The 2026 Medicare Fee Schedule Gave Most Clinicians a Raise on Paper. Many Will Still See a Pay Cut. Here Is Why.

Every fall, the Centers for Medicare and Medicaid Services releases the document that decides what your work is worth for the coming year, and every year it is written in a way that almost guarantees you will misread it. The 2026 version is a perfect example. The headline number, the conversion factor, went up for the first time in years. If you stopped reading there, you would think medicine finally got a raise. A lot of clinicians will instead open their first 2026 remittance and find they are being paid less.

Both of those things are true at once, and the gap between them is where practices get hurt. So let me walk through what the conversion factor actually is, why it rose, and why a rising conversion factor can still leave you with a smaller check. This is the explainer I wish the rule came with.

First, What the Conversion Factor Actually Is

Medicare does not set a dollar price for each service directly. Instead, every service is assigned a number of relative value units, a measure of how much work, practice expense, and liability it involves. Then Medicare multiplies those units by a single dollar figure, the conversion factor, to get the payment. Change the conversion factor and you change the payment for everything at once. That is why this one number gets all the attention, and why it makes such a convenient headline.

For 2026, something unusual happened: there are now two conversion factors instead of one. Clinicians who participate in qualifying alternative payment models get a slightly higher figure, and everyone else gets a slightly lower one. Here is how the everyday number was built.

Component	Effect
2025 conversion factor (starting point)	$32.35
Temporary increase for 2026, from the One Big Beautiful Bill Act	+2.5%
Budget-neutrality and other adjustments	about +0.5%
Result for most clinicians	$33.40, about +3.3%
Result for qualifying alternative payment model participants	$33.57, about +3.8%

That all looks like good news, and for some clinicians it is. But notice the phrase doing the quiet work in that table: the 2.5 percent increase is temporary, for 2026 only. It came from a federal law, not from a permanent fix to how Medicare pays. Next year, unless Congress acts again, it disappears. Sound familiar? It is the same short-term-patch pattern that keeps telehealth lurching from cliff to cliff.

Why the Raise Disappears for So Many

Here is the part the headline never mentions. The same 2026 rule that raised the conversion factor also changed how the relative value units themselves are calculated, in two ways that pull in the opposite direction.

The first is something the Centers for Medicare and Medicaid Services calls an efficiency adjustment. It cut the work value of non-time-based services by 2.5 percent. In plain terms, that means procedures. If your work is mostly hands-on procedural care billed by the service rather than by time, this adjustment quietly claws back roughly what the conversion factor gave you. Time-based services were spared, which matters enormously for who wins and who loses.

The second is a change to practice expense for services performed in a facility, such as a hospital or surgery center. Medicare reduced the facility portion of practice expense in a way that drops payment for facility-based services by around 7 percent overall. If you practice mostly in a hospital setting, that is a serious cut sitting underneath the cheerful conversion factor number.

A rising conversion factor with a falling work value underneath it is a magic trick. The number on the marquee goes up while the number in your account goes down.

Winners and Losers

Stack those changes together and the 2026 rule sorts clinicians into clear groups. Primary care and time-based specialties come out ahead, because their evaluation and management visits, behavioral health services, and care management work were exempt from the efficiency adjustment. Procedural and facility-based specialties tend to come out behind. The figures below are illustrative, and the word illustrative matters: your actual change depends on your specific mix of services and where you perform them.

Specialty and setting	Estimated 2026 payment change
Cardiac surgery (office setting)	+6%
Family medicine (office setting)	+4%
Diagnostic radiology	-2%
Cardiac surgery (facility setting)	-3%
Orthopedic surgery	-5%

Source: American Medical Association and Healthcare Financial Management Association analyses of the 2026 final rule. Illustrative estimates; actual impact varies by each practice’s mix of services.

Notice that cardiac surgery appears twice, once gaining and once losing, because the same specialty can land on opposite sides depending on whether the work is done in an office or a facility. That is how granular this gets. One of the hardest-hit groups this year is infectious disease, where by one analysis more than eight in ten physicians face cuts of 5 percent or more. These are the specialists we spent the pandemic calling heroes.

What This Means for Your Practice

My Honest Read

I understand the impulse behind some of this. Medicare is trying to shift money toward primary care and time-based cognitive work, which has been underpaid for decades, and as someone who values a long, careful visit over a fast one, I am not against that goal. The problem is the method. Dressing a cut as a raise, then burying the cut in a relative-value adjustment most clinicians will never read, is not a policy choice anyone would defend out loud. It is a communications strategy. And it lands hardest on the procedural and hospital-based clinicians who often have the least slack to absorb it.

The deeper issue is the one this rule shares with nearly everything I write about here. The conversion factor raise is temporary, the fixes are short-term, and practices are once again asked to plan a year, hire staff, and keep their doors open against numbers designed to expire. If you want to see where your other 2026 dollars are going, my breakdown of the telehealth extension covers another service line living on a countdown, and my look at independent practice survival is really about absorbing exactly these kinds of shocks. The honest move is the same one it always is: find your real number, plan for the version where the temporary help goes away, and make noise for a system that stops hiding the cut inside the raise.

Sources

• Calendar Year 2026 Medicare Physician Fee Schedule Final Rule — Centers for Medicare and Medicaid Services
• What to expect from the 2026 Medicare Physician Fee Schedule — American Medical Association
• 2026 Physician Fee Schedule Specialty Impact Tables — Healthcare Financial Management Association
• Medicare finalizes controversial cut to specialty care next year — Healthcare Dive
• Centers for Medicare and Medicaid Services issues 2026 physician fee schedule final rule — American Hospital Association
• Centers for Medicare and Medicaid Services Releases 2026 Physician Fee Schedule Final Rule — Holland & Knight
• 2026 Medicare Physician Fee Schedule Final Rule — American Academy of Neurology