Medicare Pays Physicians Less in 2027 Unless Congress Steps In

CMS released the final 2027 Medicare physician fee schedule(opens in new tab) on November 4, and the headline number is a cut. Starting January 1, the conversion factor for most physicians drops to $32.63, down 2.31% from $33.40 this year. Physicians who qualify through an Advanced Alternative Payment Model get $32.95, a 1.83% drop. CMS also projects that practice costs, measured by the Medicare Economic Index, will rise 2.6% next year.

The main driver is the end of the one-time 2.5% increase Congress included for 2026 in H.R. 1. Small statutory updates of 0.25% (0.75% for qualifying APM participants) don't make up the difference.

Where Advocacy Made a Difference

The final rule is softer than the proposal in several places. The AMA, joined by more than 150 specialty and state medical organizations, pushed back on a plan to cut payment for E/M visits billed with modifier -25 on the same day as a procedure. CMS had proposed paying the lower-valued service at half price for procedures with 0-, 10- and 90-day global periods. The final policy applies only to 0-day globals, trims the lower-valued service by 20% instead of 50%, and only when the same physician or a same-specialty colleague in the group bills both. Dermatology, otolaryngology and podiatry will still feel it most.

CMS also backed off proposed cuts to shoulder, hip and knee arthroplasty and adopted the RUC's recommended values. It finalized the new maternity care CPT codes without a parallel set of G-codes, and it delayed for two years a rule that would have limited remote patient monitoring to a practice's own employees.

Changes That Will Shift Payment by Specialty

CMS finalized all four of its practice expense changes as proposed, including a new way of allocating overhead and a two-year phase-out of the indirect practice cost index. A new cap limits how much a service's practice expense value can rise or fall in a single year to 5%. Because these changes interact, their effect depends heavily on specialty and setting, so it's worth checking how your most-billed codes move in 2027.

What Changes in MIPS

• The performance threshold stays at 75 points through the 2028 performance year.
• Traditional MIPS will continue through the 2030 performance year, two years longer than CMS proposed, before MVPs become the only option for clinicians outside a MIPS APM.
• The outcome measure requirement is replaced by a core measure requirement starting in 2027, and small practices are exempt.
• The electronic prior authorization measure is optional in 2027 and worth 10 bonus points, then becomes mandatory in 2028.

Separately, the Security Risk Analysis measure leaves Promoting Interoperability in 2027, though HIPAA still requires practices to do the analysis.

Physicians in Advanced APMs should also note a change CMS made over the AMA's objection. Beginning with the 2027 performance year, qualifying participant status, and the higher conversion factor that comes with it, will apply only to claims billed under the clinician's APM-participating tax ID, not every tax ID they bill under.

What Happens Next

The cut doesn't take effect until January 1, and Congress can still act. The AMA is pressing lawmakers during the lame-duck session and backing the bipartisan Patients First Act (H.R. 9693), which would tie annual Medicare updates to the Medicare Economic Index and reform budget neutrality. A short note to your representative and Maryland's senators, explaining what a pay cut means for your patients and your practice, carries more weight than most physicians expect.

The AMA is preparing a detailed analysis of the nearly 2,500-page rule, and MCMS will share it with members along with MedChi's guidance as it becomes available.