CMS’ 2.5% efficiency adjustment cut work relative value units on about 7,700 non-time-based codes starting Jan. 1. It was a percentage cut that came with a conversion factor increase, so the dollar effect is easy to miss. For physicians paid per wRVU, it runs from nothing to more than $13,000 a year, depending on specialty.
How the cut works
The 2026 Medicare Physician Fee Schedule final rule cut work RVUs and intraservice time by 2.5% for most non-time-based services. CMS based the figure on five years of Medicare Economic Index productivity adjustments. More recent data would have supported a 3.6% cut.
Time-based codes are exempt. That covers evaluation and management, care management, behavioral health, Medicare telehealth list services, some maternity codes and other time-based services such as drug administration and therapy. CMS plans to recalculate the adjustment every three years, with the next update in 2029. Holland & Knight noted that the update could produce a larger cut.
The cut reaches about 91% of physician services by billed volume.
Per case: Small on the work side
Measured against Medicare’s work payment alone, the per-case loss is small.
Total hip and knee replacement (27130, 27447): Work RVUs fell from 19.60 to 19.11, according to the American Association of Hip and Knee Surgeons. At the 2026 nonqualifying conversion factor of $33.4009, that 0.49 wRVU equals about $16.37 per case. Total national payment for each code fell about 7.8%, to roughly $1,160.
Cataract surgery (66984): Work RVUs fell from 7.35 to 7.17, according to the American Society of Cataract and Refractive Surgery. That 0.18 wRVU equals about $6.01 per case. Total payment fell $58.81, from $521.75 to $462.94. Most of that drop came from practice expense RVUs, which fell from 8.23 to 6.16 under CMS’ separate cut to indirect practice expense for facility-based services.
Why 2027 shows the cut more clearly
In 2026, the conversion factor rose 3.26% for nonqualifying clinicians, mostly because of a one-year 2.5% increase under the One Big Beautiful Bill Act. About 0.49% of the increase came from the efficiency adjustment itself, because CMS raised the conversion factor to keep the cut budget neutral. Together, the increases more than covered the work RVU cut.
For cataract surgery, the work portion of Medicare payment was about $237.75 in 2025 and about $239.48 in 2026, even with fewer wRVUs.
The one-year increase ends after 2026, but the wRVU cut does not. The proposed 2027 rule would drop the nonqualifying conversion factor to $32.84. At that rate, the work portion of a cataract case would be about $235.47, below 2025. The work portion of a knee replacement would go from about $638 in 2026 to about $628.
Per physician: Where the cut adds up
Employed physicians on productivity contracts don’t get the conversion factor increase. Their pay is wRVUs times a contracted dollar rate. Unless an employer keeps 2025 RVU values, the same work produces fewer credited wRVUs and less pay.
The estimates below apply Marit Health’s median dollars per wRVU to SullivanCotter’s November 2025 wRVU loss estimates:
- Diagnostic radiology: -2.4%, or 260 wRVUs lost. At $51 per wRVU, that is about $13,260 a year.
- Orthopedic surgery: -1.7%, or 160 wRVUs lost. At $70 per wRVU, that is about $11,200 a year.
- Invasive/interventional cardiology: -1.3%, or 139 wRVUs lost. At $60 per wRVU, that is about $8,340 a year.
- Otolaryngology: -1.2%, or 89 wRVUs lost. At $64.50 per wRVU, that is about $5,741 a year.
- General cardiology: -0.9%, or 73 wRVUs lost. At $60 per wRVU, that is about $4,380 a year.
- Neurology: -0.6%, or 28 wRVUs lost. At $58.40 per wRVU, that is about $1,635 a year.
- Internal medicine: -0.1%, or 5 wRVUs lost. At $52 per wRVU, that is about $260 a year.
- Family medicine: 0.0%, no change.
Marit reports a single cardiology rate ($60), used for both cardiology lines, and a general radiology rate ($51). SullivanCotter’s April 2026 update reflects all 2026 fee schedule changes. It puts diagnostic radiology at -3.1% and invasive cardiology at -1.7%, and shows small gains for internal medicine and family medicine.
What’s next
The Medical Group Management Association and consulting firm PYA have flagged procedural and imaging-heavy groups on formula-based wRVU incentives as the most exposed. MGMA also noted exposure for groups whose commercial contracts or benchmarks are tied to wRVU counts.
In Congress, Reps. Ron Estes (R-Kan.) and Tom Suozzi (D-N.Y.) introduced H.R. 7520,, the Efficiency Adjustment Delay Act, on Feb. 12. The bill would delay the adjustment until at least 2030, require CMS to justify it first and exempt services reviewed in the past 10 years. The American College of Surgeons has pressed lawmakers on the policy. It points to a study of 1.7 million procedures in its National Surgical Quality Improvement Program, published in the Journal of the American College of Surgeons, which found operative times rose 3.1% from 2019 to 2023.
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