Independent physician practices finalizing their 2027 budgets now have the Medicare number they were bracing for, and while it is lower than the one CMS floated in July, the final rule’s changes land directly on the operating budget.
Here are 13 things to know:
1. CMS released its final calendar year 2027 Medicare Physician Fee Schedule Nov. 4. The conversion factor falls 2.31% to $32.63 for clinicians who are not qualifying APM participants, and 1.83% to $32.95 for those who are. The agency had proposed cuts of 1.68% and 1.19%. Most provisions take effect Jan. 1.
2. The drop reflects the expiration of a one-time 2.5% increase Congress approved for 2026. Statutory updates of 0.25% for most clinicians and 0.75% for qualifying APM participants, along with a 0.12% negative adjustment for work relative value unit changes, do not make up the difference.
3. The cut extends a long slide. Inflation-adjusted Medicare physician payment fell 33% from 2001 to 2025, according to AMA data.
“Congress has intervened to increase physician payments several times in recent years, but the conversion factor has declined in five of the past six years, so this is not an aberration,” Alex Taira, associate director of public and regulatory affairs at the Ambulatory Surgery Center Association, told Becker’s after the proposed rule was released in July.
4. When a physician bills a separately identifiable office or outpatient E/M visit on the same day as a procedure with a zero-day global period, such as a biopsy or injection, Medicare will pay the highest-paid service in full and cut the others by 20%. The policy applies to the same physician or a physician of the same specialty in the same group practice.
5. CMS had proposed paying the lower-valued service at 50% and extending the policy to 10- and 90-day global procedures. It pulled back after what it described as an overwhelming response from commenters. Even in its narrower form, the policy reaches a large volume of visits: AHIP told CMS that about 50 million of the 220 million office and outpatient E/M visits billed to Medicare in 2024 carried modifier 25, representing about $5.7 billion in allowed charges.
6. Dermatology, otolaryngology, orthopedic surgery and hand surgery face the steepest cuts under the final rule, with dermatology, otolaryngology and podiatry taking the largest hit from the same-day change. The American Podiatric Medical Association estimates podiatrists will see an overall payment decrease of about 3.2% in 2027 and called the 20% cut arbitrary.
“This policy will threaten access to care, particularly for underserved and rural populations,” APMA President Patrick DeHeer, DPM, said in a Nov. 5 statement.
7. The Medical Group Management Association said the conversion factor cuts “further degrade an already fragile payment system.”
“Congress must intervene to prevent further harm by immediately fixing cuts to the conversion factor, along with changes to modifier 25,” said Anders Gilberg, senior vice president of government affairs at MGMA.
Independent practice advocates have long argued that the fee schedule’s structure, not any single year’s cut, is the core problem.
“The fee schedule is just a fundamental issue,” David Eagle, MD, president of the American Independent Medical Practice Association, told Becker’s in December. “There’s just no way around it.”
8. While the rule trims base pay, it raises payment for clinicians who join ACOs. CMS converted the G2211 add-on code into modifier B1, which raises visit payment by 16%. A new B2 modifier raises E/M payment by 32% for clinicians in Medicare Shared Savings Program and Long-term Enhanced ACO Design Model ACOs. B2 is voluntary and can be billed for any Medicare patient, not only ACO-assigned ones. The rule also adds cost-sharing waivers, higher shared savings and incentives for new participants. In 2024, 75% of the 476 participating ACOs earned shared savings totaling $4.1 billion, according to CMS.
9. CMS is continuing to shift practice expense valuation away from AMA survey data toward cost data it called “more objective, routinely updated and auditable.” It finalized removing the indirect practice cost index over two years, with half the change applying in 2027 and the index disappearing entirely in 2028. A new 5% stabilization adjustment caps how much any single code’s practice expense value can move in a year.
10. CMS received comments on whether to keep paying hospital-employed physicians less than those in physician offices and said it will consider the feedback in future rulemaking. How CMS values care across settings has drawn pushback from independent physicians before. When the agency finalized the 2026 fee schedule, AMA President Bobby Mukkamala, MD, said private practices were “expressing concern this rule would further put them at a disadvantage merely for treating patients at a hospital or ambulatory surgery center.”
11. CMS delayed to Jan. 1, 2029 its ban on paying for remote patient monitoring delivered by third-party vendor staff. Starting then, practices can bill remote monitoring codes only when the clinical staff delivering the services are direct employees of the billing practitioner or practice, though outside companies can still supply devices, software and technical support. Starting Jan. 1, 2027, however, practitioners must hold a face-to-face initiating visit, in person or via telehealth, before billing for remote monitoring, and remote therapeutic monitoring is limited to established patients.
12. Clinicians have through 2030 to move from traditional MIPS to MIPS Value Pathways or Advanced APMs. CMS had proposed starting that transition in 2029.
13. The final rule is scheduled for Federal Register publication Nov. 9. Congress could still change several Medicare provisions before federal funding runs out Dec. 11. Physician leaders are pressing lawmakers to step in before the cut takes effect.
“Congress must act before Jan. 1, 2027, to prevent further erosion of physician reimbursement and establish a sustainable, inflation-sensitive payment framework,” Alexander Vaccaro, MD, PhD, president of Philadelphia-based Rothman Orthopaedics, told Becker’s.
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