2026 Medicare Physician Fee Schedule: A Practical Breakdown for ACOs & APM Participants

Every year, the Medicare Physician Fee Schedule sets the terms for how physicians get paid. The 2026 Medicare Physician Fee Schedule is worth closer attention than usual. It introduced a structural change that has not existed before: two different conversion factors depending on how a physician participates in Medicare payment models. For ACOs, APM participants, and physician groups, the practical implications go beyond the rate change itself.

Two Conversion Factors for the First Time

Starting in 2026, CMS set two separate conversion factors. One applies to qualifying APM participants. The other applies to everyone else.

Qualifying APM participants received a conversion factor update of +0.75%, while non-qualifying APM participants received +0.25%.

The final conversion factor for qualifying APM participants landed at $33.5675, up 3.77% from 2025. For non-APM participants, it sits at $33.4009, a 3.26% increase. 

The dollar difference between these two figures is not dramatic on its own. What matters is the structure. CMS has now formalized a payment advantage for APM participation, and there is no indication the gap narrows in future years.

What Changed for ACOs in MSSP

Several changes in the 2026 Medicare Physician Fee Schedule affect how MSSP ACOs operate day to day:

• CMS reduced the time an ACO can participate in a one-sided risk track from seven years to five, moving organizations toward downside risk arrangements on a shorter timeline.
• The health equity adjustment on ACO quality scores has been removed starting in 2026 and replaced with a population adjustment
• The definition of primary care services used for beneficiary attribution has been expanded
• Patient matching requirements for Medicare CQM reporting have been simplified to reduce reporting burden

For ACOs sitting in one-sided risk tracks, the shorter runway means the transition planning needs to start sooner.

Quality Reporting Under the 2026 Fee Schedule

The 2026 Medicare Physician Fee Schedule continues the push toward electronic clinical quality measure reporting. MSSP ACOs must report under the APP Plus quality measure set, which adds more required measures each year through 2028.

For MIPS participants, the performance threshold holds at 75 points through 2028, which gives organizations some predictability for planning. The quality measure inventory saw five new additions, ten removals, and updates to several existing measures.

Promoting Interoperability is now a required reporting category for all MSSP ACO participants regardless of which track they are in.

What APM Participants Should Note

The higher conversion factor for qualifying APM participants is one part of a broader set of advantages. Organizations that qualify as Advanced APM participants also receive:

• Exemption from standard MIPS reporting requirements
• Automatic credit for Improvement Activities
• A higher base conversion factor than non-APM participants

The higher rate for APM participants reflects CMS's clear preference for providers taking on risk through value-based care arrangements. 

For physician groups weighing whether to join an ACO or move into an Advanced APM, the payment differential in 2026 adds a financial consideration alongside the clinical and operational ones.

Conclusion

The 2026 Medicare Physician Fee Schedule makes the financial advantage of APM participation concrete for the first time with a formalized rate difference. At the same time, ACO quality reporting requirements are expanding, risk timelines are compressing, and Promoting Interoperability is now mandatory across MSSP tracks. Organizations managing these requirements across multiple contracts and provider groups need infrastructure that keeps quality reporting, risk tracking, and performance monitoring current throughout the year.

Persivia's platform supports ACOs and physician groups across MSSP, ACO REACH, and other value-based programs, with quality measure tracking, risk stratification, and performance reporting running in one connected platform. For organizations working through what the 2026 Medicare Physician Fee Schedule means for their operations, see how it helps manage the moving parts.