Empowering Value-Based Care in Outpatient Rehab Therapy 

Navigating the CY 2026 Medicare Physician Fee Schedule: Key Updates for Physical Therapy Providers

Each year the Centers for Medicare and Medicaid Services (CMS) release updates impacting payment, service options and program participation for Medicare Part B covered services in the Physician Fee Schedule Final Rule. 

Ambulatory care providers across various venues of care all rely on these updates to plan for the upcoming year, and the informed providers pay close attention to how the alterations to the programs impact their workflow and compensation.  

With a new administration there are some changes that are being implemented across the various programs and measures. This year’s rule outlines changes to the Quality Payment Program (QPP), the Medicare Shared Savings Program (MSSP) and introduced new approaches to providing care through the Ambulatory Specialty Model (ASM) in CMS Innovation program adoption. 

Outpatient rehab therapy specialists should look into new model programs and MIPS Value Pathways (MVPs) as ways to compete in the new age of value-based care. 

Ambulatory Specialty Model (ASM) CMS Innovation 

The 2026 Final Rule outlined some major changes in various value-based programs. The biggest change coming in the form of a new Innovation model that is set to impact various clinicians, including those practicing physical medicine and rehabilitation. The program will be regional, but for those who meet the minimum threshold requirements, they will be mandatory participants in the new Innovation Model Program. 

CMS Innovation has introduced a new program called ASM that is set to begin with a performance year of January 1, 2027, and run for five years through December 31, 2031. This program is designed to identify and reduce costs associated with the two chronic diseases with the largest impacts on Medicare payments: low back pain and heart failure. 

ASM identifies areas of delayed detection and financially incentivizes clinicians to manage their patient population chronic conditions effectively. CMS wants clinicians who are treating these patients to find creative ways to promote preventive care and more upstream management of care for these conditions, thereby reducing overall cost utilization on the system. 

Clinicians should begin identifying their patient populations with low back pain and collaborate with primary care providers to support better outcomes for their shared patients. 

Medicare Shared Savings Program  

This year’s rule finalized some big changes to the Medicare Shared Savings Program (MSSP) participation. From faster timelines for hitting two-sided risk to beneficiary count adjustments for new Accountable Care Organization (ACO) programs, this rule made changes that will impact the program direction. 

CMS has finalized participation in a one-sided risk model to an ACO’s first agreement period to be limited to 5 years. After that ACOs will need to adopt two-sided risk agreements. The final rule also outlined that new ACO’s can drop below the 5,000 beneficiaries requirement in the first two benchmark years if they are participating in the BASIC track. 

These updates alter the structure of ACOs who are joining in the shared savings program, giving them time to build their process and care to ensure success when it comes to participating in the higher risk model tracks. 

Next, CMS finalized a few changes to the primary care services that will be used in beneficiary assignment and revised the quality performance standard and reporting requirements. CMS removed the health equity adjustment applied to the ACO’s quality score and removed the quality measure of 487 Screening for Social Drivers of Health. 

The primary care services that will be used for beneficiary assignment include the list of HCPCS and CPT codes under 42 CFR 425.400(c)(1)(ix), as well as the Enhanced Care Model Management Services (G0568, G0569, and G0570). These additional Enhanced Care Model Management Service codes may impact assignments starting in 2026, and so you should review your organization’s use of these to see if they will help add beneficiaries to your ACO. 

Updates to the Quality Payment Program (QPP) 

The Quality Payment Program (QPP) has been around since 2017, and it was originally segmented into two categories: Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs). In 2026 we begin to see the push towards a new era in the QPP with the splitting of the conversion factor for those qualified participants (QPs) participating in an Advanced APM. We also see the sunsetting of traditional MIPS, where the majority of clinicians have been submitting data, to now aligning to a more specialized approach with MVPs. 

First for those who were successful Advanced APM QPs in 2024 performance year, they will begin to see an increased conversion factor value of .75% applied to their Medicare Part B payments. This incentive is .5% higher than those who were not able to meet the QPs status and instead will only receive a .25% increase in their conversion factor rate. This design was included in the original law that implemented MIPS and APMs, and we are now beginning to see the increased incentives to join in these APMs over participation in MIPS. 

Along with the incentive to move towards APMs, CMS is also stating the Traditional Merit-based Incentive Payment System (MIPS) program will begin to sunset in the future. This program is set to be replaced with MIPS Value Pathways (MVPs), as CMS wants to compare value-based performance based on conditions that clinicians treat in their normal course of business. The Traditional MIPS program lumps all clinicians into a large group and then aligns payment adjustments based on performance across various quality measures, cost measures, and other category measures. Meeting these measures can vary based on the specialty type of practice, and value performance is therefore not comparable. 

For Physical Therapy the MVP that aligns with care providers is the “Rehabilitative Support for Musculoskeletal Care” MVP (M1370), which focuses on the clinician promoting quality care for patients with musculoskeletal issues. The final rule has a few updates to this program in 2026. The addition of quality measure Q134 Preventive Care and Screening: Screening for Depression and Follow-Up Plan, and Q182 Functional Outcome Assessment will be available measures to select in 2026. They are removing the Q487 Screening for Social Drivers of Health measure in 2026, so if you are using this measure then you will want to look at the remaining and new measures to reach your requirement of submitting 4 quality measures. Next, they are adding in 3 new Improvement Activity (IA) measures: 

1. IA_BE_15: Engagement of Patients, Family and Caregivers in Developing a Plan of Care
2. IA_BE_16: Evidenced-based techniques to promote self-management into usual care
3. IA_AHW_1: Chronic Care and Preventative Care Management for Empaneled Patients
4. These new IA measures can be used in lieu of the 4 activities that CMS is removing in 2026
5. IA_AHE_9: Implement Food Insecurity and Nutrition Risk Identification and Treatment Protocols
6. IA_AHE_12: Practice Improvements that Engage Community Resources to Address Drivers of Health
7. IA_CC_1: Implementation of Use of Specialist Reports Back to Referring Clinician or Group to Close Referral Loop
8. IA_PM_26: Vaccine Achievement for Practice Staff: COVID-19, Influenza, and Hepatitis

Your organizations should look at these new measures that are being added in and compare your program usage in 2026 to see if they will be good replacements for any current measures or measures that are scheduled to be removed in 2026. You will still need to submit 4 quality measures, one of which needs to be an outcome measure, along with an IA measure, and the associated Promoting Interoperability measures that your clinicians meet the requirements. Plan ahead continue to look at MVPs as a viable option beginning in 2026 and find improvements year over year to be ready for the full switch when CMS officially sunsets the Traditional MIPS program. 

Certification Updates to HTI-1 (Enforcement Discretion) 

On November 24, 2025, the Assistant Secretary for Technology Policy and Office of the National Coordinator (ASTP/ONC), released an updated enforcement discretion to the Certification Criteria Compliance Dates impacting the updates to Health Data, Technology and Interoperability (HTI) first iteration move that was set for January 1, 2026. With the close of the United States Government from October 1 through November 12, 2025, the certification tools that Electronic Healthcare Record vendors relied on to certify were offline and unavailable. ASTP/ONC recognized this lapse in the ability to comply with the regulations, and therefore issued an enforcement discretion through March 1, 2026, to have updated certification criteria for HTI-1. This additional time for certification means your upgrades to this new platform will now not be required until March 2026. We still recommend you communicate with your EHR vendor and work through upgrade schedules to ensure you will be on this new platform in time for 2026 performance year