Several federal and state healthcare policies are taking effect in 2026, bringing major changes to the physician workforce, hospital operations, reimbursement, insurance and medical school.
1. Affordable Care Act enhanced subsidies expire: Enhanced premium tax credits expired Dec. 31, leaving millions of marketplace enrollees facing higher premiums in 2026.
- The enhanced subsidies, introduced under the 2021 American Rescue Plan Act, increased subsidy amounts and expanded eligibility to households earning more than 400% of the federal poverty level, capping benchmark plan premiums at 8.5% of income. Since taking effect, the credits helped grow ACA marketplace enrollment to 24.3 million in 2025.
- Congressional efforts to extend the subsidies failed, with neither a Democratic three-year extension proposal nor a Republican alternative focused on health savings accounts passing the Senate. While a House vote may still take place in early 2026, about 4.8 million people are set to lose coverage without an extension, according to the Urban Institute.
- Several states have taken steps to mitigate this effect, but none will be able to completely replace federal funding indefinitely. New Mexico is the only state fully replacing the expired subsidies for 2026. California, Maryland, Connecticut and Colorado have committed partial funding, while Arkansas, Texas and Wyoming implemented “premium alignment” to stretch remaining federal subsidies further.
2. CMS’ final physician fee schedule for 2026: CMS released its final rule for 2026 Medicare payments under the physician fee schedule, including two separate conversion factors, Oct. 31. CMS will implement two separate conversion factors for Medicare reimbursement. One for qualified practitioners participating in advanced alternative-payment models that promote quality and cost accountability. The other will be used for non-QP physicians and practitioners.
- The final rule includes a QP-conversion factor of $33.57, representing a 3.77% increase from the current conversion factor of $32.35. For non-QPs, the final rule increases the conversion factor by 3.26%, from $32.35 to $33.40.
- Changes to the QP and non-QP conversion factors for 2026 include increases of 0.75% and 0.25%, respectively, according to CMS. They also include a one-year increase of 2.5% stipulated by the One Big Beautiful Bill Act, and a 0.49% increase that the agency said is necessary to account for finalized changes in work relative value units for some services.
- Additionally, the rule finalizes an efficiency adjustment of negative 2.5% to work RVUs and corresponding intraservice portion of physician time for non-time-based services that CMS said it expects to accrue gains in efficiency over time. This cut, based on the past five years of the Medicare Economic Index productivity factor, would periodically apply to all codes except time-based services, such as evaluation and management, care management, behavioral health, Medicare telehealth services and maternity codes, which have a global period of 270 days (designated as MMM).
3. One Big Beautiful Bill Act: President Donald Trump signed the One Big Beautiful Bill Act on July 4, which included historic cuts to Medicaid and other significant shifts to healthcare policy.
- The bill added new requirements to Medicaid that will require states to establish their own work requirements as early as January 2027, and also increased oversight of Medicaid-related taxes.
- The Congressional Budget Office estimates the bill will lower Medicaid spending by around $1 trillion but leave around 11.8 million more people uninsured over the next nine years. The shift would have a large financial impact on hospitals, which will then affect physician practices.
- The bill also placed limits on federal loans for professional programs, including medical school. Federal loans for medical school are now limited to $50,000 a year, with a total cap of $200,000. The average medical school debt exceeds $234,000, according to an Education Data Initiative report, and tuition and living expenses for private institutions can top $87,000 per year.
4. Changes to prior authorization. Starting in 2026, CMS will implement key provisions of the Interoperability and Prior Authorization Final Rule to help modernize prior authorization and reduce administrative burden. Impacted payers, including Medicare Advantage organizations, Medicaid and CHIP programs, Medicaid managed care plans and CHIP managed care entities, must issue prior authorization decisions within 72 hours for expedited requests and seven calendar days for standard requests, significantly shortening current timelines. Payers will need to provide specific reasons for prior authorization denials and report prior authorization metrics publicly, increasing accountability and transparency. Beginning Jan. 1, 2027, the rule will also require impacted payers to implement an HL7 FHIR-based Prior Authorization API to support electronic, end-to-end prior authorization to streamline workflows, reduce manual processes and minimize delays in patient care.
CMS also launched its Wasteful and Inappropriate Service Reduction (WISeR) as a pilot program in Arizona, Washington, New Jersey, Texas, Ohio and Oklahoma through Dec. 31, 2031. Providers in these states, including ASCs, will be required to follow the new prior authorization protocols.
CMS contractors will use a combination of artificial intelligence tools and clinical review to evaluate prior authorization requests, according to CMS. The process will align with existing Medicare coverage policies and patient safety standards.
The initial procedures subject to prior authorization include:
- Electrical nerve stimulator implants
- Epidural steroid injections for pain management (excluding facet joint injections)
- Percutaneous vertebral augmentation for vertebral compression fractures
- Percutaneous image-guided lumbar decompression for spinal stenosis
5. Changes to visa restrictions and their impact on the workforce: Immigrants make up 27% of physicians and surgeons, 22% of nursing assistants and 16% of registered nurses in the U.S. Foreign physicians and clinicians are an important part of the healthcare workforce, often working in underserved and rural areas. Foreign clinicians generally enter the country on two types of visas: H-1B and J-1. The J-1 is a temporary visitor exchange visa with a two-year home country return requirement. The H-1B visa is a temporary professional worker visa for a specialty occupation with “dual intent,” meaning visa holders can apply for a green card while on H-1B status, and requires employer sponsorship. J-1 visas are commonly used by international medical graduates to enter the U.S. for residency or fellowship training, while H-1B visas are often used by state-licensed physicians for employment in clinical practice.
This year, the federal government has made several policy changes to both visa types.
In May 2025, the White House limited travel from seven countries and banned travel from 12 others — this included temporary pauses on interviews for J-1 visa applications. In June, a strict social media screening policy was implemented that required all applicants to set their accounts to public. The pause ended June 18, 2025. Most U.S. residency programs begin July 1, meaning international medical graduates affected by visa delays had only a short window to secure appointments and enter the country.
This year, U.S. residency programs have accepted 6,653 international physicians, but about 1,000 have not yet secured visas. Although federal officials said the application pause has been lifted, some physicians cannot schedule visa appointments because their embassies have not reopened them. Some have been told their applications need more vetting, and others were denied visas because they are from countries with a travel ban. In September 2025, President Donald Trump issued a proclamation imposing a $100,000 payment to accompany new H-1B visa petitions that went into effect Sept 21. A few days later, the Trump administration reportedly began considering exempting physicians and medical residents from the fee after healthcare industry groups raised concerns. On Sept. 25, the Department of Homeland Security released a proposed rule for H-1B visa applicants that would change the current process of conducting random selections to a weighted selection process. This would generally favor applicants with higher skills and higher wages. The weighted selections would be based on an individual’s wage level, with higher wages weighing more heavily.
