2027 Medicare Physician Fee Schedule Proposed Rule: What It Means for Physician Pay

CMS's proposed CY 2027 Medicare Physician Fee Schedule sets the conversion factor at $32.8409 for clinicians who are not qualifying APM participants, a decrease of $0.56 (1.68%) from $33.4009 in 2026. For qualifying APM participants (QPs), the proposed rate is $33.1693, down $0.40 (1.19%) from $33.5675. According to the CMS fact sheet and the proposed rule in the Federal Register, the main reason is that the one-year 2.5% increase for 2026, enacted in Public Law 119-21, does not carry into 2027.

These numbers are proposals. The comment period closed on September 14, 2026, and CMS will set the 2027 rates in a final rule. The final conversion factors and specialty impacts can differ from what is on this page.

This guide covers the two conversion factors and the arithmetic behind them, CMS's specialty-by-specialty impact table, the other proposals that change what physicians are paid, the timeline for the final rule, and how to estimate your own exposure. For how the current rates were set, see our 2026 Medicare fee schedule guide.

Medicare turns relative value units (RVUs) into dollars by multiplying them, after a geographic adjustment, by a conversion factor. Since 2026, the statute has required two conversion factors: one for qualifying APM participants, meaning clinicians who meet CMS's participation thresholds in an Advanced Alternative Payment Model, and one for everyone else. Anesthesia services have their own pair. A change in the conversion factor applies to every service paid under the fee schedule.

The gap between the two physician conversion factors widens from $0.1666 in 2026 ($33.5675 minus $33.4009) to $0.3284 in the proposal ($33.1693 minus $32.8409), because the statutory update for QPs is half a point higher each year.

A note for anyone citing the rule. The executive summary of the Federal Register document (91 FR 43844) pairs the 2026 baselines the other way around and prints one of them as $33.5875. The calculation tables (Tables D-B1 and D-B2) and the CMS fact sheet show $33.5675 for QPs and $33.4009 for everyone else, and the published dollar and percent changes only work with that pairing. This page uses the tables.

CMS describes the calculation in the rule's regulatory impact analysis (91 FR 44241). It starts from the 2026 conversion factor, takes out the one-year 2.5% increase, then applies a budget-neutrality adjustment and the statutory update.

1. The 2026 increase expires. Public Law 119-21, which CMS calls 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. The fact sheet puts it this way: current law requires a 2.5% reduction in Medicare fee schedule payment compared with 2026. This is the main reason both conversion factors go down.

2. Budget neutrality adds 0.53%. The statute (section 1848(c)(2)(B)(ii)(II) of the Social Security Act) does not allow RVU changes to move Part B spending by more than $20 million in a year. CMS says the 0.53% adjustment accounts for proposed changes in work RVUs for some services. A positive adjustment means the proposed RVU changes, taken together, would lower spending, so CMS raises the conversion factor to hold the total level. It is an offset for cuts elsewhere in the fee schedule, and it does not add money in aggregate.

3. The statutory update is small. Section 1848(d)(20) of the Act sets the 2027 update at 0.75% for the QP conversion factor and 0.25% for the other. For comparison, CMS projects the Medicare Economic Index, its measure of growth in practice costs, at 2.5% for 2027 (91 FR 43865).

What about the efficiency adjustment? It is not one of the 2027 conversion factor steps. The CY 2026 final rule applied a 2.5% efficiency adjustment to work RVUs and intraservice time for non-time-based services, with a policy to apply it every three years. For 2027, CMS treated RUC recommendations that were based on pre-adjustment values as if they had been efficiency-adjusted (91 FR 43868). Our 2026 guide covers the original adjustment.

In its accounting statement, CMS estimates the conversion factor update lowers fee schedule expenditures by $2.1 billion in 2027 (Table D-B21, 91 FR 44275).

Table D-B5 of the proposed rule, "CY 2027 PFS Estimated Impact on Total Allowed Charges by Specialty," lists 56 specialties. The table below reproduces all of them. The percentages are from column G, "Combined Impact," which combines the work, practice expense, and malpractice RVU changes, for each specialty in total and split into non-facility (office) and facility settings. The dollar column is column C: CMS's estimate of each specialty's fee schedule allowed charges, in millions, based on 2025 utilization and 2026 rates.

Read it with two cautions. First, the table shows how the proposed RVU changes move money between specialties inside a fixed pool; its TOTAL row is 0%. CMS says the 0.75% and 0.25% statutory updates are outside budget neutrality and are not captured in the table (91 FR 44249), and the 0% total shows the expiring 2.5% increase is not in it either. Second, these are specialty averages. CMS says an individual practitioner's impact depends on the mix of services they furnish.

The largest decreases are in dermatology (-9%), otolaryngology (-9%), orthopedic surgery (-7%), and hand surgery (-5%). CMS attributes these largely to the proposed same-day E/M reduction and the removal of the indirect practice cost index from practice expense, partly offset by the new practice expense stabilizer, plus the continued phase-in of code-level cuts finalized in earlier years (91 FR 44248). The largest increases go to clinical social workers (+12%) and clinical psychologists (+11%), with smaller gains for physical and occupational therapists, interventional radiology, and vascular surgery (+3% each). CMS credits code valuation and practice expense changes, the G2211 change, and the final year of the behavioral health work update.

For more detail, CMS publishes a "Specialty Impacts by Practitioner" file that shows the range of impacts within each specialty, and code-level RVUs in the Addendum B file. Both are in the downloads on the CMS-1848-P rule page.

When the same physician, or a physician in the same group practice, bills a separately identifiable office/outpatient E/M visit on the same day as a 0-, 10-, or 90-day global procedure, CMS proposes to pay the most expensive service at 100% and every other procedure or E/M visit that day at 50% (91 FR 43908). CMS says it believes there are efficiencies in these encounters and that it is likely paying twice for some of the same resources. It proposed a similar policy for 2019 and did not finalize it.

The rule's own example, using 2026 RVUs: a 99212 visit (1.78 non-facility RVUs) plus two shave removals, 11300 (2.89 RVUs) and 11301 (3.48 RVUs). 11301 is paid in full, and 11300 and 99212 are each cut in half, to 1.445 and 0.89 RVUs. Illustration: the encounter drops from 8.15 RVUs to 5.815 RVUs, about 29% less. At the proposed non-QP conversion factor, before geographic adjustment, that is $267.65 versus $190.97, or $76.68 less for the visit.

CMS is asking for comments on a 25% reduction instead of 50%, on applying the policy to other E/M visits such as inpatient visits, and on how it should apply to E/M visits on the same day as intravitreal injections. The AMA says it opposes the proposal and has asked CMS to withdraw it (AMA).

CMS proposes to replace add-on code G2211 with a modifier (placeholder MOD1) billed in the same circumstances. It would add 16% of the E/M visit's value instead of a flat amount. CMS notes that G2211 now adds 29% to a 99212 but only 9% to a 99215, and it set 16% as a utilization-weighted average adjusted for budget neutrality (91 FR 43899). A second modifier (placeholder MOD2) would add 32% and would be available only to clinicians in a Medicare Shared Savings Program ACO or Participant Providers in the LEAD Model (91 FR 43901).

CMS describes a multi-year move away from AMA survey data toward cost data it calls more objective, routinely updated, and auditable. For 2027 it proposes to (91 FR 43850-43851):

• Remove the steps that rely on the indirect practice cost index (IPCI), which is rooted in specialty practice expense per hour data from 2007 or earlier. Half of the change would apply in the first year and all of it in the second.
• Add a practice expense stabilizer so a code's PE RVUs cannot rise or fall more than 5% in a year. It would not apply to new, revised, or revalued codes, and it runs before the statutory phase-in, which CMS applies as a maximum 19% cut in a code's total RVUs in one year.
• Allocate indirect practice expense based on both work RVUs and clinical labor for all services except 10- and 90-day global codes.

CMS also proposes to pay nursing facility visits (99304 through 99310, 99315, and 99316) the same whether or not the patient is in a Part A stay, by setting the facility PE RVUs equal to the non-facility PE RVUs (91 FR 43860). CMS says interested parties told it the 2026 site-of-service change created an unintended payment gap for these visits. CMS is asking for comments on whether the facility and non-facility payment differential is still appropriate.

Per the fact sheet, CMS proposes to limit remote therapeutic monitoring (RTM) to established patients, to require a separately reportable initiating visit before RPM or RTM begins, and to pay for RPM or RTM only when clinical staff employed by the practice perform it, with no payment when contractors deliver the service. It also proposes revaluing these services because it understands the devices may cost less than it first estimated, and it is asking for comments on bundling the codes into four new HCPCS G-codes.

CMS proposes to pause the post-operative visit data collection required by section 523 of MACRA and says its data show post-operative visits in the global period are not occurring while practitioners are still paid for them (91 FR 43862). It is posting a file showing the work RVUs that would remain for 10- and 90-day globals if post-operative visits were removed, and it is asking for comments on revaluation. No revaluation is proposed for 2027.

Smoking and tobacco cessation services and SBIRT would join the final year of the four-year work RVU increase for timed behavioral health services. CMS proposes new coding and payment for shared medical appointments, and two new HCPCS codes for advance care planning done by clinical staff, with CPT 99497 and 99498 reserved for the billing practitioner's own time (fact sheet).

The Consolidated Appropriations Act, 2026 already extended the broader Medicare telehealth flexibilities, including the removal of geographic restrictions, through December 31, 2027, and pushed audio-only flexibility and the in-person requirement for mental health telehealth to January 1, 2028 (91 FR 44249). In the rule, CMS proposes adding GACP1, GACP2, GSMAS, GSLPP, and GADV1 to the Medicare Telehealth Services List (91 FR 43863), and letting teaching physicians bill when either the teaching physician or the resident is in the same place as the patient.

CMS does not propose changing the MIPS performance threshold, which stays at 75 points for the 2027 performance period (91 FR 44264). It does propose ending traditional MIPS reporting, making MIPS Value Pathways (MVPs) the only MIPS reporting option starting with the 2029 performance period and 2031 payment year (91 FR 44142).

CMS is asking for comments on how to reconsider primary care payment in the fee schedule, how technology in primary care affects payment, and prospective primary care payment in the Shared Savings Program and possibly Original Medicare. This is a request for input, with no payment change proposed for 2027.

A proposed rule is CMS's draft. CMS put the CY 2027 rule on public display on July 14, 2026, published it on July 16, 2026 (91 FR 43842), and took comments through September 14, 2026. The AMA says it filed a 171-page comment letter asking CMS to change several proposals, including the modifier -25 policy and the practice expense changes (AMA). CMS will respond to comments in a final rule, and the final rule sets the 2027 rates, which take effect January 1, 2027.

In the last two cycles, the final rule went on public display around November 1:

Why the final numbers can move. The 0.53% budget-neutrality adjustment depends on which RVU changes CMS finalizes, so dropping or changing a proposal such as the modifier -25 reduction would change it. CMS also says it will update the Medicare Economic Index projection with more recent data for the final rule. The 2.5% increase for 2026 came from legislation, and changing the statutory pieces would take legislation too. Until the final rule is out, treat every figure on this page as an estimate.

1. Know which conversion factor applies to you. The QP rate applies only to clinicians who meet the qualifying APM participant thresholds. If you are not sure, your group's APM or ACO lead will know. Everyone else is paid at the non-QP rate.

2. Estimate your exposure from your own numbers. Medicare pays each service its RVUs times the conversion factor, so two things move your Medicare revenue: the conversion factor and the RVUs of the codes you bill. For a service whose RVUs do not change, payment falls by exactly the conversion factor change. Illustration: $500,000 of 2026 Medicare fee schedule revenue from services with unchanged RVUs, at the same volume, would fall by $8,400 for a non-QP ($500,000 x 1.68%) or $5,950 for a QP ($500,000 x 1.19%).

To use CMS's specialty table instead, do not add the table percentage to the 1.68%. The table already reflects the 0.53% budget-neutrality offset (its total is 0%), so adding the full conversion factor change would count that offset twice. Apply the table figure to the statutory change alone: multiply by 1.0025 / 1.025, about 0.978, for non-QPs (1.0075 / 1.025, about 0.983, for QPs). Illustration for a non-QP with $500,000 of 2026 Medicare fee schedule revenue, same volume and mix:

• A specialty at 0% in Table D-B5, such as general surgery: $500,000 x 0.978 = about $489,000, or roughly $11,000 (2.2%) less.
• The dermatology average, -9%: $500,000 x 0.91 x 0.978 = about $445,000, or roughly $55,000 (11%) less.
• The psychiatry average, +3%: $500,000 x 1.03 x 0.978 = about $503,700, or roughly $3,700 (0.7%) more.

These are rough because CMS rounds the table to whole percentages and your code mix is not your specialty's average. For a closer number, look up your highest-volume codes in Addendum B on the CMS-1848-P page and compare the 2026 and proposed 2027 RVUs.

3. If you do procedures in the office, count your same-day E/M visits. Pull a year of claims where you billed an office E/M with modifier -25 on the same day as a 0-, 10-, or 90-day global procedure, and apply the 50% reduction to whichever service is cheaper, using the example above as a template. CMS says this proposal has the largest negative impact on otolaryngology, dermatology, and podiatry.

4. Read the contract clauses tied to Medicare. If you are paid per wRVU at a fixed dollar rate, the conversion factor does not change that rate by itself, though it lowers what Medicare pays your employer for the same work. Look for language that ties your rate, your productivity thresholds, or your wRVU values to "the current Medicare Physician Fee Schedule" or to CMS's current-year figures, because those clauses carry the 2027 changes into your pay. Two specific questions for 2027: whether your plan credits wRVUs for G2211 today and how it would credit a modifier instead, and whether it applies Medicare's same-day payment reductions to your wRVU credit. Our guides on how wRVUs work and contract negotiation cover the mechanics, and the contract analyzer can help you review the language. Who keeps the value when billing rules change is the same question raised in our piece on AI scribes and wRVUs.

5. If you own a practice, check payer contracts too. A commercial contract priced as a percentage of the Medicare fee schedule can move with Medicare's rates, depending on which year's schedule it references. Read the reimbursement exhibit for the year it names.

6. Budget with the proposal and wait for the final rule to commit. The proposed numbers are a reasonable planning base for 2027. Revisit the estimate when the final rule is published, since the conversion factor and the specialty impacts can change.