The 2026 Medicare Physician Fee Schedule (MPFS) updates are sending mixed signals depending on where services are performed.
If your providers primarily see patients in the office, this update likely brings positive news. If a large portion of services are performed in a facility setting (hospital, facility outpatient department, etc.), reimbursement pressure may be increasing.
The Centers for Medicare & Medicaid Services (CMS) released the 2026 Medicare payment updates with adjustments that directly impact physician reimbursement across care settings.
Let’s break it down using some Evaluation & Management services as examples.
Office (Non-Facility) Services: Rates Increased
Across commonly billed office E/M codes, Medicare increased reimbursement for services performed in a non-facility setting.
For example (Indiana rates):
- Code 99213
- 2025: $83.88
- 2026: $90.09
- Increase: +$6.21
- Code 99214
- 2025: $118.14
- 2026: $128.33
- Increase: +$10.19
- Code 99215
- 2025: $166.04
- 2026: $182.08
- Increase: +$16.04
These increases represent meaningful revenue gains for practices with high office-based visit volume. Multiplied across hundreds or thousands of visits annually, the impact becomes significant.
For independent practices and provider-owned clinics, this shift helps offset rising operational costs — staffing, rent, technology, and compliance pressures.
Facility Services: Rates Decreased
On the flip side, reimbursement for E/M services performed in a facility setting decreased (excluding anesthesia services).
Using code 99213 again as an example (Indiana rates):
- Code 99213 – Facility
- 2025: $60.62
- 2026: $55.10
- Decrease: -$5.52
Similarly:
- Code 99214 – Facility
- 2025: $89.21
- 2026: $80.95
- Decrease: -$8.26
- Code 99215 – Facility
- 2025: $132.04
- 2026: $120.15
- Decrease: -$11.89
While these reductions may appear modest at first glance, the cumulative effect across hospital-based or facility-heavy provider groups can be substantial.
Why This Matters More Than Ever
The 2026 update reinforces a trend we’ve seen before: site of service matters… a lot.
Two providers performing the same CPT code may now see a widening reimbursement gap based solely on where the service occurs.
That affects:
- Independent practices
- Hospital-employed physicians
- Specialty providers splitting time between clinic and facility
- Groups evaluating expansion or restructuring
This isn’t just a Medicare billing detail. It’s a strategic financial variable.
Strategic Considerations for Practices
With these changes in place, now is the time to:
1. Analyze Your Site-of-Service Mix
What percentage of your services are billed as facility vs. non-facility? Even a small shift in volume could materially affect revenue projections. Are you performing services in the facility that could be performed in your office?
2. Review Employment & Compensation Models
If providers split time between hospital and clinic, compensation formulas tied to collections may shift unexpectedly.
3. Revisit Revenue Forecasting
Budget projections built on 2025 rates need to be updated. For some practices, 2026 could bring improved margins. For others, it may require expense adjustments.
4. Confirm Accurate POS Coding
With rate differences increasing, correct Place of Service (POS) coding is even more critical. Errors could now result in larger reimbursement discrepancies.
The Bottom Line
For office-based providers, 2026 Medicare updates bring welcome increases.
For providers performing services in a facility setting, reimbursement tightening continues.
The services haven’t changed, but where they’re performed now carries even more financial weight. If you have questions about how these updates affect your specific billing situation, contact your HSC Medical Billing representative or give our team a call at 812.473.0181. We’re here to help you navigate the changes with clarity and confidence.
Find the full 2026 Medicare E/M rate changes for Indiana and Kentucky here: