Most physicians who aren’t qualifying APM participants face a 1.68% cut to the Medicare conversion factor in 2027 under CMS’ proposed physician fee schedule. Some specialties face much steeper drops once coding and valuation changes are added in.
The proposed rule, released July 14, would lower the conversion factor to $32.8409 from $33.4009 for clinicians who are not qualifying APM participants. Qualifying APM participants would see a 1.19% cut, to $33.1693. Most of the drop comes from the expiration of the one-time 2.5% increase Congress approved for 2026. Wakely estimates the changes would lower average fee schedule reimbursement by about 2.2% for nonqualifying clinicians. By locality, the drop ranges from 3.6% in Arkansas and Southern Maine to 0.8% in Atlanta.
The biggest single driver of the gap between specialties is a proposed cut to same-day E/M visits billed with modifier 25. When a visit and a 0-, 10- or 90-day global procedure happen on the same day, only the highest-paid service would get full payment. The others would be paid at 50%. CMS said otolaryngology, dermatology and podiatry would be hit hardest by this change, according to Holland & Knight. The AMA and more than 150 groups have asked CMS to drop the proposal. More than 10,000 public comments mentioned it, and about 85% opposed it, per Jiro Health.
CMS is expected to finalize the rule in November, and Congress could still change several Medicare provisions before federal funding runs out Dec. 11.
Here’s how estimated 2027 payment impacts break down by specialty:
Dermatology: -9%
Dermatology is tied for the steepest cut, per HFMA. That’s because visit-plus-procedure encounters are routine in the specialty. A Milliman analysis commissioned by the American Academy of Dermatology Association estimates the modifier 25 policy alone would cut dermatology’s allowed amounts by about $291 million, or about 7% of its total fee schedule allowed amounts, based on 2024 utilization. A separate Jiro Health analysis of Medicare claims from October 2024 through September 2025 put dermatology’s share at $395.4 million, or 44.5% of all modeled modifier 25 reductions. Milliman put dermatology’s share at about 30%. The gap reflects the different data and methods behind each estimate.
Otolaryngology: -9%
ENT is tied with dermatology for the largest cut, per HFMA, mostly because of the same-day E/M policy.
Orthopedic surgery: -7%
Orthopedic surgery is projected to lose about 7% from RVU and coding changes, on top of the conversion factor cut. The proposal would also cut RVUs for total hip and total knee replacement (CPT 27130 and 27447) by 20%, according to comments from the American Association of Hip and Knee Surgeons.
“This is one of the most dangerous and severe situations I’ve seen in the 30-plus years I’ve been in practice,” Wilford Gibson, MD, president of the American Academy of Orthopaedic Surgeons, told Becker’s.
Hand surgery: -5%
Hand surgery’s estimated cut is 5%. CMS said the same-day policy would have a smaller effect on hand surgery than on dermatology, ENT and podiatry.
Ophthalmology: -3%
CMS estimates a 3% combined cut for ophthalmology. Payment for cataract surgery (CPT 66984) would fall to $444.34, about 4% lower than in 2026.
Gastroenterology: about -3%
Physician payments for GI endoscopy in ASCs and hospital outpatient departments would fall about 3%, according to the American Society for Gastrointestinal Endoscopy.
Neurosurgery and interventional pain management: -2% each
Both specialties face an estimated 2% decline under CMS’ specialty-level estimates, separate from the conversion factor cut. Wakely’s analysis, however, projects neurosurgery among the specialties with the largest decreases. Separately, ASC facility rates for common spine injection codes would also fall under CMS’ proposed ASC payment rule, which is distinct from the physician fee schedule. CPT 64483 and 64493 would drop to $466.96 from $485.51.
Urology: about -2%
Medicare payments for urology would fall about 2%, according to the American Urological Association.
Podiatry; colon and rectal surgery: cuts, size unclear
CMS named podiatry among the specialties hit hardest by the same-day policy, and listed colon and rectal surgery among those with smaller negative effects, per EY.
Gainers
Behavioral health and primary care-oriented specialties come out ahead. Clinical social work would rise 12%, clinical psychology 11%, and diagnostic testing facilities and geriatrics 4% each, per HFMA. Psychiatry, interventional radiology, and physical and occupational therapy are also projected to gain, according to EY.
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