CMS released its final rule for the calendar year 2027 Medicare Physician Fee Schedule Nov. 4. Physician pay falls more than the agency proposed in July, while CMS scaled back a same-day visit cut and delayed its ban on vendor-run remote monitoring by two years.
Most provisions take effect Jan. 1, 2027. The proposed rule, released July 14, drew 43,040 public comments.
Ten things to know:
1. Physician pay falls more than proposed
Base rates for 2027 drop 2.31% to $32.63 for clinicians who are not qualifying alternative payment model participants. For qualifying APM participants, they drop 1.83% to $32.95. CMS had proposed smaller cuts: 1.68% to $32.84 and 1.19% to $33.17.
A one-time 2.5% increase Congress approved for 2026 expires at the end of this year. The updates required by law are 0.25% for most clinicians and 0.75% for qualifying APM participants. Those updates, along with a 0.12% negative adjustment for work relative value unit changes, don’t make up the difference. The Ambulatory Surgery Center Association told Becker’s it expected a lower conversion factor because the 2026 increase was temporary.
“The recurring cycle of annual physician payment cuts is no longer simply a reimbursement issue. It is a patient access issue,” Alexander Lazarides, MD, orthopedic oncologist at Tampa, Fla.-based Moffitt Cancer Center, told Becker’s ahead of the final rule. “When reimbursement steadily declines while the cost and complexity of care continue to rise, the greatest risk is not to physicians. It is to patients who depend on access to highly specialized treatment that cannot be easily replaced.”
2. CMS softens its same-day visit cut
CMS is moving ahead with a cut for procedures billed alongside a separate office visit, but it is smaller than proposed.
- What’s covered: an office/outpatient evaluation and management visit billed on the same day as a 0-day global procedure. A 0-day global is a minor procedure, such as a biopsy or injection, with no follow-up care bundled into its payment.
- How payment works: Medicare pays the higher-valued service at 100% and the other at 80%. CMS said paying both in full duplicates some of the work.
- What changed from the proposal: CMS had proposed paying the lower-valued service at 50% and extending the policy to 10- and 90-day global procedures. It dropped both.
The proposed version was the largest single driver of specialty-level losses. Dermatology and otolaryngology, which often pair visits with minor procedures, faced proposed cuts of 9% each, according to Healthcare Financial Management Association estimates.
3. ACOs get more incentives to participate
CMS finalized both E/M add-on changes as proposed. The office-visit complexity add-on, G2211, becomes modifier B1, which raises visit payment by 16% instead of paying a flat fee. A new B2 modifier raises E/M payment 32% for clinicians in Medicare Shared Savings Program and Long-term Enhanced ACO Design Model ACOs. B2 is voluntary and can be billed for any Medicare patient, not only ACO-assigned ones.
The rule also adds cost-sharing waivers, higher shared savings and incentives for new participants. In 2024, 75% of the 476 participating ACOs earned shared savings totaling $4.1 billion, according to CMS.
4. 340B claims reporting becomes mandatory
Covered entities must submit claim-level data to the Medicare Part D Claims Data 340B Repository for 340B-discounted Part D drugs, starting with claims dated Jan. 1, 2027. The requirement includes drugs dispensed through contract pharmacies. CMS pushed the deadline for the first quarterly submission, which covers January through March 2027, to Sept. 30, 2027.
The companion outpatient rule also cuts 340B drug payments. It pays for 340B-acquired drugs at average sales price minus 28%, down from ASP plus 6%. CMS had proposed ASP minus 33.4%. Under the proposed cut, Henry Ford Health and Trinity Health each estimated $109 million in annual losses.
5. Traditional MIPS gets more runway
Clinicians have through 2030 to move from the traditional Merit-based Incentive Payment System reporting option to MIPS Value Pathways or Advanced APMs. CMS had proposed starting the transition in 2029. The rule adds pathways for diabetes, hypertension and hospitalists, and it requires at least one specialty-specific core measure starting in 2027.
CMS also closed what it called a loophole in Advanced APM bonuses, which it estimates will prevent $2.38 billion in unintended payments over a decade.
6. Remote monitoring tightens, but the vendor ban waits
Starting in 2027, remote monitoring requires a separate initiating visit, and remote therapeutic monitoring is limited to established patients. CMS delayed to 2029 its proposal to pay only when a practice’s own staff, not third-party vendors, deliver the services. Remote physiologic monitoring payments rose 31% to $536 million in 2024.
7. The practice expense overhaul moves forward
CMS is continuing its shift away from American Medical Association survey data toward cost data it called “more objective, routinely updated and auditable.” It will phase out the indirect practice cost index over two years and replace it with a stabilizer meant to limit volatility.
CMS also received comments on whether to keep paying hospital-employed physicians less than those in physician offices. It said it will consider the feedback in future rulemaking.
8. Global surgery reporting pauses
CMS is pausing required reporting on post-operative visits, saying years of data show the visits included in global surgery payments often aren’t happening. CMS posted a file estimating how much of 10- and 90-day global payments is tied to those visits and said it may revisit valuation in future rulemaking.
9. The Ambulatory Specialty Model starts on schedule
CMS finalized refinements to the Ambulatory Specialty Model, which launches Jan. 1. The CMS Innovation Center model holds specialists accountable for the quality and cost of longitudinal care for heart failure and low back pain. Several medical groups and orthopedic and anesthesia societies had asked for a delay.
10. The inpatient-only list loses 637 services
The companion hospital outpatient prospective payment system and ASC final rule removes 637 services in the second year of a three-year phaseout. It adds several hundred procedures to the ASC covered procedures list; CMS had proposed adding 618.
Industry response
Physician groups pushed back on the payment cuts. The Medical Group Management Association said the conversion factor cuts “further degrade an already fragile payment system.” It also said the same-day visit cut interferes with practices’ ability to offer same-day care.
“Congress must intervene to prevent further harm by immediately fixing cuts to the conversion factor, along with changes to modifier 25,” said Anders Gilberg, senior vice president of government affairs at MGMA.
Hospital groups targeted the 340B cuts in the companion outpatient rule. America’s Essential Hospitals called them “an existential threat to essential hospitals and the patients they serve.” The Association of American Medical Colleges said the drug payment cuts, combined with the site-neutral imaging cuts and faster recoupment of past 340B payments, “will be devastating for patients.”
Accountable for Health welcomed the rule’s ACO provisions, calling them “important steps toward rewarding providers for keeping patients healthier while lowering costs.” The group said it was disappointed CMS did not extend the 32% modifier to the Comprehensive Kidney Care Contracting Model.
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