The U.S. Centers for Medicare & Medicaid Services has proposed a 3.3% increase to the conversion factor in the proposed Medicare Part B Physician Fee Schedule for 2026; however, this is offset by significant changes that prioritize primary care over specialty care providers.
To improve telehealth access, CMS proposes revising how codes are added to the Medicare Telehealth Services List, which could help maintain access to telehealth services if Congress extends the privileges for PTs and PTAs beyond Sept. 30. New requests for information in the fee schedule emphasize this administration’s broader commitment to promoting prevention, managing chronic disease, and deregulating health care. However, omitting physical therapists from a new model focused on treating low back pain and devaluing physical therapy codes comes into conflict with these priorities. APTA has reached out to CMS for clarification on these proposals.
Due to the numerous provisions affecting the profession, we've divided our analysis of the proposed rule into two parts. Part 1 focuses on how key payment-related changes to the conversion factor and relative value units impact physical therapy reimbursement. We also provide an update on telehealth, discuss a new request for information on prevention and chronic disease management, and review of an alternative payment model for low back pain.
Part 2 of our fee schedule takeaways series will cover the Quality Payment Program, including the Merit-based Incentive Payment System and the Rehabilitative Support for Musculoskeletal Care MIPS Value Pathway.
For the First Time, Two Conversion Factors
For the first time in the history of the fee schedule, there are two conversion factors, one of the elements used in calculating final payment amounts for various CPT codes. One conversion factor is for qualifying alternative payment model, or APM, participants, and the other is for providers who are not qualified APM participants, which includes most PTs. Because participation in an APM requires a high level of accountability for quality and cost of care, qualified APM participants will receive a 0.75% increase in their conversion factor while nonqualified APM participants will only receive a 0.25% increase in their conversion factor.
An Increase in the Conversion Factor but Overall Decrease in Payment
As opposed to the usual cuts we have come to see, CMS is proposing a conversion factor of $33.42 for nonqualified APM participants, a 3.3% increase from the $32.3465 conversion factor adopted in the 2025 fee schedule. Qualifying APM participants will see a conversion factor of $33.85, a 3.85% increase from 2025. Since the majority of physical therapists who provide Medicare Part B services do not qualify for APM participation, this analysis focuses on the conversion factor for nonqualified APM participants.
Part of the proposed increase is due to the 2.5% statutory update that was included in Congress’ recent reconciliation budget package. The remainder can be attributed to the fee schedule’s 0.25% increase for nonqualified APM participants and a budget neutrality adjustment of 0.55%. While the budget neutrality adjustment typically leads to a decrease in payment, the 0.55% adjustment this year is positive because the efficiency adjustment outlined below would reduce thousands of code values in 2026.
While the conversion factor represents an increase in payment, for physical therapists, CMS estimates a net impact of –1% due to changes to the relative value units that combine components of a provider’s work, practice expenses, and professional liability protection. CMS is proposing changes in all three areas of the Physical Medicine and Rehabilitation RVUs which, when multiplied by the updated conversion factor, impact each code differently. APTA’s analysis of the most commonly reported CPT codes found that despite the 3.3% increase in the conversion factor, most of the codes used by physical therapists only see a nominal increase, up to 3%, while others would remain stagnant or decrease.
APTA strongly opposes these RVU changes and has proactively reached out to CMS to get clarification on the methodology used to make these adjustments as there is no explanation in the proposal itself that would explain the shift in reimbursement.
Factors Affecting Payment
Part of the confusion lies in CMS’ application of the proposed “efficiency adjustment.” CMS is concerned about the overvaluation of the work RVUs for non-time-based codes. As a result, the agency proposed an efficiency adjustment to the work RVUs of non-time-based codes to take into account changes to medical practice over time.
The adjustment will be calculated as the sum of the final productivity adjustments used in the Medicare Economic Index, or MEI, for the prior five years, 2021 through 2025. Ultimately, it would reduce the intraservice portion of physician time and work RVUs every three years. In 2026, a 2.5% reduction would be applied. While very few physical medicine and rehabilitation codes are non-time based, it appears that CMS has incorrectly applied the adjustment to multiple time-based codes that physical therapists use. This was among the issues APTA has sought clarification on in our recent letter to CMS.
New Remote Therapeutic Monitoring Codes
Last year, APTA worked with the American Academy of Physical Medicine and Rehabilitation to present evidence to the AMA's Relative Value Scale Update Committee, a multispecialty committee whose purpose is to develop values for CPT codes, that supported an increase in RVU values for RTM codes. The evidence was developed using survey results that helped determine the "professional work" value and time involved in the physical therapist’s provision of the services identified by each of these codes. The RUC Health Care Professionals Advisory Committee agreed with the survey results and made a recommendation to CMS for the professional work value of these newly developed codes. In the proposed rule, CMS disagreed with the RUC’s recommendations and is not proposing to use the RUC’s recommendations for both the existing and new RTM codes. Our existing codes will not see a change in RVUs and the new codes will be valued as less than what was recommended by the RUC.
CMS Throws Out CPI Survey Results
The practice expense methodology currently relies primarily on the American Medical Association’s Physician Practice Information Survey data that measures specialty-specific practice costs. In 2024, the AMA worked with specialty societies representing qualified health professionals, including APTA, to field the Clinical Practice Information, or CPI, survey and submit data to CMS in early 2025 for consideration in rate-setting. APTA participated with other nonphysician associations in the development and distribution of the survey as well as the analysis of the survey results. APTA encouraged both member and nonmember physical therapists to participate in the survey through a variety of communication methods, including social media. The survey results were favorable for physical therapists.
In the proposed rule, CMS has decided not to implement the data or cost shares from the CPI survey for 2026 rate-setting. The agency cites data limitations including a small sample size, low response rates, lack of comparability, potential measurement error, and missing and incomplete data submission as its reasoning. APTA is disappointed with the decision and will provide recommendations in the association’s comments on the proposal.
New Ambulatory Specialty Model
To improve upstream management of chronic conditions with significant Medicare spending, CMS is proposing a mandatory alternative payment model for low back pain and congestive heart failure to test whether adjusting payment for specialists based on targeted measures results in enhanced quality and reduced costs. The model that would begin in 2027 also includes beneficiary benefits such as gym memberships to encourage regular physical activity. CMS acknowledges the role of physical therapists but does not include them as eligible participants. APTA will be commenting on the essential role of physical therapists in managing low back pain and objectives of the model.
Prevention and Management of Chronic Disease – Request for Information
CMS is currently seeking input on strategies to improve chronic disease management and prevention. Specifically, CMS is interested in learning more about services that address the root causes of chronic illness, reduce social isolation, and enhance physical activity — particularly those services not currently reimbursable under the existing fee schedule code set.
In addition to broadening the scope of covered services, CMS is exploring the possibility of establishing new codes to support the use of intensive lifestyle interventions, motivational interviewing techniques, and FDA-cleared digital therapeutics that help treat or manage the symptoms of chronic diseases.
As part of this inquiry, CMS is also looking for ideas around technological solutions that could increase uptake of the Medicare Annual Wellness Visit, as well as improve its accessibility, impact, and overall utility for both patients and providers. APTA will respond to this request with evidence supporting the role of physical therapy in managing and preventing chronic disease.
Update to the KX Modifier
Amid confusion about the payment update, CMS also failed to include a proposed update to the 2026 KX modifier in the rule. APTA has already spoken with agency staff who said that CMS will be issuing a correction with the 2026 KX threshold.
Medicare Regulatory Relief
CMS continues to request information on how to simplify regulations and reduce administrative burden on providers. APTA has already commented on the RFI and submitted feedback in both the skilled nursing facility and inpatient rehabilitation facility proposed rule comments.
Next Steps
APTA is reviewing the rule and will submit comments by the Sept. 12 deadline, but member comments are also essential. In the coming days, APTA will release a template comment letter on APTA’s Patient Action Center, making it easy for you to share your voice. Also, while the association will be submitting comments about the proposal, we will continue to advocate to both CMS and Congress for a permanent fix to the fee schedule.
On Aug. 7 at 2:30 p.m. ET, APTA’s Regulatory, Legislative, and Payment Updates webinar will feature APTA staff experts discussing the fee schedule and other recent payment news. will feature APTA staff experts discussing the fee schedule and other recent payment news.
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