2027 Medicare Physician Fee Schedule: What Healthcare Leaders Need to Know
CMS has released the proposed 2027 Medicare Physician Fee Schedule, and the potential impact extends well beyond a change to the conversion factor.
The proposal includes changes affecting E/M reimbursement, global procedures, G2211, remote monitoring, practice expense calculations, ACO participation, rural health services, and potentially the coding system Medicare relies on in the future.
For healthcare organizations, the central question is not simply how much the conversion factor may decrease.
It is how the combined changes could affect net reimbursement, coding workflows, provider documentation, staffing models, ACO performance, and revenue integrity across the organization.
The rule is still proposed, but organizations should begin assessing the potential impact now.
Proposed Conversion Factor Reductions
CMS is proposing two conversion factors for 2027:
Qualifying APM participants: $33.1693, a projected decrease of approximately 1.2%
Nonqualifying APM participants: $32.8409, a projected decrease of approximately 1.7%
The decrease is partly connected to the expiration of a temporary 2.5% conversion factor increase that applied in 2026.
A reduction of 1% to 2% may appear manageable when viewed in isolation. However, the true financial impact will depend on an organization’s Medicare volume, specialty mix, procedure mix, participation in value-based arrangements, and exposure to the other policies included in the proposed rule.
Organizations should model the effect using actual utilization data rather than applying the conversion factor decrease evenly across expected revenue.
G2211 Could Be Replaced by Two New Modifiers
CMS is proposing to transition HCPCS code G2211 from a separately reported add-on code to a modifier appended to the associated office or outpatient E/M code.
The first proposed modifier would increase payment for the associated E/M service by 16%.
A second modifier would be available to qualifying providers participating in a Medicare Shared Savings Program ACO or the Long-term Enhanced ACO Design Model. That modifier would increase payment for the associated E/M service by 32%.
This creates both reimbursement opportunities and implementation risks.
Organizations would need to determine:
Which providers and services qualify for each modifier
Whether payer and claim-editing systems are prepared to accept them
How provider eligibility will be maintained
Whether documentation supports longitudinal or complex care
How the modifiers affect beneficiary assignment and ACO expenditures
Whether missed modifier use creates an avoidable revenue loss
This would not be a simple code replacement. It could require coordinated updates across coding, compliance, billing, provider education, charge capture, payer testing, and ACO administration.
Same-Day E/M and Global Procedures Could Be Paid at 50%
One of the most significant proposals would affect separately identifiable office or outpatient E/M services performed on the same day as a procedure with a 0-, 10-, or 90-day global period.
When the same physician, or another physician in the same practice, performs both services:
The highest-valued service would be paid at 100%
The additional E/M service or procedure would be paid at 50%
This proposal could have a substantial effect on specialties that frequently provide a separately identifiable E/M service and a procedure during the same encounter.
Documentation may still support reporting the E/M service, but reimbursement could be reduced even when the service is separately identifiable.
Organizations should identify:
High-volume procedure and E/M combinations
Departments with frequent modifier 25 utilization
Physicians and specialties most affected
Expected revenue loss under the proposed methodology
Potential scheduling and operational implications
Commercial payers that may eventually adopt similar edits
This is an area where a broad percentage estimate will not provide enough visibility. The impact should be modeled by specialty, provider, code combination, and payer.
Remote Monitoring Requirements Could Reshape Current Programs
CMS is also proposing several changes to remote physiologic monitoring and remote therapeutic monitoring.
The proposals include:
Restricting RTM services to established patients
Requiring a separately reportable initiating visit when RPM or RTM begins
Allowing payment only when clinical staff performing the service are employed by the practice
Excluding services delivered by contractors
Revising service valuation based on updated device-cost assumptions
Considering whether current RPM and RTM CPT codes should be bundled and replaced by four new HCPCS G-codes
Organizations using third-party remote monitoring vendors should pay close attention to the employee requirement. Depending on how the final rule is written, existing vendor arrangements and staffing models could affect whether services remain reimbursable.
A review of contracts, staffing relationships, billing workflows, patient eligibility, initiating visits, and documentation should begin before 2027.
Practice Expense Methodology Is Moving Away From Older Data
CMS is continuing a multiyear effort to reduce its reliance on older AMA survey data when calculating practice expense RVUs.
The agency is proposing a methodology that uses more objective, routinely updated, and auditable cost information. It would also begin phasing out a step that ties overall practice expense RVUs by specialty to data that may date back to 2007 or earlier.
These changes could redistribute reimbursement among specialties and care settings.
The impact may not be uniform. Some specialties could experience reductions while others see increases, even before the conversion factor change is applied.
Organizations should review CMS’s specialty-impact and code-level files rather than relying only on national averages.
ACO Financial Incentives Could Shift
The proposed rule includes several changes to the Medicare Shared Savings Program.
Among them, CMS is proposing to:
Increase the BASIC Track Level E shared-savings rate from 50% to 60%
Reduce the maximum positive regional-adjustment weight for ENHANCED Track ACOs from 50% to 35%
Increase the prior-savings adjustment scaling factor from 50% to 75%
Risk-adjust the 5% cap on upward benchmark adjustments
Create an additional benchmark growth adjustment for ACOs adding providers and beneficiaries who are new to value-based care
These proposals may create opportunities for some ACOs while changing the financial advantages of particular tracks for others.
ACO leaders should model the complete financial methodology before making participation or track decisions. The higher G2211-related modifier may also affect expenditures, benchmarks, beneficiary assignment, and performance calculations.
Additional Considerations for Rural Providers
The proposed rule includes several provisions that may be particularly relevant to rural health organizations.
CMS is proposing to recognize Diabetes Self-Management Training and Medical Nutrition Therapy as qualified preventive services that Rural Health Clinics could bill as stand-alone visits under the all-inclusive rate.
CMS also notes that current statutory extensions allow RHCs and Federally Qualified Health Centers to continue providing certain services through telecommunications technology through December 31, 2027.
For rural organizations already operating under narrow margins, these opportunities should be evaluated alongside the proposed conversion factor decreases and specialty-specific payment changes.
Could Medicare Move Away From CPT?
CMS is also requesting public feedback on whether Medicare should continue relying on the AMA’s CPT code set.
The request explores concerns about licensing, governance, code-development processes, and whether another system, including ICD-10-PCS, could serve as an alternative.
This is only a request for information. CMS is not proposing an immediate elimination of CPT.
However, any future move away from CPT would have broad implications for:
Coding and billing
Provider documentation
Claims processing
EHR and practice-management systems
Payer contracts
Compliance programs
Staff education
Data analytics and reporting
Healthcare organizations should monitor this discussion, but they should not begin changing their coding systems based on the request alone.
What Healthcare Organizations Should Do Now
Model the financial impact
Use actual Medicare utilization, specialty, provider, procedure, and place-of-service data. Do not limit the analysis to the conversion factor.
Identify high-risk service combinations
Review same-day E/M and global procedure combinations, current G2211 use, remote monitoring services, and codes affected by practice expense changes.
Bring the right teams together
Finance, revenue cycle, coding, compliance, clinical operations, contracting, IT, and ACO leadership should evaluate the proposal together.
Review affected workflows
Determine what would need to change in documentation, charge capture, coding, billing, claim edits, provider education, remote monitoring contracts, and system configuration.
Submit comments where the impact is significant
CMS is accepting public comments through September 14, 2026, under file code CMS-1848-P.
The MRS Perspective
The most significant revenue risk may not come from the published conversion factor reduction. It may come from how several policy changes interact inside an organization’s actual service mix.
A missed modifier, an unprepared claim edit, a remote monitoring staffing arrangement, a same-day E/M reduction, or a specialty-specific RVU change can create revenue erosion that is difficult to see in a high-level financial forecast.
Healthcare organizations should use the proposed-rule period to create visibility now, before the final policies move into implementation.
Medical Management & Reimbursement Specialists helps healthcare organizations evaluate coding, compliance, reimbursement, and revenue integrity risks before they become recurring losses.
Contact MRS to discuss how the proposed 2027 changes could affect your organization.
Sources: CMS 2027 Physician Fee Schedule Proposed Rule Fact Sheet, CMS Shared Savings Program Proposals, and CMS-1848-P supporting materials.