The 2027 Medicare Physician Fee Schedule: What Changed and How to Protect Your Revenue

Status note: This guide is based on the CY 2027 Medicare Physician Fee Schedule proposed rule (CMS 1848 P), released July 14, 2026. CMS is expected to publish the final rule in early November 2026, and the final figures can differ from the proposal. We will update this page when the final rule is released. Every figure below is marked as proposed until then.

Medicare will pay most physicians less per service in 2027 than it did in 2026. The proposed conversion factor for clinicians who are not qualifying participants in an Advanced Alternative Payment Model (APM) is $32.8409, a 1.68% decrease from $33.4009. For qualifying APM participants the proposed figure is $33.1693, a 1.19% decrease from $33.5675. The main reason is simple: the one year 2.5% increase Congress provided for 2026 expires on December 31, 2026, and the statutory updates for 2027 (0.25% and 0.75%) do not come close to replacing it. An Advanced APM is a Medicare payment arrangement, such as a Medicare Shared Savings Program accountable care organization track with downside risk, in which participants accept financial accountability for the cost and quality of care in exchange for a higher annual payment update and other incentives. Clinicians who meet CMS participation thresholds in one of these models are called qualifying participants, or QPs, and are paid under the higher conversion factor.

The conversion factor is only the first layer. The CY 2027 proposed rule also includes a 50% payment reduction for office visits billed on the same day as a global procedure, a change that converts the G2211 add on code into a percentage based modifier, a multiyear overhaul of the practice expense methodology, tighter rules for remote monitoring, and specialty level impacts that range from a 12% increase for clinical social workers to a 9% decrease for dermatology and otolaryngology. For some practices the net effect will be close to flat. For others it will be a double digit revenue reduction on the Medicare book of business.

This guide explains each change, shows how to calculate your own practice’s exposure, and lays out the operational and contracting steps that protect revenue before the new rates take effect on January 1, 2027.

Table of Contents

1. Quick answers for busy practice leaders
2. Where the 2027 fee schedule stands right now
3. The 2027 conversion factors: the numbers and the math behind them
4. Why Medicare physician payment keeps losing ground
5. The efficiency adjustment: what it is and where it stands for 2027
6. Same day E/M visits with global procedures: the modifier 25 reduction
7. G2211 becomes a modifier
8. The practice expense methodology overhaul
9. Specialty impact: who gains and who loses
10. Other 2027 changes that touch practice revenue
11. How to calculate your practice’s 2027 exposure
12. Fifteen ways to protect revenue in 2027
13. Compliance guardrails: offsetting cuts without creating audit risk
14. How DoctorsManagement helps practices prepare
15. Frequently asked questions
16. Sources and references

1. Quick answers for busy practice leaders

How much will Medicare pay physicians in 2027? Under the proposed rule, Medicare would pay $32.8409 per relative value unit for most physicians and $33.1693 per RVU for qualifying APM participants, before geographic adjustment. That is a 1.68% and 1.19% decrease, respectively, from 2026. Your actual payment per service depends on the RVUs assigned to each code, your geographic locality, and whether you participate in an Advanced APM.

What changed in the 2027 physician fee schedule? The largest changes are the expiration of the 2026 one year 2.5% increase, a proposed 50% payment reduction for office E/M visits billed on the same day as a 0 day, 10 day, or 90 day global procedure, the conversion of G2211 into a 16% modifier (32% for ACO participants), a phase out of the indirect practice cost index in practice expense RVUs with a new 5% stabilizer, revaluation and new restrictions for remote physiologic and remote therapeutic monitoring, a pause of global surgery postoperative data collection, new codes for shared medical appointments and clinical staff advance care planning, and a plan to make MIPS Value Pathways the only MIPS reporting option beginning with the 2029 performance year.

How can a practice offset Medicare reimbursement cuts? Practices offset cuts in four ways: capturing revenue they already earn but do not bill correctly (coding accuracy, care management, G2211, annual wellness visits, chronic care management), reducing the cost of collecting each dollar (denial prevention, clean claims, patient collections), improving payer mix and contract terms (commercial contracts tied to a specific Medicare year, Advanced APM participation for the higher conversion factor), and controlling practice expense (staffing models, supply costs, technology that reduces administrative labor). Section 12 covers each in detail.

Underneath all four is a shift in how practice owners think about their role. Leading a medical practice is less about the patients you individually see and more about the patients you oversee. Advanced practice providers, other licensed health professionals, and an engaged clinical and administrative team extend the physician’s reach, and they are what make care management, wellness visits, and the new 2027 codes workable at scale rather than one more task on the physician’s schedule. Private practice also enters 2027 with a structural advantage: it is the lowest cost site of care compared with hospital outpatient departments and private equity backed platforms, and the direction of Medicare policy, including CMS’s own questions about the facility payment differential, favors the low cost provider. Practices that build the team model and defend that cost position are the ones best placed to absorb a reimbursement cut.

2. Where the 2027 fee schedule stands right now

The Medicare Physician Fee Schedule is updated through annual rulemaking. CMS publishes a proposed rule in mid summer, accepts public comments for roughly 60 days, and publishes a final rule in late October or early November. The final rule takes effect on January 1 of the following year.

For CY 2027, the timeline is as follows:

• July 14, 2026: CMS placed the proposed rule (CMS 1848 P) on public display and published a fact sheet.
• July 16, 2026: The proposed rule was published in the Federal Register at 91 FR 43842.
• September 14, 2026: The comment period closed. The American Medical Association filed a 171 page comment letter opposing the same day E/M reduction and several practice expense proposals.
• Early November 2026 (expected): CMS publishes the final rule. The CY 2026 final rule went on display October 31, 2025, and the CY 2025 final rule on November 1, 2024.
• January 1, 2027: New rates and policies take effect.

Two things can still change the final numbers. First, the 0.53% budget neutrality adjustment depends on which RVU changes CMS finalizes. If CMS withdraws or softens the same day E/M reduction, which is the single largest redistribution in the rule, the budget neutrality adjustment shrinks and the conversion factors fall further. Second, CMS has said it will update its Medicare Economic Index projection with more recent data before finalizing. What cannot change through rulemaking is the statutory piece: the 2.5% increase for 2026 came from Congress, and only Congress can extend it. As of this writing no extension has been enacted.

Practice leaders should treat the proposed figures as a planning baseline for 2027 budgets and compensation models, then revise when the final rule is released.

3. The 2027 conversion factors: the numbers and the math behind them

Medicare converts the relative value units assigned to each service into dollars by multiplying total RVUs (after geographic adjustment) by a conversion factor. Since 2026, federal law has required two conversion factors: one for qualifying APM participants (QPs), meaning clinicians who meet CMS participation thresholds in an Advanced Alternative Payment Model, and one for everyone else. Anesthesia services have their own pair.

Proposed CY 2027 conversion factors

Source: CMS 1848 P, Tables D B1 through D B4, and the CMS fact sheet dated July 14, 2026. The anesthesia conversion factors also include a 0.30% specialty specific practice expense and malpractice adjustment.

The three moving pieces

CMS builds the 2027 conversion factor in three steps, starting from the 2026 figure.

• Remove the one year 2.5% increase. Public Law 119 21, which CMS refers to as the Working Families Tax Cut legislation, raised the 2026 conversion factor by 2.5% for services furnished from January 1 through December 31, 2026 only. Removing it takes the nonqualifying factor from $33.4009 to $32.5863 and the QP factor from $33.5675 to $32.7488.
• Apply the budget neutrality adjustment of positive 0.53%. Section 1848(c)(2)(B)(ii)(II) of the Social Security Act prohibits RVU changes from moving Part B spending by more than $20 million in a year. When proposed RVU changes would lower aggregate spending, CMS raises the conversion factor to hold the total level. A positive adjustment here means the proposed work RVU changes, taken together, reduce payments elsewhere in the fee schedule. This adjustment redistributes money; it does not add any.
• Apply the statutory update. Section 1848(d)(20) of the Act sets the 2027 update at 0.75% for the QP conversion factor and 0.25% for the nonqualifying conversion factor.

The result: $32.5863 multiplied by 1.0053 and then by 1.0025 equals $32.8409 for nonqualifying participants, and $32.7488 multiplied by 1.0053 and then by 1.0075 equals $33.1693 for QPs.

Note that the gap between the two physician conversion factors widens each year because the QP update is half a percentage point higher. In 2026 the gap was about 17 cents per RVU. In the 2027 proposal it is about 33 cents. Over a decade, this differential becomes a meaningful incentive to qualify for Advanced APM status.

In its regulatory impact analysis, CMS estimates the conversion factor update lowers fee schedule expenditures by about $2.1 billion in 2027.

4. Why Medicare physician payment keeps losing ground

The 2027 reduction is not an isolated event. It is the latest step in a pattern that has defined physician payment since the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) replaced the sustainable growth rate formula.

MACRA set statutory updates of 0.5% per year through 2019, then froze updates at 0% from 2020 through 2025, with the two track structure (0.75% for QPs and 0.25% for everyone else) beginning in 2026. Those updates were never indexed to practice cost inflation. CMS projects the Medicare Economic Index, its measure of growth in physician practice costs, at 2.5% for 2027. A 0.25% update against 2.5% cost growth is a real terms reduction of more than two percentage points in a single year, before any RVU redistribution.

Congress has repeatedly intervened with temporary increases, including the 2.5% for 2026. Each temporary fix expires, and each expiration shows up as a nominal cut in the following year’s proposed rule. The CY 2027 proposal is the fifth consecutive year in which CMS has proposed a lower conversion factor than the one in effect, counting the statutory expirations.

Several physician payment reform bills were introduced in the House during the 2026 session, including proposals to tie annual updates to the MEI. None had been enacted as of this writing. The House Energy and Commerce Subcommittee on Health held a hearing on the fee schedule, MACRA, and payment reform during the comment period. Practice leaders should watch for a year end legislative package, which has been the vehicle for prior temporary increases, but should not build a 2027 budget around the assumption that one will pass.

5. The efficiency adjustment: what it is and where it stands for 2027

The efficiency adjustment was the most contested policy in the CY 2026 final rule, and many practice leaders expected a second round in 2027. The 2027 proposed rule does not include a new efficiency adjustment, but the original one continues to affect how CMS values services.

What the efficiency adjustment does

In the CY 2026 final rule, CMS applied a 2.5% reduction to the work RVUs and intraservice time of most non time based services. CMS reasoned that procedures and tests become more efficient over time as technology improves and clinicians gain experience, while the Relative Value Scale Update Committee (RUC) survey process does not reliably capture those gains. Time based services, including E/M visits, care management, and behavioral health codes, were exempt because their value is tied directly to clock time.

CMS described the adjustment as periodic rather than annual, with a policy to apply it approximately every three years.

How it shows up in the 2027 proposal

Two things carry forward into 2027. First, the 2.5% reduction applied in 2026 remains in the work RVUs of affected codes; there is no restoration. Second, when CMS reviewed RUC recommendations for new and revised codes that were developed before the efficiency adjustment was finalized, it treated those recommendations as though they had already undergone the 2.5% adjustment. Specialty society summaries describe this as CMS continuing to apply the efficiency adjustment to non time based services and extending it to new and revised services whenever CMS determines the RUC recommended values do not already reflect expected efficiency gains.

In practical terms, proceduralists should not expect any relief from the 2026 adjustment, and new procedural codes entering the fee schedule in 2027 will be valued on an efficiency adjusted basis. The next scheduled application, if CMS holds to its stated cadence, would be CY 2029.

6. Same day E/M visits with global procedures: the modifier 25 reduction

This is the single most consequential policy in the 2027 proposed rule for office based procedural specialties, and it is the main driver of the large specialty level decreases for dermatology, otolaryngology, orthopedics, and podiatry.

The proposal

When a physician, or another physician in the same group practice, furnishes a separately identifiable office or outpatient E/M visit (reported with modifier 25) on the same day as a procedure with a 0 day, 10 day, or 90 day global period for the same patient, CMS proposes to pay the most expensive service at 100% and every other procedure or E/M visit furnished that day at 50%.

CMS argues that there are efficiencies when the same physician provides an E/M service in conjunction with a global procedure, that the practice expense and pre service work overlap, and that the current methodology likely pays twice for the same resources. CMS proposed a similar reduction in the CY 2019 rule and did not finalize it, but stated at the time that it continued to believe the overlap exists.

A worked example from the rule

CMS illustrates the policy with a dermatology encounter using 2026 RVUs: a level two established patient visit (CPT 99212, 1.78 nonfacility RVUs) plus two shave removals (CPT 11300 at 2.89 RVUs and CPT 11301 at 3.48 RVUs). Under the proposal, 11301 is paid in full as the highest valued service, while 11300 and 99212 are each cut in half, to 1.445 and 0.89 RVUs.

The encounter drops from 8.15 RVUs to 5.815 RVUs, a 29% reduction. At the proposed nonqualifying conversion factor and before geographic adjustment, that is $267.65 versus $190.97, or $76.68 less for a single routine visit. A dermatology practice performing thirty such encounters per week would lose roughly $120,000 per year on Medicare patients from this one policy, before the conversion factor change.

What CMS is asking about

CMS requested comments on three alternatives: a 25% reduction instead of 50%, extending the policy to other E/M families such as inpatient and nursing facility visits, and how the policy should apply to E/M visits furnished on the same day as intravitreal injections, which are high volume in ophthalmology and retina practices. The AMA and most procedural specialty societies asked CMS to withdraw the proposal entirely.

What practices should do now

Pull a full year of claims where an office E/M code was billed with modifier 25 on the same date of service as a global procedure by the same provider or any provider in the group. Calculate the exposure by applying a 50% reduction to the lower valued services in each encounter. This analysis is also a compliance review: modifier 25 is a long standing OIG and Medicare Administrative Contractor audit target, and any encounter where the E/M documentation does not support a separately identifiable service is both a revenue risk under the new policy and an overpayment risk under existing rules. Section 13 covers the compliance side.

7. G2211 becomes a modifier

HCPCS code G2211 is the office and outpatient E/M visit complexity add on that recognizes the cost of serving as the continuing focal point for a patient’s care or managing a single serious or complex condition over time. It was finalized in 2021, delayed by statute, and implemented for CY 2025.

The 2027 proposal

CMS proposes to retire G2211 as a separately billed code and replace it with a modifier appended to the associated E/M base code. CMS uses placeholder MOD1 in the proposed rule and will assign a two digit HCPCS modifier in the final rule. The modifier would increase payment for the associated E/M visit by 16% rather than adding a flat dollar amount.

CMS chose a percentage because the flat payment produced uneven results across visit levels: G2211 currently adds about 29% to a 99212 but only about 9% to a 99215. The 16% figure is a utilization weighted average adjusted for budget neutrality. Practices that bill G2211 mostly with lower level visits will see less from the modifier than they receive today; practices that bill it with level four and five visits will see more.

The ACO version

CMS also proposes a second modifier (placeholder MOD2) available only to practitioners participating in a Medicare Shared Savings Program ACO or as Participant Providers in the Long term Enhanced ACO Design (LEAD) Model. MOD2 would increase payment for the associated E/M visit by 32%, recognizing the additional resource costs of total cost of care accountability and quality reporting. Use of MOD2 would be voluntary, and it could be billed for all beneficiaries the practitioner serves, not only those assigned to the ACO. Claims with MOD2 would be included in beneficiary assignment, historical benchmark, and performance year expenditure calculations for the Shared Savings Program.

For primary care and medical specialty practices, the MOD2 proposal is one of the clearer financial arguments for ACO participation in the 2027 rule. A practice billing 10,000 Medicare E/M visits per year at an average of 2.5 work RVUs each, with G2211 appended to half of them, would see the add on payment roughly double by moving from MOD1 to MOD2.

Operational implications

Billing systems, EHR charge capture rules, and physician compensation plans built around G2211 as a separate line item will need to change. Compensation plans that credit wRVUs for G2211 should specify how the modifier will be credited. Coding staff will need updated guidance on when the modifier applies, since the clinical criteria do not change even though the mechanism does.

8. The practice expense methodology overhaul

Practice expense (PE) RVUs typically account for 40% to 50% of total RVUs for office based services. CMS has historically derived PE values from AMA survey data, including the Physician Practice Information Survey, most of which dates to 2007 or earlier. The 2027 proposed rule begins a multiyear transition away from that data toward what CMS describes as more objective, routinely updated, and auditable cost sources. CMS states that it expects the change to make fee schedule payments more sensitive to market pressures and to open possibilities for right sizing payments across outpatient settings.

Phasing out the indirect practice cost index

The current methodology includes a final step, the indirect practice cost index (IPCI), that scales each specialty’s total PE RVUs to be consistent with specialty specific practice expense per hour data from the old surveys. CMS proposes to remove the IPCI steps over two years: half of the adjustment removed in 2027 and the remainder in 2028. Under the new approach, PE RVUs would still be derived from work RVUs, direct PE inputs, and specialty specific indirect allocators, but without the anchor to 2007 era cost data.

The redistribution from this change is substantial for some specialties. Specialties whose old survey data showed high practice expense per hour relative to their current direct inputs lose; specialties whose survey data understated their costs gain. CMS cites the IPCI removal alongside the same day E/M reduction as the main reasons for the dermatology and otolaryngology decreases.

The practice expense stabilizer

To limit volatility, CMS proposes a new PE stabilization adjustment that would cap annual increases or decreases in a code’s PE RVUs at plus or minus 5% for most existing services. The stabilizer would not apply to new, revised, or revalued codes, and it runs before the statutory phase in, which already limits any code’s total RVU reduction to a maximum of 19% in one year.

Indirect PE allocation and site of service

CMS proposes to allocate indirect practice expense based on both work RVUs and clinical labor for all services except 10 day and 90 day global codes. For nursing facility visits (CPT 99304 through 99310, 99315, and 99316), CMS proposes to set the facility PE RVUs equal to the nonfacility PE RVUs so that payment is the same whether or not the patient is in a Part A skilled nursing facility stay, correcting an unintended gap created by the 2026 site of service change.

Most important for the long term, CMS is asking whether the facility versus nonfacility payment differential is still appropriate at all. The agency specifically requests comment on whether hospital employed physicians incur substantially lower indirect costs than independent physicians furnishing services in facility settings, whether facility indirect PE could be reduced below the current 50% allocation or to zero for certain employed physicians, and whether a new modifier identifying employed physicians could be used to adjust facility PE payments. Nothing is proposed for 2027 on this question, but the direction of travel favors independent practices over employed physician groups in facility settings.

9. Specialty impact: who gains and who loses

Table D B5 of the proposed rule estimates the combined impact of all proposed RVU changes on total allowed charges by specialty. The table isolates the redistribution inside a fixed pool: its total row is 0%. It does not include the conversion factor change or the statutory updates, which apply across the board.

The largest proposed decreases are dermatology and otolaryngology at 9% each, orthopedic surgery at 7%, hand surgery at 5%, and colon and rectal surgery and podiatry at 4% each. CMS attributes these mostly to the same day E/M reduction, the IPCI removal, and the continued phase in of code level reductions finalized in prior years. The largest increases go to clinical social workers at 12% and clinical psychologists at 11%, reflecting the final year of the four year work RVU increase for timed behavioral health services. Physical and occupational therapy, interventional radiology, radiation oncology, vascular surgery, and psychiatry each gain 3%.

Source: CMS 1848 P, Table D B5, columns C and G (91 FR 44244 through 44247). Allowed charges are CMS estimates based on 2025 utilization at 2026 rates. Percentages are rounded to whole numbers and are proposed estimates.

Two cautions apply when reading this table. First, these are specialty averages. CMS states plainly that an individual practitioner’s impact depends on the mix of services furnished, and CMS publishes a separate “Specialty Impacts by Practitioner” file showing the range within each specialty. A dermatology practice that performs few same day procedures will do better than the 9% average; one built around high volume same day biopsy and destruction encounters will do worse. Second, the table percentages must not simply be added to the conversion factor change, because the budget neutrality offset is already inside the table. Section 11 explains the correct arithmetic.

10. Other 2027 changes that touch practice revenue

Remote physiologic and remote therapeutic monitoring

Remote monitoring has been one of the fastest growing service lines in Part B, and the OIG has issued multiple reports raising concerns about billing without an established relationship, services delivered by third party vendors with minimal practice involvement, and device costs that no longer justify current valuations. The 2027 proposed rule responds with three restrictions and a revaluation:

• RTM services could be furnished only to established patients.
• Practitioners reporting RPM or RTM would have to furnish a separately reportable initiating visit in association with the onset of monitoring.
• RPM and RTM would be payable only when performed by clinical staff employed by the practice, not when delivered by contractors.
• CMS proposes to update the valuation of the device supply codes because devices are available at lower cost than originally estimated.

CMS is also seeking comment on bundling the RPM and RTM CPT codes into four new HCPCS G codes. Practices that rely on outsourced monitoring vendors should model what the employed staff requirement means for their program’s economics and compliance posture. Those relationships may need to be restructured before January 1, 2027.

Global surgery data collection paused

CMS proposes to pause the postoperative visit data collection required by section 523 of MACRA. The agency states that several years of data show postoperative visits during global periods are not occurring at the frequency assumed in the valuations, yet practitioners are still paid for them. CMS is posting a public use file with imputed RVUs for 10 day and 90 day global codes with the postoperative visits removed, and is soliciting comment on revaluation strategies. No revaluation is proposed for 2027, but surgeons should read this as a clear signal of future reductions to global period payments.

Behavioral health, smoking cessation, and SBIRT

The four year transition that increased work RVUs for timed behavioral health services, finalized in the CY 2024 rule, reaches its final year in 2027. CMS proposes to add smoking and tobacco use cessation services and screening, brief intervention, and referral to treatment (SBIRT) services to this final transition year. This is why clinical social workers, clinical psychologists, and psychiatry show the largest specialty gains.

Shared medical appointments

CMS proposes to establish separate coding and payment for shared medical appointments, a group based format in which beneficiaries receive clinical guidance while engaging with peers managing similar conditions. No HCPCS code currently describes this service. For practices managing large panels of patients with diabetes, hypertension, obesity, or other chronic conditions, this is a new revenue opportunity aligned with the administration’s chronic disease and prevention priorities.

Advance care planning by clinical staff

CMS proposes two new HCPCS codes for advance care planning furnished by clinical staff under direct supervision of the billing practitioner. The existing CPT codes 99497 and 99498 would be reserved for time personally spent by the billing practitioner. Practices that have used nurses or care coordinators for ACP conversations gain a compliant way to bill that work.

Telehealth

The Consolidated Appropriations Act, 2026 extended the broader Medicare telehealth flexibilities, including the removal of geographic restrictions and expanded originating sites, through December 31, 2027, and delayed the in person requirement for mental health telehealth to January 1, 2028. In the rule, CMS proposes adding five services to the Medicare Telehealth Services List (including the new shared medical appointment and clinical staff ACP codes), allowing teaching physicians to bill when either the teaching physician or the resident is physically present with the patient, and increasing the originating site facility fee (HCPCS Q3014) to $32.65.

Quality Payment Program

The MIPS performance threshold stays at 75 points for the 2027 performance period. The larger change is structural: CMS proposes to end traditional MIPS reporting and make MIPS Value Pathways (MVPs) the only reporting option beginning with the 2029 performance period and 2031 payment year. Practices that have not yet selected or tested an MVP should begin in 2027. CMS also proposes updates to the Ambulatory Specialty Model finalized in 2026, including a rural adjustment, subspecialty exclusions, and a voluntary patient reported outcome submission option. Details are in the separate CMS fact sheet on the Shared Savings Program and QPP provisions.

Rural health clinics and FQHCs

CMS proposes to recognize diabetes self management training and medical nutrition therapy as stand alone billable visits under the RHC all inclusive rate, aligning RHCs with FQHCs and physician offices. The FQHC PPS base rate would rise 2.5% to $212.91. In person visit requirements for mental health visits furnished via telecommunications would not apply through December 31, 2027.

Clinical laboratory fee schedule

Conforming changes implement the CAA 2026 amendments to the CLFS, including a phase in that caps payment reductions from private payor rate data at 15% per year through CY 2029. CMS also proposes to move algorithm only laboratory services (software as a medical service) from the CLFS to the fee schedule.

Primary care payment request for information

CMS is seeking comment on three topics: reconsidering relative primary care valuation in the fee schedule, the payment implications of technology in primary care, and prospective (capitated) primary care payment in the Shared Savings Program and potentially in Original Medicare broadly. No payment change is proposed for 2027, but the RFI signals that the CY 2028 rule may contain substantial primary care changes.

11. How to calculate your practice’s 2027 exposure

Specialty averages are a starting point, not an answer. The following method produces a practice specific estimate in a few hours of work by a billing manager or practice administrator. It is also the method behind the specialty impact worksheet distributed to attendees of the DoctorsManagement webinar on this topic.

Step 1: Identify your conversion factor

Determine whether your clinicians are qualifying APM participants for the 2027 payment year. QP status is based on participation in an Advanced APM during the 2025 performance period. Your ACO or APM lead will have the determination. Everyone else uses the nonqualifying factor.

Step 2: Pull your top 20 codes by Medicare volume

Export 12 months of Medicare fee for service claims and rank CPT and HCPCS codes by total allowed charges. For most practices the top 20 codes represent 70% to 85% of Medicare revenue. Record the volume for each code.

Step 3: Look up 2026 and proposed 2027 RVUs

Addendum B on the CMS 1848 P rule page lists the proposed 2027 work, practice expense, and malpractice RVUs for every code, in both facility and nonfacility settings. Compare each of your top 20 codes against the 2026 Addendum B. Note whether the code is time based (exempt from the efficiency adjustment) or non time based.

Step 4: Apply your geographic practice cost indices

Multiply each RVU component by your locality’s GPCI. Many practices skip this step and use national figures; the error is usually small, but for practices in high cost or low cost localities it matters.

Step 5: Calculate payment per code and total change

For each code, multiply total adjusted RVUs by the applicable conversion factor for 2026 and for proposed 2027, then multiply by annual volume. The difference, summed across the top 20 codes, is your baseline exposure from the conversion factor and RVU changes combined.

For a service whose RVUs do not change, payment falls by exactly the conversion factor change. As an illustration, $500,000 of 2026 Medicare revenue from unchanged codes at the same volume falls by $8,400 for a nonqualifying practice (1.68%) or $5,950 for a QP practice (1.19%).

Step 6: Layer in the same day E/M reduction

If you perform office procedures, pull every claim in the 12 month window where an office E/M code with modifier 25 was billed on the same date as a 0 day, 10 day, or 90 day global procedure by the same billing provider or any provider in the group. For each encounter, identify the highest valued service, apply a 50% reduction to all other services, and sum the difference. Add this to the Step 5 result.

Step 7: Adjust for G2211

Count G2211 units billed in the window by the level of the associated E/M visit. Recalculate the add on as 16% of each associated visit’s proposed 2027 payment. If you participate in an MSSP ACO or the LEAD model, also calculate the 32% scenario. The difference versus current G2211 payments adjusts the Step 5 result up or down.

Step 8: Review remote monitoring and care management

If you bill RPM or RTM, determine whether your program uses contracted vendors for monitoring services and estimate the revenue at risk if the employed clinical staff requirement is finalized. If you bill chronic care management, principal care management, or advanced primary care management, confirm those codes’ proposed 2027 values; most are time based and were not affected by the efficiency adjustment.

A note on using the specialty table correctly

If you use Table D B5 as a shortcut instead of code level analysis, do not add the table percentage to the 1.68% conversion factor change. The table already includes the 0.53% budget neutrality offset, so adding the full conversion factor change would count that offset twice. Instead, apply the table percentage and then the statutory change alone: multiply by 1.0025 divided by 1.025 (about 0.978) for nonqualifying participants, or 1.0075 divided by 1.025 (about 0.983) for QPs.

Three illustrations for a nonqualifying practice with $500,000 of 2026 Medicare revenue at constant volume and mix:

• A specialty at 0% in the table, such as general surgery: $500,000 multiplied by 0.978 equals about $489,000, roughly $11,000 (2.2%) less.
• The dermatology average, 9% decrease: $500,000 multiplied by 0.91 and then by 0.978 equals about $445,000, roughly $55,000 (11%) less.
• The psychiatry average, 3% increase: $500,000 multiplied by 1.03 and then by 0.978 equals about $503,700, roughly $3,700 (0.7%) more.

Independent actuarial analysis using national claims data estimates the average reduction for nonqualifying participants at about 2.2% across all specialties, consistent with the first illustration above.

12. Fifteen ways to protect revenue in 2027

The strategies below are organized by where the money comes from: capturing earned revenue, reducing the cost to collect, improving contracts and payer mix, and controlling practice expense. Not every strategy applies to every practice, but most practices can implement five or six of them before the new rates take effect.

Capture revenue you already earn

1. Audit E/M coding accuracy in both directions. Undercoding is as common as overcoding in practices that have never had an independent coding audit. The 2021 E/M guidelines base level selection on medical decision making or total time, and many physicians still code by habit from the old history and exam framework. A baseline audit of 10 to 20 charts per provider usually identifies a 3% to 8% revenue gap, and the fix is documentation education rather than more work.

2. Capture the G2211 modifier on every eligible visit. Under the proposed 16% structure, the modifier is worth more on higher level visits. Build EHR prompts that flag eligible established patient relationships, and make sure the clinical rationale (continuing focal point for all care, or management of a serious or complex condition over time) is reflected in the record.

3. Build or expand care management services. Chronic care management, principal care management, transitional care management, behavioral health integration, and the advanced primary care management codes introduced in 2025 are time based, were exempt from the efficiency adjustment, and pay for work that clinical staff already do by phone and portal. A practice with 1,500 Medicare patients that enrolls 20% in CCM at the base code generates roughly $200,000 in new annual revenue with one dedicated care coordinator.

4. Schedule annual wellness visits systematically. AWV completion rates in independent practices commonly run below 30%. Each AWV is a stand alone payment, and it is the natural entry point for care management enrollment, advance care planning, and preventive services that pay separately.

5. Add shared medical appointments and clinical staff ACP once codes are finalized. Both are new in 2027 and both monetize work that chronic disease practices are already doing informally.

6. Bill the correct place of service and site of service. With CMS questioning the facility and nonfacility differential, accurate place of service coding matters more than ever. Services furnished in a practice owned office must be billed as nonfacility to receive the full practice expense payment.

Reduce the cost to collect

7. Attack denials at the root cause. Industry benchmarks put initial denial rates between 8% and 12%, and the cost to rework a denied claim averages $25 to $118 depending on complexity. Group denials by reason code, fix the top five causes (eligibility, authorization, modifier, diagnosis specificity, timely filing), and track first pass resolution rate weekly.

8. Tighten front end eligibility and authorization. Real time eligibility verification at scheduling and again at check in prevents the largest single denial category. For Medicare Advantage patients, confirm plan specific authorization requirements before procedures.

9. Collect patient responsibility at the time of service. Patient balances are the fastest growing share of practice receivables and the hardest to collect after the visit. Estimate responsibility before the appointment, collect copays and known deductibles at check in, and offer card on file for balances.

10. Measure days in accounts receivable and aging by payer. Medicare pays clean claims within 14 days by statute. If your Medicare A/R over 60 days exceeds 10% of total Medicare A/R, the problem is internal (claim edits, unworked rejections, missing documentation), and it is fixable.

Improve contracts and payer mix

11. Read every commercial contract’s reimbursement exhibit for its Medicare reference. Contracts that pay a percentage of “the current Medicare fee schedule” automatically import the 2027 reductions, including the same day E/M cut, into commercial payments. Contracts that reference a fixed year (for example, “2024 Medicare RVUs and conversion factor”) do not. Know which you have, and when renegotiating, push for fixed year references or an annual inflator tied to the MEI.

12. Evaluate Advanced APM and ACO participation. QP status earns the higher conversion factor (a widening differential), MSSP participants would qualify for the 32% MOD2 complexity modifier, and participants in two sided risk tracks are exempt from MIPS reporting. For primary care and medical specialty practices, the 2027 rule makes the financial case for ACO participation stronger than it has been in any prior year.

13. Review physician compensation plans for Medicare linked terms. Plans that credit wRVUs at a fixed dollar rate are insulated from the conversion factor change but may not be insulated from the same day E/M reduction if the plan credits wRVUs as billed rather than as paid. Plans tied to collections absorb the full impact. Decide now how G2211 modifier credit and same day reductions will be handled, and communicate before January.

Control practice expense

14. Right size staffing against the work. Staffing is 50% to 60% of practice overhead in most specialties. Benchmark support staff per full time physician against MGMA data for your specialty, and look at scheduling templates, no show rates, and room utilization before adding headcount. Care coordinators and medical assistants who generate care management revenue often pay for themselves; administrative positions that do not touch revenue should be scrutinized.

15. Audit supply, drug, and vendor costs annually. Group purchasing organization participation, drug acquisition cost benchmarking against ASP, and competitive bids on EHR, billing clearinghouse, and remote monitoring vendors typically yield 3% to 6% savings on non labor overhead. For practices affected by the RPM contractor restriction, this is also the moment to re evaluate whether an in house program is more economical.

13. Compliance guardrails: offsetting cuts without creating audit risk

Revenue pressure is the most common precursor to compliance problems. When practices respond to payment cuts by pushing coding to the edge, the result is often an overpayment, a payer audit, or in the worst cases a False Claims Act exposure that costs far more than the cut it was meant to offset. Every strategy in Section 12 can be executed compliantly. The following guardrails keep it that way.

Modifier 25 documentation. The same day E/M reduction will not make modifier 25 less scrutinized; it will make it more scrutinized, because the policy change focuses auditor attention on the code pair. The E/M service must be significant and separately identifiable from the procedure, which means the record must show evaluation of a problem beyond the decision to perform the procedure. A pre existing note template that always generates an E/M alongside a procedure is a red flag. Audit a sample of modifier 25 encounters quarterly.

G2211 clinical criteria. The modifier does not change the criteria. The visit must reflect a longitudinal relationship in which the practitioner is the continuing focal point for all needed services, or ongoing management of a single serious or complex condition. Appending the modifier to every established patient visit without that relationship is improper billing.

Care management consent and time. CCM, PCM, and APCM require documented patient consent, a comprehensive care plan, and (for time based codes) contemporaneous time logs. The OIG has audited CCM billing and found claims without a documented care plan or with time overlapping other services. Build the documentation workflow before scaling enrollment.

Remote monitoring. The 2027 restrictions respond directly to OIG findings. Even before they take effect, practices should confirm that every RPM patient has an established relationship, that the 16 day device data requirement is met for supply codes, that the 20 minute interactive communication requirement is met and documented for management codes, and that the practice retains control over the clinical work.

E/M level selection. Correcting undercoding is appropriate when documentation supports it. Coaching physicians to document more in order to bill higher, without a corresponding change in the medical decision making or time actually involved, is not. The 2021 guidelines reward accurate documentation of complexity, not volume of text.

Incident to and split shared billing. As practices lean on nurse practitioners, physician assistants, and clinical staff to generate care management and ACP revenue, supervision and billing rules become central. Incident to billing in the office requires direct supervision and an established plan of care initiated by the physician. Split shared visits in facility settings must be billed under the practitioner who performed the substantive portion.

The connection between revenue strategy and compliance is why DoctorsManagement pairs revenue cycle engagements with compliance review. A revenue improvement that cannot withstand an audit is not an improvement.

14. How DoctorsManagement helps practices prepare

DoctorsManagement has guided physician practices through every fee schedule cycle since the resource based relative value scale was introduced. Two service lines are built specifically for the work described in this guide.

Revenue Cycle Management. Our revenue cycle team conducts code level impact analysis against the proposed and final 2027 rates, audits E/M and modifier 25 coding accuracy, designs care management and AWV programs with compliant documentation workflows, and runs denial root cause analysis with a first pass resolution target. For practices that outsource billing to us, the 2027 impact model is part of the standard annual planning cycle.

Practice Assessments. A practice assessment is a structured review of financial performance, operations, staffing, contracts, and compliance against specialty benchmarks. For 2027, the assessment includes a Medicare exposure model, a commercial contract review for Medicare linked reimbursement terms, an Advanced APM and ACO participation analysis, and a prioritized action plan with projected revenue impact for each recommendation.

If you would like to discuss your practice’s 2027 exposure, schedule a 30 minute discovery call with our team. Attendees of our Simplifying the Business of Medicine webinar on the 2027 fee schedule also receive the specialty impact worksheet, a spreadsheet template for the top 20 code analysis described in Section 11.

15. Frequently asked questions

How much will Medicare pay physicians in 2027?

Under the proposed rule, the conversion factor is $32.8409 per RVU for clinicians who are not qualifying APM participants and $33.1693 for qualifying APM participants, before geographic adjustment. These are decreases of 1.68% and 1.19% from 2026. Payment for a specific service equals its total RVUs, adjusted for locality, multiplied by the applicable conversion factor. The final rule, expected in early November 2026, sets the final figures.

What is the 2027 Medicare conversion factor?

The proposed 2027 conversion factor is $32.8409 for most physicians and $33.1693 for qualifying APM participants. Anesthesia has separate conversion factors of $20.2143 and $20.4165, respectively.

Why are Medicare physician payments being cut in 2027?

The one year 2.5% increase Congress provided for 2026 expires at the end of 2026. The statutory updates for 2027 (0.25% for most physicians, 0.75% for QPs) and a 0.53% budget neutrality adjustment offset only part of that expiration, so both conversion factors fall below their 2026 levels. Extending the increase would require new legislation.

What changed in the 2027 physician fee schedule?

The major changes are the conversion factor reduction, a proposed 50% payment reduction for office E/M visits billed on the same day as a global procedure, conversion of G2211 into a 16% modifier (32% for ACO participants), a two year phase out of the indirect practice cost index in practice expense RVUs with a new 5% stabilizer, new restrictions and revaluation for remote monitoring, a pause of global surgery data collection, new codes for shared medical appointments and clinical staff advance care planning, and a proposal to make MVPs the only MIPS reporting option beginning in the 2029 performance year.

Is the 2027 physician fee schedule final?

No. The proposed rule was published July 16, 2026, and the comment period closed September 14, 2026. CMS typically publishes the final rule around November 1. The 2027 rates take effect January 1, 2027, and the final figures can differ from the proposal.

Which specialties are affected most by the 2027 proposed rule?

In CMS’s specialty impact table, the largest decreases are dermatology and otolaryngology (9% each), orthopedic surgery (7%), hand surgery (5%), and colon and rectal surgery and podiatry (4% each). The largest increases are clinical social workers (12%) and clinical psychologists (11%). These figures reflect RVU redistribution only and exclude the conversion factor change.

What is the efficiency adjustment and does it apply in 2027?

The efficiency adjustment is a 2.5% reduction to the work RVUs and intraservice time of non time based services, finalized in the CY 2026 rule and intended to apply roughly every three years. CMS did not propose a new adjustment for 2027, but the 2026 reduction remains in effect, and CMS valued new and revised codes for 2027 as if they had already received the adjustment. The next scheduled application would be 2029.

What is the proposed modifier 25 same day payment reduction?

When the same physician or a physician in the same group bills a separately identifiable office E/M visit on the same day as a 0 day, 10 day, or 90 day global procedure, CMS proposes to pay the highest valued service at 100% and every other service that day at 50%. CMS is also considering a 25% reduction instead. The AMA and procedural specialty societies have asked CMS to withdraw the proposal.

What happens to G2211 in 2027?

CMS proposes to retire G2211 as a separate code and replace it with a modifier that increases payment for the associated E/M visit by 16%. A second modifier worth 32% would be available only to practitioners in a Medicare Shared Savings Program ACO or the LEAD model. The clinical criteria for using the add on do not change.

How does the practice expense methodology change affect my practice?

CMS proposes to phase out the indirect practice cost index, which anchored specialty level PE RVUs to survey data from 2007 or earlier, over two years. A new stabilizer caps annual PE RVU changes at plus or minus 5% for most existing codes. The effect varies by specialty: dermatology and otolaryngology lose, while several medical specialties gain. CMS is also asking whether the facility and nonfacility payment differential should be reduced for hospital employed physicians, which would not affect 2027 but signals future changes.

How can a practice offset Medicare reimbursement cuts?

Start with revenue the practice already earns but does not fully capture: E/M coding accuracy, the G2211 modifier, care management codes, annual wellness visits, and the new shared medical appointment and advance care planning codes. Then reduce the cost to collect through denial prevention and point of service collections. Review commercial contracts for Medicare linked terms and evaluate Advanced APM participation for the higher conversion factor and the 32% ACO modifier. Finally, benchmark staffing and vendor costs against specialty norms. Section 12 of this guide covers fifteen specific strategies.

Does the conversion factor cut reduce wRVU based physician compensation?

Not directly. If a compensation plan pays a fixed dollar amount per wRVU, the conversion factor does not change that rate, although it reduces what Medicare pays the practice for the same work and will surface at the next renegotiation. Plans tied to collections absorb the full impact. The same day E/M reduction and the G2211 modifier change may affect wRVU credit depending on how the plan is written.

Should my practice join an ACO because of the 2027 rule?

The 2027 rule strengthens the case for primary care and medical specialty practices. Qualifying APM participants receive a higher conversion factor with a widening differential, MSSP participants would qualify for the 32% complexity modifier, and two sided risk participants are exempt from MIPS. The decision also depends on the ACO’s track record, the practice’s patient panel, and the practice’s ability to manage total cost of care. A practice assessment can model the financial case.

What is changing for remote patient monitoring in 2027?

CMS proposes to require that RTM be furnished only to established patients, that RPM and RTM be preceded by a separately reportable initiating visit, and that monitoring services be performed only by clinical staff employed by the practice rather than contractors. CMS also proposes to reduce the device supply valuations and is considering bundling the codes into four new G codes. Practices using outsourced monitoring vendors should review their arrangements.

When does MIPS change to MVPs only?

CMS proposes to end traditional MIPS reporting and make MIPS Value Pathways the only option beginning with the 2029 performance period, which affects the 2031 payment year. The 2027 performance threshold remains 75 points.

Where can I find the proposed 2027 RVUs for specific codes?

Addendum B on the CMS 1848 P rule page lists proposed 2027 RVUs for every code. CMS also publishes a Specialty Impacts by Practitioner file showing the range of impacts within each specialty.

16. Sources and references

• CMS Fact Sheet: Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule, July 14, 2026
• CMS Fact Sheet: CY 2027 PFS Proposed Rule, Medicare Shared Savings Program and Quality Payment Program Provisions
• Federal Register: CY 2027 Payment Policies Under the Physician Fee Schedule (CMS 1848 P), 91 FR 43842, July 16, 2026
• CMS 1848 P rule page with Addendum B and Specialty Impacts by Practitioner downloads
• American Medical Association: 2027 proposed Medicare fee schedule, what physicians need to know
• American Hospital Association: CMS issues CY 2027 physician fee schedule proposed rule
• CMS 1832 F: CY 2026 Physician Fee Schedule Final Rule (efficiency adjustment and 2026 conversion factors)
• HHS Office of Inspector General, reports on remote patient monitoring and chronic care management billing
• Quality Payment Program, MIPS and MVP resources

This article is for general informational purposes and does not constitute legal, billing, or coding advice. Figures are drawn from the CY 2027 proposed rule and are subject to change in the final rule. Verify current rates and policies with CMS before making financial or operational decisions.

About the Author

Matt Kolinski is a strategy and management consultant who works with physician-led practices across the country on financial modeling, operations, payer strategy, and the business architecture behind sustainable, scalable medical businesses. He helps physicians think clearly about both paths, running a great practice and building something bigger, so they can choose the one that fits the life they actually want.