On October 31, CMS released the CY 2026 Medicare Physician Fee Schedule final rule. The headline number looks like good news. The conversion factor for non-qualifying APM physicians moves from $32.35 to $33.40, a 3.26 percent bump, and the qualifying APM rate climbs to $33.57. After years of erosion, that should feel like a win.
It is not. Buried inside the same rule is a new policy CMS calls the “efficiency adjustment,” which cuts work relative value units by 2.5 percent across nearly every non-time-based service in the schedule. For most Florida physicians who are not paid on a strict time basis, the practical effect of the rule is a wash at best and a net cut at worst, depending on specialty mix. The CMS framing matters here. Congress legislated a temporary increase. CMS, on its own authority, took most of it back.
Where the cut actually lands
The efficiency adjustment is justified in the rule as a correction for “productivity gains” CMS believes physicians have realized over time. The agency applies the haircut to work RVUs and to corresponding intraservice time for any service that is not strictly time-based. That definition matters, because it carves out a small set of evaluation and management codes while sweeping in the procedural and diagnostic work that drives revenue for most subspecialty practices in Florida.
A cardiology practice doing diagnostic catheterizations, an orthopedic group billing arthroscopies, a gastroenterology group running a colonoscopy schedule, a dermatology practice billing biopsies and excisions, an interventional radiology suite, a pain medicine practice doing fluoroscopy-guided injections. Every one of these will see the 2.5 percent reduction applied to most of what they do. Layer on the practice expense methodology changes that were also finalized in the rule, and several specialties end up with a worse 2026 than 2025 even after the conversion factor increase.
Primary care fares somewhat better. The carve-outs for time-based E/M codes, plus the new add-on codes for complex visits and the continued expansion of advanced primary care management codes, mean that an internist running a panel-heavy practice can come out roughly even. That is the tradeoff CMS is signaling. Procedures down, cognitive work up. It is the same lever the agency has been pulling since the early 2010s, and it favors the parts of medicine the federal government wants to grow.
Why “efficiency” is the wrong word
The agency’s stated rationale is that physician work has become more efficient, so the time and effort baked into RVUs from prior surveys overstates current effort. There are problems with this claim that every practicing physician will recognize.
First, the productivity gains CMS describes are mostly attributable to investments physicians made themselves: better tools, refined techniques, smaller incisions, faster turnover. Penalizing physicians financially for getting better at their jobs is not a neutral act. It is a transfer of the value of those gains from the people who created them to the people who pay for them.
Second, the savings physicians have driven from improved technique are routinely offset by a parallel increase in administrative load. Prior authorizations, appeals, MIPS reporting, EHR documentation, payer-specific quality measures, and now AI-driven claim audits. The 2.5 percent that gets taken back as “efficiency” is dwarfed by the unpaid hours every Florida practice now spends fighting payers and feeding compliance systems. CMS does not adjust for any of that.
Third, the methodology used to identify which services are “efficient” is opaque. The American Medical Association and several specialty societies have already said publicly that they cannot reproduce the agency’s calculations from the data CMS released. When the math is not auditable, the policy is not accountable.
The Florida-specific stakes
Florida has the third-highest concentration of independent physician practices in the country and one of the largest Medicare populations as a share of total patient mix. Roughly 4.9 million Floridians are enrolled in original Medicare or Medicare Advantage as of late 2025. A 2.5 percent reduction in work RVUs for procedural services, applied to a payer that represents 30 to 60 percent of revenue in a typical Florida specialty practice, is a real number. For a five-physician orthopedic group billing $4.2 million annually in Medicare procedural codes, the efficiency adjustment alone removes roughly $52,000 in pre-overhead revenue per year. That is one nurse’s salary, or a year of malpractice premium for a junior partner, or the deductible on the practice’s cyber policy.
Florida physicians also face the structural reality that our state pays some of the lowest commercial rates in the country relative to Medicare. Practices here have less room to absorb a Medicare cut by leaning on commercial volume, because the commercial book is already thin. The result is that the 2026 PFS final rule will hit Florida harder than it hits, say, a similar practice in Massachusetts or California. We do not have the cushion.
What to do in the next 60 days
The rule is final. The 2026 conversion factor and efficiency adjustment took effect January 1. There is still meaningful action available to Florida physicians, and the window to act is short.
- Run a 2026 vs. 2025 revenue model on your top ten CPT codes. Use the actual finalized work RVUs published in the November 5 Federal Register, not the proposed rule. Most billing software vendors have updated their schedules; if yours has not, that is a separate problem worth fixing this week.
- Identify which of your high-volume codes lost ground despite the conversion factor increase. These are the codes where the efficiency adjustment ate the raise and then some. Knowing them lets you make informed coding decisions and lets you negotiate with commercial payers from a defensible position.
- Audit your add-on code usage. CMS finalized expanded payment for several add-on codes in 2026, including the new complex E/M add-on G2211 in more contexts. If your practice has not been billing G2211 consistently, you are leaving money on the table that the rule explicitly intends you to capture.
- File comments with your specialty society now, not in October. The 2027 proposed rule will be released in July. The efficiency adjustment is almost certainly going to expand. Specialty societies that bring documented practice-level data to the comment period have measurably better outcomes in the final rule than those that bring talking points.
- Engage your federal delegation. Florida has two senators on the Senate Finance Committee. Senator Rick Scott has been vocal about Medicare physician payment in past sessions, and Representative Vern Buchanan sits on the Ways and Means Committee. A short letter from a five-physician group, on practice letterhead, with specific revenue impact numbers, lands differently than a generic AMA action alert.
- If you are an independent practice, get an honest assessment of your 2026 break-even. Practices that have been running thin should not wait for the next downstream pressure to make that math worse. There are still good options for independent groups in Florida, but they require planning, not panic.
The conversion factor increase will be the only piece of this rule most physicians hear about. Make sure your partners, your administrator, and your specialty society know about the rest of it. Policy that is done quietly is policy that is hardest to reverse.
Frequently Asked Questions
When does the CY 2026 Medicare Physician Fee Schedule take effect?
The final rule took effect January 1, 2026. The conversion factor changes and the new efficiency adjustment apply to all claims with dates of service on or after that date.
How much will the efficiency adjustment cut my Florida practice’s Medicare revenue?
The 2.5 percent reduction in work RVUs applies to most non-time-based services, so the impact depends on your specialty and code mix. Procedural specialties such as cardiology, orthopedics, gastroenterology, dermatology, and interventional radiology will see the largest effect. Primary care practices that bill mostly time-based E/M codes are largely insulated.
Does the 2026 conversion factor increase offset the efficiency adjustment?
For most procedural specialties, no. The +3.26 percent conversion factor increase for non-qualifying APM physicians is partially or fully erased by the 2.5 percent work RVU cut on the codes that drive their revenue. The math is roughly neutral for primary care and net negative for many procedural specialties.
Can the efficiency adjustment be challenged or reversed?
The final rule is in effect, but specialty societies and the AMA have signaled they will challenge the methodology in the 2027 rulemaking cycle and through congressional action. Physician comments during the 2027 proposed rule comment period (expected July 2026) are the most concrete near-term lever.
What is G2211 and why does it matter for Florida physicians in 2026?
G2211 is a complex E/M add-on code that CMS expanded for 2026. It allows physicians to bill an additional payment when an E/M visit reflects ongoing, longitudinal care for a patient with a serious or complex condition. Florida primary care and specialty practices that consistently bill G2211 where appropriate can recover several percentage points of lost revenue.