Medicare's final 2027 fee schedule cuts physician pay more than proposed but softens the same-day visit penalty

Medicare will pay most physicians 2.31% less per relative value unit (RVU) in 2027 under the final physician fee schedule the Centers for Medicare & Medicaid Services (CMS) released Nov. 4, a deeper cut than the agency proposed in July.

The conversion factor for physicians who don't qualify through an advanced alternative payment model (APM) drops from $33.40 to $32.63, according to the CMS fact sheet. For qualifying APM participants, it falls 1.83%, from $33.57 to $32.95.

The July proposal had projected cuts of 1.68% and 1.19%, to $32.84 and $33.17.

Most of the decline comes from the expiration of a one-year 2.5% increase Congress provided for 2026 in Public Law 119-21, which CMS calls the Working Families Tax Cut legislation. Statutory updates of 0.25% for most physicians and 0.75% for qualifying APM participants offset part of it.

The gap between July and November sits in an adjustment for changes to work RVUs, which CMS estimated at +0.53% in the proposed rule and -0.12% in the final rule. The changes take effect Jan. 1, 2027.

The Medical Group Management Association (MGMA) told CMS in its September comment letter that it was "deeply concerned about the impact of the estimated reductions to the conversion factors."

"For too long, fee-for-service payment has rewarded volume over value, fueling a reactive system of sick care," CMS Administrator Mehmet Oz, M.D., said in a news release. "This final rule breaks from that status quo."

Same-day visit cut shrinks

CMS will pay 20% less for the lower-paid service when a physician bills a separately identifiable office or outpatient evaluation and management (E/M) visit with modifier -25 on the same day as a procedure with a 0-day global period.

The policy applies when the same physician, or a physician of the same specialty in the same group practice, furnishes both. The higher-paid service is paid in full.

The proposed version would have paid the second service at 50%, reached 10- and 90-day global procedures as well and applied to any physician in the same practice. CMS scaled back all three after public comments, according to the rule and fact sheet. Commenters told the agency that patients often see physicians of different specialties on the same day, especially when they travel for appointments.

The draft rule drew 44,287 public comments. MGMA's letter said the group "strongly opposes CMS' proposal to cut same-day services by 50%," and the American Medical Association (AMA) singled out the modifier -25 proposal among its chief concerns in a 171-page comment letter.

Dermatology, otolaryngology and podiatry still take the largest hits from the policy, CMS estimates in the rule's regulatory impact analysis, though the cuts are smaller than the proposal would have produced. CMS first proposed a similar policy in 2019 and did not finalize it.

The agency's release describes the final version as ending duplicate billing for clinical work already counted in a procedure's valuation.

G2211 becomes a modifier

The E/M visit complexity add-on code, G2211, becomes modifier B1 in 2027. Instead of a flat amount, B1 raises payment for the associated E/M visit by 16%, the same percentage at every visit level. CMS expects minimal overall payment impact because the volume billed under the code moves to the modifier.

Clinicians in Medicare Shared Savings Program accountable care organizations (ACOs) and participant providers in the Long-term Enhanced ACO Design Model can append modifier B2 instead, which raises the visit payment 32%. B2 is voluntary and can be billed for any patient those clinicians see, not only patients assigned or aligned to the ACO.

Practice expense overhaul and specialty impacts

CMS finalized a two-year phase-out of the indirect practice cost index, which keeps each specialty's total practice expense RVUs in line with practice expense per hour data from 2007 or earlier. A stabilizer meant to limit short-term swings replaces it. CMS describes the change as part of a multiyear shift away from AMA survey data toward "more objective, routinely updated and auditable cost data."

The rule's impact analysis projects significant decreases for dermatology, otolaryngology, orthopedic surgery and hand surgery, largely because of the modifier -25 policy and the removal of the index.

Clinical psychologists and clinical social workers are projected to see significant increases, with smaller gains for physical and occupational therapists, interventional radiology and vascular surgery. CMS posted the full specialty table as a separate public use file and cautioned that the figures are averages that may not reflect what a single practitioner sees.

CMS backed away from steeper cuts to joint replacement. The final work RVU for total hip arthroplasty (Current Procedural Terminology [CPT] code 27130) and total knee arthroplasty (CPT code 27447) is 16.70 for each, matching the recommendation of the AMA's Relative Value Scale Update Committee and down from 19.11 now.

CMS had proposed 15.37 for the hip code and 15.94 for the knee code. Commenters persuaded the agency that its proposed values "could significantly affect providers and create barriers to accessing care," the rule states.

Remote monitoring changes, one delayed

CMS finalized three remote monitoring policies as proposed. Remote therapeutic monitoring (RTM) can be furnished only to established patients. Practitioners billing RTM or remote physiologic monitoring (RPM) must furnish a separately reportable initiating visit when the services begin. And CMS updated how the services are valued.

A fourth policy, paying for RPM and RTM only when clinical staff employed by the practice perform them rather than contractors, is delayed two years to Jan. 1, 2029. CMS said the delay gives practices more time to adapt. The agency also took comments on bundling the remote monitoring codes into four new G-codes and said it may revisit the idea in future rulemaking.

Traditional MIPS reporting ends in 2031

The traditional Merit-based Incentive Payment System (MIPS) reporting option ends beginning with the 2031 performance period, according to the CMS release. Clinicians have through 2030 to move to MIPS Value Pathways (MVPs), which CMS said already cover about 98% of clinicians, or to advanced APMs. That is two years more transition time than CMS proposed.

The rule adds three MVPs focused on diabetes, hypertension and hospitalists. Starting in 2027, clinicians must report at least one specialty-specific core measure.

ACOs can waive patient cost sharing

In performance year 2024, 75% of the 476 participating ACOs earned shared savings totaling $4.1 billion, according to CMS. Starting April 1, 2027, ACOs approved by CMS may reduce or eliminate Part B cost sharing for assigned beneficiaries on most items and services.

Durable medical equipment, prosthetics, orthotics and supplies, and prescription drugs are excluded. CMS will collect initial applications in early 2027, according to the Shared Savings Program fact sheet.

The shared savings rate for Level E of the BASIC track rises from 50% to 60%, closer to the ENHANCED track's 75%. CMS also cut the maximum weight of the positive regional adjustment for lower-spending ENHANCED track ACOs from 50% to 35% and raised the prior savings adjustment's scaling factor from 50% to 75%.

CMS projects its benchmark changes will add up to 1 million assigned beneficiaries in an average year and increase net federal savings by $5.5 billion over 10 years, give or take $3.3 billion.

ACOs applying for a Jan. 1, 2027, start will get another chance to change their track or level selection during the application cycle's Phase 2 request for information period, according to CMS.

The agency is removing the prepaid shared savings option, citing low uptake; ACOs already in it will receive payments through Dec. 31, 2027. Beginning Jan. 1, ACOs must give beneficiaries the standardized written notice once per agreement period, by May 30, rather than tying it to a first primary care visit, and the required follow-up communication is gone.

New codes for prevention and planning

Two new codes, G0572 and G0573, cover advance care planning furnished by clinical staff under the billing practitioner's direct supervision. CPT codes 99497 and 99498 will be used only for time the billing practitioner personally spends.

CMS also finalized separate coding and payment for shared medical appointments, with an add-on code for additional time, and add-on coding for the diagnosis and treatment of vaccine adverse effects.

That code covers work beyond an E/M visit, including listening to patient concerns, answering questions and building trust, according to the fact sheet. The release adds national payment pathways for health and well-being coaching under general supervision.

Smoking and tobacco cessation services and structured assessment, brief intervention and referral to treatment services join the final year of a four-year increase to work RVUs for timed behavioral health services. Work RVUs for psychiatric collaborative care model services also rise.

"Medicare should reward clinicians for keeping people healthy," Health and Human Services Secretary Robert F. Kennedy Jr. said in the release.

Other provisions

CMS is pausing the global surgery data collection required by section 523 of the Medicare Access and CHIP Reauthorization Act. The agency said it has several years of data showing post-operative visits during global periods are not occurring even though physicians are paid for them.

The Consolidated Appropriations Act, 2026, extended Medicare telehealth flexibilities through Dec. 31, 2027. The final rule recognizes diabetes self-management training and medical nutrition therapy as stand-alone billable visits at rural health clinics, and it limits clinical lab fee schedule payment reductions to 15% a year through 2029.

The rule also implements the Working Families Tax Cut legislation's limits on Medicare eligibility to U.S. citizens and nationals, lawful permanent residents, Cuban and Haitian entrants, and people lawfully residing in the U.S. under a Compact of Free Association, including procedures for termination and appeal rights.

The Ambulatory Specialty Model, which holds specialists accountable for the cost and quality of care for heart failure and low back pain, launches Jan. 1.