On October 31, 2025, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2026 Medicare Physician Fee Schedule (PFS) final rule, including a number of significant policy changes effective January 1, 2026 (unless otherwise noted). Among them, CMS finalized a major change to the practice expense (PE) methodology that halves the indirect PE allocated to facility-based services, reshaping payment relativity and shifting spend toward office-based care.
This +Insight is the first in a two-part series analyzing CMS’s decision, its rationale, and its implications. Part two will take a deeper dive into the data and methodology behind the policy and explore alternative approaches raised by stakeholders, which CMS may consider for future rulemaking.
