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CMS’s 2027 Medicare Physician Fee Schedule, issued Wednesday, sets conversion-factor decreases of 2.31% for physicians outside advanced payment models and 1.83% for participants—larger cuts than in the July proposal. Physician groups criticized the cuts and the modifier-25 payment policy, while ACO, primary care and telehealth organizations welcomed other provisions.
CMS issued the final 2027 Medicare Physician Fee Schedule on Wednesday, setting payment-conversion-factor decreases of 2.31% for physicians outside advanced payment models and 1.83% for those participating in them. The final reductions are larger than the cuts in the July proposal, prompting criticism from physician groups even as organizations representing accountable care and primary care praised separate payment expansions.
The conversion factor is a multiplier used to calculate Medicare payment for each covered service or procedure. CMS’s final rule sets a 2.31% decrease for non-APM physicians and a 1.83% decrease for APM participants. The July proposal had put the respective decreases at 1.68% and 1.19%. The source report does not provide the conversion factor’s dollar value or a full estimate of how the changes will affect individual practices.
The rule also adopts a proposed modifier-25 payment policy. When two or more services are performed on the same day, the most expensive service—whether a surgical procedure or an evaluation and management visit—would be paid at 100%, while other surgical procedures or E/M visits would be paid at 50%. The Medical Group Management Association objected, with senior vice president for government affairs Anders Gilberg urging Congress to act on both the conversion-factor cuts and the modifier-25 change.
CMS also set out provisions welcomed by some groups. Accountable for Health CEO Mara McDermott said the rule provides a 32% payment increase for qualifying visits by clinicians in the Medicare Shared Savings Program and LEAD Model, raises the credit ACOs receive for prior-year savings from 50% to 75%, and lets eligible ACOs reduce or eliminate Medicare Part B cost-sharing. The American Academy of Family Physicians praised expanded primary-care services and the Primary Care Exception for qualifying residents. CMS also delayed for two years a requirement that remote monitoring services be provided by clinical staff directly employed by the billing practice.
Payment Cuts Meet Care Model Changes
The final rule affects Medicare payment for physician services in 2027, but its provisions do not affect all clinicians or care models in the same way. The larger final conversion-factor reductions drew concern from groups representing specialists and medical practices, while ACO and primary-care organizations pointed to targeted increases and expanded payment options.
That split reflects a practical tension in the policy: CMS is making changes intended to support coordinated, primary care-focused delivery while also setting lower conversion factors for many physician services. The American College of Rheumatology said the payment trend could threaten practice stability and patient access to specialty care, especially in rural and underserved areas. Those are the group’s stated concerns; the supplied report does not quantify resulting changes in access or practice closures.
For patients and practices, the effects will depend on service mix, participation in qualifying models, and how the finalized policies are implemented. The ACO provisions could alter payment and cost-sharing for eligible organizations and beneficiaries, while the modifier-25 rule changes payment when multiple services are furnished on one day.
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From July Proposal to Final Rule
CMS’s July proposal included smaller conversion-factor reductions than the final rule: 1.68% for physicians outside APMs and 1.19% for APM participants. The final figures increased those proposed cuts by 0.63 and 0.64 percentage points, respectively. These are differences between the proposal and final rule, not separate estimates of the rule’s total effect on physician revenue.
HHS Secretary Robert F. Kennedy Jr. described the agency’s approach as shifting Medicare toward prevention, primary care and coordinated care. In a press release, he said the rule directs resources toward coordinated care and aims to change what Medicare pays for. Physician groups’ statements, by contrast, focused on the effect they expect from lower payments and the need for longer-term reform.
Other provisions address specific services and training. The AAFP praised expanded payment for shared medical appointments, maternity care, tobacco cessation and advance care planning, as well as the expansion of the Primary Care Exception, under which qualifying residents can provide more complex office and outpatient care without a teaching physician in the room. The Primary Care Collaborative also welcomed reimbursement for health coaching and more resources for integrating behavioral health care.
“Medicare should reward clinicians for keeping people healthy.”
— Robert F. Kennedy Jr., HHS secretary
Practice-Level Effects Remain Unknown
The source report does not state the final conversion factor’s dollar amount, estimate how much Medicare spending or individual physician revenue will change, or detail how many practices will be affected by the modifier-25 policy. It also does not specify whether Congress will intervene before the cuts take effect in 2027.
Groups’ warnings about access and financial pressure are their assessments, not measured outcomes in the information provided. The final impact will vary by specialty, service mix and participation in qualifying payment models. The full operational details and any further agency guidance are not described in the source material.
Congress and CMS Face Follow-Up
The conversion-factor changes are set for 2027. The American Academy of Neurology and other physician organizations say they will seek congressional action or longer-term payment reforms, including an inflation adjustment linked to the Medicare Economic Index. The Medical Group Management Association has also called for Congress to address the conversion-factor cuts and modifier-25 policy.
CMS will implement the final rule’s provisions, including the two-year delay for the remote-monitoring staffing requirement. The source report does not give dates for further agency guidance or legislative action, so whether lawmakers will change the payment rules before they take effect remains unresolved.
Key Questions
What payment cuts did CMS finalize for 2027?
The conversion factor will decrease 2.31% for physicians outside advanced payment models and 1.83% for APM participants. The July proposal had listed decreases of 1.68% and 1.19%, respectively.
What does the modifier-25 change do?
When multiple services are provided on the same day, the highest-priced surgical procedure or evaluation and management visit is paid at 100%; other surgical procedures or E/M visits are paid at 50%, according to the report.
Which groups welcomed parts of the rule?
Accountable for Health praised provisions for ACOs, while the American Academy of Family Physicians and the Primary Care Collaborative welcomed expanded primary-care payments and services. ATA Action welcomed a two-year delay to a remote-monitoring staffing requirement.
Will Congress change the cuts before 2027?
That is not known. The American Academy of Neurology and other groups said they would seek congressional action, but the report does not confirm that lawmakers will intervene.
Source: medpagetoday.com
