more accurate valuation for non-facility services but simultaneously widens reimbursement gaps across sites of care and applies broad efficiency cuts that disproportionately affect procedural specialists. The headline “0% impact” for urology masks internal redistributions that place independent urology practices—long recognized for delivering high-quality, cost-effective care—at increased financial risk.

LUGPA continues to advocate for:

  • Medicare physician payment stabilization
  • Permanent telehealth flexibilities
  • Comprehensive site-neutral payment reform
  • RVU methodologies that reflect modern clinical practice and true resource use

LUGPA will continue to analyze the Final Rule, communicate emerging impacts to members, and engage with federal policymakers to ensure reimbursement policies preserve independent specialty care and protect patient access.