wRVU-Based Compensation and Adjusting Contracts for 2026 Changes

January 14, 2026
10:44 am

What You Need to Know About wRVU-Based Compensation and Adjusting Contracts for 2026 Changes Right Now?

If your organization uses wRVU-based physician compensation, your contracts are about to become financially inaccurate on January 1, 2026.

CMS has finalized a –2.5% efficiency adjustment to work RVUs for nearly all non-time-based CPT codes, including procedures, imaging, diagnostics, and most surgical services. This change affects roughly 7,000 physician services, representing over 90% of physician-billed Medicare volume.

At the same time, CMS is increasing the Medicare conversion factor by roughly 3.3–3.8%, but this increase does not offset the wRVU losses for procedural and facility-based specialists.

For organizations that pay physicians based on:

This means doctors will appear less productive even if they do the same work, and many will miss bonus and base-salary thresholds unless contracts are updated.

This is not theoretical. It is structural.

What exactly is changing in wRVU valuation in 2026?

CMS is introducing a permanent efficiency adjustment to the way physician work is valued.

Beginning January 1, 2026, CMS will reduce the intraservice work RVU and time for non-time-based CPT codes by 2.5%. This includes:

Surgeries
Diagnostic testing
Imaging
Interventional procedures
Pathology services
Procedural dermatology
Most outpatient and inpatient technical services

This reduction will be repeated every three years, meaning this is not a one-time cut. It is a new valuation framework.

CMS justified this change by calculating that physician productivity has increased by 2.5% over five years, based on the Medicare Economic Index (MEI). Rather than adjusting payments upward for inflation and then reducing them through budget neutrality, CMS is now directly cutting work RVUs to reflect presumed efficiency.

This is the first time CMS has applied a systematic productivity haircut to physician labor.

Chirok Health · wRVU-Based Compensation and Adjusting Contracts for 2026 Changes

Which services are protected?

CMS excluded all time-based services, including:

These services will not receive any efficiency reduction.

This creates a major specialty imbalance.

Primary care, psychiatry, and behavioral health remain protected.

But procedural specialists who generate the majority of hospital revenue are not.

Why this breaks wRVU-based compensation models

Most compensation contracts assume wRVUs are a neutral productivity unit.

They are not anymore.

In 2026, a surgeon can perform the same number of cases, generate the same hospital revenue, and deliver the same clinical value yet their measured wRVUs will be lower.

That triggers:

You now have a valuation mismatch between actual clinical output and contractual productivity units.

This is the single biggest risk to physician-hospital alignment in 2026.

How much will physicians actually lose?

Let’s look at a simplified example.

A cardiologist produces 10,000 wRVUs, of which 80% are procedural.

CMS reduces those procedural wRVUs by 2.5%.

That physician now generates:

10,000 × 0.8 × (1 − 0.025) = 7,800 wRVUs
Plus 2,000 protected E/M wRVUs
= 9,800 total wRVUs

They just lost 200 wRVUs on paper without changing behavior.

At a $33.40 conversion factor, that is $6,680 per year in compensation erosion.

For high-volume surgeons, that number can exceed $20,000–$40,000 annually.

Will the higher conversion factor offset this?

Partially but not reliably.

CMS increased the conversion factor to:

But remember: the 2.5% wRVU cut applies first.

For physicians whose work is dominated by procedures, the net effect is often negative.

Worse, the 2.5% conversion factor boost expires in 2027, creating a massive cliff risk for multi-year contracts.

You cannot build physician compensation on a one-year political patch.

How facility-based physicians get hit twice

CMS also changed how practice expense RVUs are allocated.

This means hospital-employed physicians get:

A cardiologist doing a stent in a hospital now generates 8–19% fewer RVUs than the same work in an office setting.

Yet the hospital still earns the DRG, APC, and technical revenue.

This creates massive alignment risk if compensation contracts are not rebalanced.

What contracts are most exposed?

You should immediately audit any agreement that includes:

“wRVUs”
“CMS RVU schedule”
“Medicare valuation”
“Conversion factor”
“Productivity threshold”
“Evergreen CMS updates”

These exist in:

Employment agreements
Independent contractor agreements
Medical director contracts
Teaching and academic agreements
Call-pay formulas
Coverage agreements

Most of them were written under pre-2026 assumptions.

Five contract strategies smart organizations are using

Option 1 – Lower wRVU thresholds

If the target was 8,000 wRVUs, lower it to 7,800. This preserves pay while keeping productivity logic intact.

Option 2 – Increase per-wRVU rate

Increase the conversion factor by 2.5% so each RVU is worth more. This keeps benchmarks stable.

Option 3 – Increase base salary

Move the lost variable compensation into guaranteed income. This stabilizes recruitment and retention.

Option 4 – Carve out CMS efficiency cuts

Use pre-2026 RVUs for compensation while CMS uses adjusted RVUs for payment.

This decouples policy from payroll.

Option 5 – Move to blended compensation

Add:

Quality
Access
Care coordination
Clinical Documentation
Value-based metrics

This future-proofs compensation.

Why HIM, CDI, and RCM leaders are now in the middle

This is not just a finance problem.

Your coding, documentation, and charge capture teams now determine whether physicians:

In 2026, every missing CC, modifier, procedure detail, and documentation gap becomes a compensation risk.

Expect:

Your revenue integrity infrastructure must be ready.

What should you do this quarter?

Run CPT-level modeling using 2025 data
Identify who loses RVUs
Quantify dollar impact
Update contracts before Jan 1
Document fair market value using MGMA and AMGA benchmarks
Prepare for 2027 cliff risk

Final Word for Leaders

CMS has permanently altered how physician labor is valued.

If you do nothing, your contracts will quietly break.

If you act now, you can:

2026 is not a reimbursement year. It is a contract reset year.