What’s on the Horizon for 2027: CMS Floats Big Changes to Medicare Payment

A first look at the CY 2027 Physician Fee Schedule proposed rule, and what it could mean for you

Every summer, CMS shows its hand for the year ahead. On July 16, the agency released its proposed rule for the CY 2027 Physician Fee Schedule (CMS-1848-P), and this year’s edition is heavier than most. Alongside the usual rate update sit several structural changes that, if finalized, would reshape how a wide range of our clients get paid.

A word before we dive in: none of this is final. This is a proposed rule. CMS history tells us that proposals do change, sometimes substantially, between the proposed and final versions. Think of what follows as a weather forecast, not a done deal. But it’s a forecast worth planning around, and in a few cases, worth responding to directly.

Here’s what we’re watching.

The headline number: a modest rate dip

CMS is proposing conversion factors of roughly $33.17 for clinicians in advanced payment models and $32.84 for everyone else, declines of about 1.2% and 1.7% respectively from 2026. The main culprit isn’t a cut so much as an expiration: the temporary 2.5% bump Congress provided for 2026 was a one-year measure, and it’s rolling off.

That’s the top-line, but for most clients the conversion factor won’t be the story. The bigger swings come from the policy changes underneath it.

The proposal to watch: a new hit on “same-day” billing

If there’s one item procedural practices should read closely, it’s this. CMS is proposing to cut payment by 50% when an office visit billed with modifier -25 is performed on the same day as a procedure with a global period. The highest-paid service on the claim would be paid in full; the office visit and other procedures would be reduced.

CMS actually floated this back in 2019 and pulled it after pushback, so its return is notable. The agency is openly asking whether 25% might be more appropriate than 50%, and whether the policy should eventually reach inpatient visits too. Translation: this is genuinely up for debate, and comments could move the needle.

• Who Feels It Most: Dermatology, ENT, orthopedics, and other specialties that routinely pair an evaluation with a same-day procedure. If that describes your practice, this is worth understanding before the comment window closes.

A quieter change with real reach: how practice expense is calculated

CMS wants to remove a long-standing component of its practice-expense formula (the “Indirect Practice Cost Index”) over two years, and pair it with a new guardrail that caps how much any code’s practice-expense value can move, up or down, at 5% per year. The cap is meant to smooth out volatility, which is good news for predictability. The underlying change will still shift dollars between specialties, with the effects landing gradually.

There’s also a welcome fix for skilled nursing facility visits: under a quirk of the current rules, the same visit could pay differently depending only on the patient’s Part A status. CMS proposes to equalize that. A small item, but a clean one.

Telehealth: extended, with a new box to check

The pandemic-era telehealth flexibilities live on. Thanks to recent legislation, the expanded geographic and originating-site rules run through the end of 2027, and the audio-only and mental-health provisions extend into 2028.

One operational note: starting January 1, 2027, CMS would require new modifiers on certain telehealth claims furnished through contracted virtual platforms. No payment impact, but a claims-scrubbing change worth teeing up early.

For our value-based care clients: ACOs get a mixed bag

The Shared Savings Program sees a broad set of proposed financial changes: a higher sharing rate for one risk track, a new benchmark “growth adjustment” to attract fresh participants, and the discontinuation of the prepaid shared savings option, among others.

The important framing: CMS’ own projections show this creates winners and losers, not a rising tide. Some ACOs would see more in shared savings; others less. If you’re in an ACO, the specifics of your track and spending position will determine which side you land on, and that’s exactly the kind of modeling worth doing now.

For rural clients: a genuine win

Rural Health Clinics would gain the ability to bill diabetes self-management training and medical nutrition therapy as stand-alone visits, bringing them in line with what FQHCs and physician offices already do, and expanding access to preventive care. FQHC base rates would tick up about 2.5%. Small in dollar terms, but a step in the right direction for rural access.

For our lab clients: the delayed cuts are back on the calendar

After years of Congressional postponements, the reductions tied to private-payor rate reporting are scheduled to begin: up to 15% per year for 2027 through 2029, built on newly collected market data. For labs, this is the most consequential item in the entire rule, and one the general specialty-impact figures badly understate. If you’re a lab client, expect us to reach out directly.

CMS is also signaling scrutiny of certain software- and algorithm-based diagnostics, hinting some tests could move off the lab fee schedule entirely. We’re watching that closely.

The longer game: MIPS as we know it is being phased out

For anyone reporting under traditional MIPS: CMS proposes to sunset it after 2028, making MIPS Value Pathways (MVPs) the only road forward beginning with the 2029 performance year. Three new MVPs are on the table (Diabetic Disease, Hypertension, and Hospitalist).

You have runway here, but “start planning your MVP transition” moves from someday to soon.

And a note for anyone in a mandatory model

The Ambulatory Specialty Model is scheduled to go live January 1, 2027, as a mandatory program for cardiologists and certain low-back-pain specialists in selected geographic areas. If that’s you, participation isn’t optional, and the first performance year is now less than six months out. CMS is proposing a set of technical refinements, but the launch itself is on track.

What we’re doing and what you can do

Between now and the September 14 comment deadline, our team is:

• Modeling the real-dollar impact of the modifier -25 and lab fee schedule proposals against actual claims patterns
• Flagging clients in mandatory model geographies so no one is caught off guard
• Drafting comment letters on the provisions where client input could genuinely shape the final rule

If any of the items above hit close to home, now is the moment to talk. The comment period is the one window where the “proposed” can still become something better before it becomes “final.” Reach out and we’ll walk through what it means for your specific situation.

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This article summarizes a proposed rule for general informational purposes. Provisions may change in the final rule, and nothing here should be taken as a guarantee of future payment policy. We’ll keep you posted as things develop.