In July 2025, the Centers for Medicare & Medicaid Services (CMS) announced its proposed 2026 Medicare Physician Fee Schedule (PFS). For the first time in years, it’s not another cut, physicians are expected to see a Medicare reimbursement changes in the form of an increase beginning in January 2026.
At first glance, it might sound like reason to celebrate, and early headlines have already labeled it a much-needed “raise” for America’s physicians. But, as with most healthcare policy changes, the reality is more complex. Behind the announcement are budget neutrality rules, shifting payment priorities, and ongoing cost pressures that could make this raise feel like a mixed blessing – particularly for specialists and independent practices.
And here’s where it gets even more interesting: the impact isn’t limited to payroll and operating budgets. These changes can also shape a practice’s real estate strategy; from determining the right time to expanding medical practice to deciding whether it makes more sense to buy rather than lease.
2026 Medicare reimbursement changes – Fee Schedule
The proposal outlines two conversion factors (the dollar amount Medicare pays per Relative Value Unit, or RVU):
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Qualifying Alternative Payment Model (APM) Participants: $33.59 CF (+3.83% from 2025)
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Non-APM Participants: $33.42 CF (+3.62% from 2025)
These bumps come from the “Big Beautiful Bill” legislation, which mandates a 2.5% statutory increase, plus a 0.55% RVU update and additional adjustments for chronic care management services. (Fierce Healthcare summary)
The underlying intent is clear: move the needle toward value-based care by better compensating providers who spend more time managing patient health and preventing costly complications.
Who Benefits Most?
Primary care physicians and those managing chronic conditions are the clear winners. According to Stat News, CMS is deliberately shifting more dollars toward cognitive services, those that require patient interaction, follow-up, and care coordination – rather than procedural volume.
This means:
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Practices focusing on preventive care and disease management will see the biggest net gains.
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Groups already positioned in value-based care models stand to benefit most.
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Smaller independent practices in primary care may finally get a reimbursement tailwind after years of financial pressure.
Who May Feel the Pinch?
Because of Medicare’s budget neutrality rule, every dollar increase in one area has to be offset somewhere else. Specialties heavily dependent on procedures such as orthopedics, ophthalmology, or certain surgical fields may see smaller increases or even reductions. This isn’t new; it’s part of a longer-term policy trend aimed at rebalancing Medicare payments toward evaluation and management services.
Independent Practices vs. Hospital Systems
The impact will differ depending on a physician’s employment model:
Independent Physician Groups
- More likely to feel the increase directly in their bottom line.
- Can use higher reimbursement to reinvest in staff, technology, and facility upgrades.
- Still face rising costs for labor, malpractice insurance, and compliance requirements.
Hospital-Employed Physicians
- Any reimbursement increase typically flows into the hospital’s budget, not directly into the physician’s paycheck.
- Raises may be offset by continued productivity quotas and operational constraints.
Why This “Raise” Might Not Feel Like One
A 3.6% bump sounds nice, but not until you account for the other side of the ledger:
- Medical inflation continues to erode margins.
- Staffing shortages are driving wage competition.
- Private insurers may not match Medicare’s rate increases.
- Future federal budget pressures could lead to cuts down the road.
For many physicians, especially in private practice, the increase could feel like running faster just to stay in place.
The Commercial Real Estate Connection
Medicare reimbursement changes don’t happen in a vacuum – they directly influence practice real estate decisions. Here’s how:
Expansion
CRE Implication: Higher, more stable income may support moving to a larger or upgraded space.
How I Help: Site selection, lease negotiation, ROI analysis.
Consolidation
CRE Implication: If reimbursement still can’t keep up with costs, downsizing or sharing facilities may make sense.
How I Help: Landlord negotiations, sublease structuring.
Buy vs. Lease
CRE Implication: Predictable income could make ownership more attractive; uncertainty favors leasing flexibility.
How I Help: Buy/lease modeling, sale-leaseback structuring.
Exit Planning
CRE Implication: Retirement, merger, or acquisition strategies can benefit from a planned property disposition.
How I Help: Market valuation, listing strategy.
How I Help Physicians Navigate CRE in Changing Reimbursement Landscape
As a CCIM-designated commercial real estate advisor specializing in medical office and healthcare real estate, my role is to help physicians align their property strategy with both market realities and practice goals.
That could mean:
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Negotiating favorable lease terms that protect margins.
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Identifying high-visibility locations to drive patient growth.
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Structuring sale-leasebacks to free up capital.
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Crafting long-term ownership strategies to build wealth.
Final Thoughts
The Medicare reimbursement changes aren’t the simple win it might appear to be. It’s a strategic reshuffling of reimbursement dollars that will create both opportunities and challenges. For some practices, it will provide breathing room; for others, it could accelerate the need to rethink their operating model or real estate footprint.
Physicians who take a proactive approach; evaluating their business model, adjusting operational strategies, and aligning their real estate plans – will be in the strongest position to thrive, regardless of what future policy changes bring.
At The ICRE Investment Team, we specialize in guiding healthcare providers through these kinds of market shifts. Whether you’re looking to lease, expand, consolidate, buy, or sell, we bring market expertise, negotiation skill, and a deep understanding of healthcare’s unique challenges to every transaction.
If you’re ready to protect your margins, grow strategically, and make your real estate work harder for you, let’s start the conversation today.
