The Centers for Medicare & Medicaid Services (CMS) recently released the Calendar Year 2027 Medicare Physician Fee Schedule (MPFS) proposed rule, and there are significant shifts ahead for practice revenue. Between across-the-board cuts to the conversion factor and aggressive structural changes to how evaluation and management (E/M) services are billed alongside procedures, practice leaders need to pay close attention before the rule is finalized.
Here is the breakdown of the most critical proposals and how they will impact your bottom line.
1. The Conversion Factor Drop
By statute, current law dictates a reduction in Medicare payment for CY 2027. This largely stems from the expiration of the one-year 2.50% conversion factor bump provided by the Working Families Tax Cut (WFTC) legislation for CY 2026.
For 2027, CMS is proposing two separate conversion factors:
- Non-Qualifying APM Participants: Proposed at $32.84 — a decrease of $0.56 (-1.68%) from the 2026 rate of $33.40.
- Qualifying APM Participants: Proposed at $33.17 — a decrease of $0.40 (-1.19%) from the 2026 rate of $33.57.
2. Structural Changes to G2211 (Complexity Add-on)
The G2211 add-on code for visit complexity is being completely restructured. Instead of billing it as a standalone HCPCS code with a flat rate, CMS proposes converting it into a modifier appended directly to the base E/M code.
- MOD1 (General): This standard placeholder modifier will increase the payment of the associated E/M base code by 16%. This ensures the add-on scales proportionally across all levels of E/M coding rather than paying a flat rate.
- MOD2 (ACO Longitudinal Care): A second placeholder modifier will be available voluntarily for practitioners participating in a Shared Savings Program ACO or LEAD Model ACO. Designed to reward total cost of care accountability and longitudinal coordination, this modifier increases the associated E/M visit payment by 32%.
3. The 50% E/M Reduction on Surgery Days
This is arguably the most disruptive operational proposal for proceduralists. If you (or another physician in your same group practice) bill a separately identifiable office/outpatient E/M visit on the same day as a 0-, 10-, or 90-day global procedure, CMS proposes cutting your reimbursement to offset what they view as duplicative payment for overlapping practice efficiencies.
Under the proposal, Medicare will pay the most expensive service (either the surgical procedure or the E/M) at 100%. All other surgical procedures and E/M visits furnished on that same day will be slashed by 50%. This will significantly impact specialties that routinely evaluate, diagnose, and treat with minor procedures during a single patient encounter.
4. Winners and Losers: Table D-B5 Impact
Actual payment rates rely on a combination of the conversion factor and changes to work, practice expense (PE), and malpractice relative value units (RVUs). Based on Table D-B5 in the complete proposed rule, budget neutrality adjustments hit certain specialties much harder than others based on their service mix.
- Greatest Losses: Dermatology and Otolaryngology are projected to take the heaviest hits, with estimated impacts of -9%.
- Greatest Gains: Behavioral health services continue to see valuation increases, with Clinical Social Workers projected to lead the table with a +12% gain.
(Note: These percentages reflect RVU changes only. Because they exclude the statutory decreases to the conversion factor mentioned in Section 1, the net reality for the losing specialties will be even steeper).
Sources & Official Documentation:
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