The comment period on the CY 2027 Medicare Physician Fee Schedule proposed rule closed on Monday, September 14. CMS released the proposal on July 14, 2026, the Federal Register published it on July 16, and the final rule usually arrives around November 1. That leaves practices about six weeks in which the numbers are known well enough to budget with and not yet final. In our experience that is the right moment to do the arithmetic, because the final rule rarely moves the conversion factor by more than a few cents.
Here is what the proposal does, in the order it will hit a practice's bank account.
Key takeaways
- The proposed conversion factor is $32.84, down 1.68 percent, because the one-year 2.50 percent increase for 2026 expires.
- A separately identifiable E/M visit on the same day as a global procedure would be paid at 50 percent when it is not the most expensive service that day; this is the proposal that matters most for procedural specialties.
- G2211 would become a modifier worth 16 percent of the E/M rate (32 percent for ACO participants), which should make it easier to report.
- Commercial contracts indexed to the current-year Medicare fee schedule take the same cut; check which kind you have before finishing the budget.
The conversion factor goes down
The proposed 2027 conversion factor is $32.84 for physicians who are not qualifying participants in an advanced alternative payment model, down 1.68 percent from $33.4009 in 2026. For qualifying APM participants it is $33.17, down 1.19 percent from $33.5675. The reason is not mysterious. Public Law 119-21 gave the fee schedule a one-year 2.50 percent increase for 2026 only. That expires. The statutory update for 2027 is 0.25 percent for non-QPs and 0.75 percent for QPs, and a small positive adjustment for work RVU changes (CMS estimates 0.53 percent) softens the drop slightly. Net, most practices are looking at a cut of roughly 1.7 percent on every Medicare service before any code-level changes.
The conversion factor is only the first layer. Underneath it, relative value units move by code every year, and the specialty impact table in the proposed rule shows who gains and loses once the RVU changes are included. Pull that table for your specialty rather than assuming the average applies to you; a specialty shown at minus 1 percent overall can still contain a handful of codes that move 8 or 10 percent because of the practice expense changes described below.
The E/M plus global procedure change
This is the proposal that will change coding behavior. CMS proposes that when the same physician, or another physician in the same practice, bills a separately identifiable office E/M visit on the same day as a procedure with a 0-, 10- or 90-day global period, the most expensive service that day is paid in full and every other service, including the E/M, is paid at 50 percent. Today that visit, with modifier 25, is paid in full when documentation supports it. Under the proposal it is paid at half in almost every office scenario, because the procedure is usually the more expensive line.
Dermatology, orthopedics, podiatry, ophthalmology and any office-based procedural specialty bills this combination constantly. Take one dermatologist who sees 25 Medicare patients a week with a 99213-25 alongside a lesion destruction or biopsy. At a 2026 national allowed amount of roughly $90 for 99213, the half not paid is about $45 a visit, and over 46 working weeks that is about $52,000 for one physician, if the proposal is finalized as written. Whether the final rule keeps the 50 percent, changes it, or drops it is the single most important thing to read on November 1. Until then we would not change any coding practice; the documentation rules for modifier 25 have not changed and should be followed exactly as before.
G2211 becomes a modifier and gets a raise
The complexity add-on code G2211, which pays for the longitudinal relationship in primary and continuing specialty care, would become a modifier applied to the E/M code rather than a separate line, with a payment increase of 16 percent of the E/M rate. Practices in the Medicare Shared Savings Program and similar accountable care arrangements could apply a second version worth 32 percent. If your practice has been under-reporting G2211 because of the separate-line workflow, and many are, the modifier form should make it easier. Check whether your practice management system can handle a value-bearing modifier; several cannot without an update.
Remote monitoring gets narrower
The proposal would restrict remote physiologic and therapeutic monitoring to established patients, require a separately reportable face-to-face initiating visit, and limit payment to monitoring performed by clinical staff employed by the practice rather than by a third-party monitoring company. Practices that built RPM programs around new-patient enrollment or a contracted vendor's staff need to model the effect. In our view the programs that survive this are the ones that were clinically integrated anyway.
Other proposals worth a line each
- Practice expense methodology: CMS proposes to change how indirect practice expense is allocated, to phase out over two years the indirect practice cost index that rests on specialty survey data nearly twenty years old, and to add a stabilization adjustment that limits year-to-year practice expense RVU swings to about 5 percent for most services. This shifts relative value between office-based and facility-based services over several years; watch your specialty society's impact table.
- Advance care planning: two new HCPCS G codes for ACP services provided by clinical staff, added to the telehealth list.
- Behavioral health: tobacco cessation counseling, SBIRT and behavioral health collaborative care management proposed for upward adjustments.
- Rural health clinics and FQHCs: diabetes self-management training and medical nutrition therapy recognized as standalone visits, and telehealth flexibility extended through December 31, 2027.
- Maternity care: 15 proposed G codes that would preserve a global-style payment for Medicare, even as CPT 2027 moves to phase-based reporting.
A worked budget
| Line | Assumption | 2027 effect |
|---|---|---|
| Medicare allowed, 2026 | $1,400,000 for a six-provider multispecialty group | Baseline |
| Conversion factor change | Minus 1.68 percent across the board | About minus $23,500 |
| E/M with global procedure, if finalized | $120,000 of modifier 25 E/M revenue on procedure days, paid at 50 percent | About minus $60,000 |
| G2211 as modifier, if fully reported | Currently reported on 30 percent of eligible visits; rises to 70 percent with a 16 percent value | Roughly plus $18,000 |
| Commercial contracts tied to the current-year Medicare fee schedule | 60 percent of commercial revenue indexed to the 2027 conversion factor | The same cut, again, on those contracts |
The last line is the one people forget. A commercial contract written as "115 percent of the current Medicare fee schedule" follows the Medicare conversion factor down. Contracts written against a fixed year (for example, the 2024 schedule) do not. Pull your contracts and check which kind you have before you finish the budget. Run the same table for each provider as well, because the E/M plus procedure line usually concentrates in two or three of them, and the January conversation about coding and scheduling is with those providers, not the whole group. This is also a fair moment to ask payers with current-year indexing for a fixed-year or floor provision at the next renewal.
Notice what the table does not include: the RVU changes by code, which are specific to your mix, and the practice expense transition, which is small in year one for most office-based codes because of the stabilizer. Both belong in the model once the final rule publishes the actual RVU file. Until then the four lines above are the budget conversation.
Questions we hear
Should we stop billing modifier 25 visits now to get ahead of this?
No. The current rule pays the visit in full when documentation supports a separately identifiable service, and a visit that meets that standard should be billed. What you should do now is measure how often it happens by provider, so that if the 50 percent payment is finalized you can decide about scheduling (a follow-up visit on another day is sometimes better care and is paid in full) rather than about coding.
Does the E/M cut apply to our commercial payers?
Not directly. It is a Medicare payment policy. Commercial payers often adopt Medicare payment policy over a year or two, and several already apply their own multiple-procedure reductions to modifier 25 visits, so read each payer's policy bulletin rather than assuming either way.
How much will the final rule change from the proposal?
The conversion factor usually moves by pennies. Policy proposals are less predictable; CMS has softened or delayed unpopular proposals before after heavy comment, and the E/M plus global proposal drew heavy comment. Budget the proposal as written, and plan to reread the model in the first week of November.
What to do this month
- Pull 2026 Medicare allowed amounts by CPT code and calculate the conversion factor effect for your own mix.
- Count the E/M visits billed with modifier 25 on the same day as a 0-, 10- or 90-day global procedure, by provider, and put a dollar figure on the 50 percent scenario.
- Read each commercial contract for how it references the Medicare fee schedule.
- Ask your practice management vendor whether it can process a value-bearing G2211 modifier for January.
- Calendar the final rule for the first week of November and plan a fee schedule load before December 15.
The RCM audit we run for practices includes the contract indexing review in the last item, because a surprising number of practices discover their largest commercial contract has been following Medicare down for years. If you want help building the model for your own numbers, book a call.
