CMS is proposing reductions to 2027 physician payment rates as a temporary increase provided for this year expires. Under the agency’s 2027 Medicare Physician Fee Schedule proposed rule, the conversion factor for clinicians who qualify as participants in advanced alternative payment models would fall to $33.17, a decrease of $0.40, or 1.19%, from 2026. The conversion factor for clinicians who do not qualify as advanced alternative payment model participants would decline to $32.84, a reduction of $0.56, or 1.68%.
The proposed rates incorporate statutory payment updates of 0.75% for qualifying participants and 0.25% for other clinicians, as well as an estimated 0.53% adjustment associated with changes to relative value units. Those increases would be outweighed by the expiration of the one-year 2.5% physician payment increase Congress provided for 2026. CMS had initially proposed increasing the conversion factor by 3.62% for 2026, with much of that increase stemming from the temporary congressional adjustment.
Medicare fee schedules are scheduled for publication in the Federal Register on July 16. The policies would generally take effect Jan. 1, 2027, if finalized.
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Changes to billing and monitoring
CMS is also proposing to reduce payment when a physician or another clinician in the same practice provides a separately identifiable office or outpatient evaluation and management visit on the same day as a procedure with a zero-, 10- or 90-day global period. Under the proposal, Medicare would pay the most expensive service at 100% of the applicable rate and other evaluation and management visits or surgical procedures furnished that day at 50%.
CMS would also replace the existing G2211 evaluation and management complexity add-on payment with a modifier that increases the underlying visit payment by 16%. Clinicians participating in a Medicare Shared Savings Program accountable care organization or the forthcoming Long-term Enhanced Accountable Care Design Model could use a separate modifier that increases the visit payment by 32%.
The agency is additionally proposing tighter requirements for remote physiologic monitoring and remote therapeutic monitoring. The services generally would be limited to established patients, require a separately billable initiating visit and be performed only by clinical staff employed by the billing practice rather than outside contractors. CMS is seeking feedback on whether to bundle existing remote monitoring codes and replace them with four Healthcare Common Procedure Coding System codes.
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This shift away from traditional fee-for-service incentives represents a long-standing effort by federal agencies to tie reimbursements more tightly to quality outcomes. Historically, attempts to adjust payment structures often face significant pushback from provider groups concerned that new reporting requirements or bundling mechanisms will increase administrative burdens without proportionally boosting compensation. The proposed changes aim to address those concerns by offering direct payment boosts through modifiers, though the net financial impact remains uncertain for smaller practices.
Merit-based incentives and future reporting
The proposal would also phase out traditional Merit-based Incentive Payment System reporting beginning with the 2029 performance year, shifting clinicians toward specialty-focused reporting pathways. “We’re proposing some of the most significant Medicare reforms in recent years to strengthen primary care, expand accountable care and modernize physician payment,” CMS Administrator Mehmet Oz said in the agency’s announcement.
The larger trend involves lawmakers and provider groups questioning the recurring use of temporary congressional payment adjustments. The 2026 Medicare Physician Fee Schedule final rule included the one-year 2.5% increase that is now set to expire. A House Energy and Commerce subcommittee examined possible long-term reforms to Medicare physician payment in May, signaling potential legislative activity on the issue.