Most coverage of the 2027 Medicare Physician Fee Schedule gives you percentages. A 1.68% cut does not tell a practice owner anything useful.

This article works the numbers in dollars, for three practice sizes, and then covers the two proposals that will cost many practices more than the conversion factor does.

Status as of November 4, 2026

Everything below is based on the CY 2027 Medicare Physician Fee Schedule proposed rule (CMS-1848-P), released July 14, 2026, and published at 91 FR 43842.

The comment period closed on September 14, 2026. CMS has not yet released the final rule, CMS-1848-F, and it is expected within days.

Treat every figure here as a planning number, not a payment rate. CMS can change any proposal in the final rule. We will update this article the day the final rule publishes.

Table of Contents

1. The Headline Numbers
2. What the Cut Costs You in Dollars
3. The Same-Day E/M Cut, Which Will Cost Many Practices More
4. G2211 Becomes a Modifier
5. Remote Patient Monitoring Restrictions
6. What to Do Before January 1
7. Will Congress Reverse It?
8. Frequently Asked Questions
9. Sources

1. The Headline Numbers

Medicare converts relative value units (RVUs) into dollars by multiplying total RVUs, after geographic adjustment, by a conversion factor.

Change the conversion factor and every single code on the fee schedule moves.

For the second year, there are two conversion factors: one for clinicians who qualify as Advanced Alternative Payment Model (APM) participants and one for everyone else.

2027 Medicare Conversion Factors

Why Is It Falling?

Three things move the conversion factor for 2027. Only one is negative, but it is much larger than the other two combined.

The 2.5% increase was never permanent. It came from Public Law 119-21 and applied to CY 2026 only, so its expiry is not a new cut so much as the removal of a temporary one.

That distinction matters when predicting what Congress might do, which we cover in Section 7. However, it makes no difference to your January cash flow.

CMS estimates that the conversion factor update alone will reduce fee schedule expenditures by $2.1 billion in 2027.

One important caution: The conversion factor is only part of the picture.

CMS also proposed significant practice expense methodology revisions, and RVU changes affect specialties differently.

A practice can face a 1.68% conversion factor cut and experience a very different total impact once its own code mix is accounted for.

The dollar figures below isolate the conversion factor so you can see that component clearly. They represent a floor, not a complete forecast.

2. What the Cut Costs You in Dollars

A percentage is not a number you can plan against. Here is the same cut expressed as annual dollars, assuming volume and payer mix remain constant.

The calculation is straightforward:

Annual Medicare fee schedule revenue × 1.68% for non-qualifying APM participants, or × 1.19% for qualifying APM participants.

Estimated Annual Revenue Impact

Calculate Your Own Practice’s Exposure

To estimate your own number, take your Medicare fee schedule collections for the last 12 months. Use only the Medicare Part B fee schedule portion, not total collections.

Then multiply by 0.0168 if you are a non-qualifying APM participant.

What That Figure Is, and What It Is Not

The figure represents the conversion factor component alone, which applies uniformly to every code on the fee schedule.

It is not your total 2027 impact.

Three additional factors can affect the final result:

• RVU revaluations: These vary by code and therefore by specialty.
• Practice expense methodology changes: These may shift reimbursement between facility and non-facility settings.
• Same-day E/M proposal: For procedural practices, this may have a much larger financial impact than the conversion factor itself.

A practice reading only the headline percentage and budgeting for a 1.68% reduction may be planning for the smallest part of its 2027 problem.

The Framing That Actually Helps

For most independent practices, the conversion factor cut represents a loss in the low five figures.

It is real, but it is not necessarily a practice-threatening amount.

The more useful question is whether your practice is already leaving more money on the table through unworked denials and under-captured services.

For example:

• A practice with $750,000 in Medicare revenue faces a $12,600 annual reduction.
• A single percentage point improvement in net collection rate represents $7,500.
• Recovering one-fifth of a stale over-90-day A/R bucket can often recover considerably more than either amount.

The cut is not something you can negotiate. Your collection rate is.

3. The Same-Day E/M Cut, Which Will Cost Many Practices More

This is the proposal worth reading twice.

CMS proposed that when a separately identifiable office or outpatient evaluation and management (E/M) visit is furnished on the same day as a procedure carrying a 0-, 10-, or 90-day global period, the higher-valued service is paid in full and the lower-valued service is paid at 50%.

Two details make this proposal broader than it initially appears:

• It applies whether the same physician performs both services or a colleague in the same group practice bills one of them.
• It applies to 0-day global procedures, covering many minor office procedures, not just surgical procedures.

How to Estimate Your Exposure

The calculation is straightforward.

For every encounter where you currently bill an E/M service with modifier 25 alongside a same-day procedure, the lower-valued service would be reduced to half payment under the proposal.

Work through these three steps:

Step 1: Pull a count of claims from the last 12 months where an office E/M service was billed on the same date as a procedure with a 0-, 10-, or 90-day global period.

Step 2: For each claim, identify which of the two services has the lower allowed value.

For most office encounters pairing a mid-level E/M service with a minor procedure, the procedure is the lower-valued service. However, for a level 4 or 5 E/M service paired with a very minor procedure, the difference may be substantial. In some pairings, the E/M service may be the lower-valued service.

Step 3: Multiply the allowed amount of the lower-valued service by 50%, then calculate the total across all affected claims.

Worked Example

Consider a practice that bills this pattern 12 times per week, with the lower-valued service averaging $75 in allowed reimbursement.

The proposed reduction would be:

• Average allowed amount: $75
• Proposed reduction: 50%
• Loss per occurrence: $37.50
• Annual impact: Approximately $23,400

For a practice with $750,000 in Medicare revenue, this is nearly double the conversion factor cut.

Confirm the allowed amounts against your own fee schedule and remittance advice rather than treating this illustration as a guaranteed figure.

The important point is the potential scale of the impact. For practices that routinely pair E/M services with minor procedures, this proposal could matter more than the conversion factor reduction.

Which Practices Should Be Most Concerned?

Specialties that frequently perform minor procedures during office visits may face the greatest exposure, including:

• Dermatology
• Podiatry
• Orthopaedics
• ENT
• Urology
• Primary care practices performing lesion removals, joint injections, and similar procedures

There is no coding workaround for this proposal. Attempting one would create a compliance problem rather than solve the financial issue.

The sensible response is to quantify the exposure now and plan accordingly.

4. G2211 Becomes a Modifier

G2211 is the visit complexity add-on for office and outpatient E/M visits. It is billed when the practitioner has a longitudinal relationship with the patient or manages a single serious condition over time.

It became separately payable in 2025 and has been a meaningful addition for primary care and internal medicine practices.

CMS proposed replacing it entirely with a modifier.

Current G2211 vs. Proposed 2027 Structure

The proposed rule used placeholder names MOD1 and MOD2.

If finalized, CMS said it would replace them with actual two-digit HCPCS modifiers. Those values will appear in the final rule, not before it.

This is one of the main reasons practices should review the final rule rather than relying only on summaries of the proposal.

What Changes in Practice?

1. Payment Becomes Level-Dependent

Under the existing flat add-on structure, the complexity payment is the same whether a practice bills 99212 or 99215.

Under the proposed percentage-based structure, a higher-level visit earns a larger add-on.

Practices that under-level their E/M coding may lose revenue twice on the same visit:

• First, through the lower base E/M code.
• Second, through a smaller percentage-based complexity payment.

2. Modifier 25 Rules Carry Over

CMS proposed retaining the limitations established for G2211 in the CY 2025 final rule.

These limitations permit payment alongside modifier 25 when the base office or outpatient E/M service is reported by the same practitioner on the same day as:

• An Annual Wellness Visit.
• Vaccine administration.
• Any Medicare Part B preventive service furnished in the office or outpatient setting.

3. Your Billing System Needs Updating

Changing an add-on code into a modifier is not a cosmetic change.

The following systems and workflows will need to be reviewed:

• Charge templates.
• EHR favourites.
• Superbill configurations.
• Claim scrubber rules.

These references will need to be rebuilt, and the work cannot be finalized until the final rule identifies the actual modifiers.

The Wider Signal

Alongside this proposal, CMS created several new HCPCS G codes replacing CPT codes for Medicare payment.

CMS also issued a request for information asking whether reliance on CPT codes produces contradictory incentives.

Taken together, these developments suggest that CMS may gradually move away from the AMA CPT and RUC process.

Nothing in this broader shift happens in 2027, but it is worth monitoring when making multi-year decisions about coding infrastructure.

5. Remote Patient Monitoring Restrictions

CMS proposed new billing restrictions and payment reductions for Remote Patient Monitoring (RPM) and Remote Therapeutic Monitoring (RTM), including tighter requirements around who may furnish the service.

The details should be confirmed carefully against the final rule rather than relying on summaries.

RPM billing is already an area where documentation and staffing requirements receive close attention.

If your practice has incorporated RPM into its revenue model over the last two or three years, this proposal deserves a direct review of the relevant final-rule provisions.

Two practical points apply regardless of the final wording:

• If you bill RPM or RTM, review whether the staff performing treatment management time meet the proposed requirements under your current operating model.
• If you planned to launch an RPM programme in early 2027, hold the business case until the final rule is published. The economics may be materially different from what a 2026 model assumes.

6. What to Do Before January 1

You have roughly eight weeks, and the first set of actions cannot begin until CMS publishes the final rule.

The Week the Final Rule Is Published

Before December 31

The Item Most Practices Skip

Number 8: An E/M leveling audit.

It is unglamorous, but it is the only item on this list that can directly put money back into your practice rather than simply prevent a loss.

If a practice habitually bills 99213 when the documentation supports 99214, the revenue gap may be larger than the entire conversion factor cut.

From 2027, the complexity modifier could compound that difference because a percentage of a 99213 payment is lower than the same percentage of a 99214 payment.

The cut is imposed on you. The leveling is not.

Request a Free A/R Analysis from RKR Prime

If you want an outside assessment of where your money is actually going, request a free A/R analysis.

Send your aging report and three months of denial data. RKR Prime will provide a written summary within three business days.

7. Will Congress Reverse It?

This is the question every practice asks, and the honest answer has two sides.

History Says Intervention Is Common

Congress has changed the conversion factor actually in effect in four of the last six years.

The 2.5% increase for CY 2026 was itself an example of this type of intervention.

A practice that assumes the published rate is final has been wrong more often than right in recent years.

But the Timing Rarely Helps You

These adjustments usually arrive as part of year-end or early-year legislation.

Sometimes they happen after January 1, and occasionally they are retroactive.

A retroactive adjustment means claims may already have been submitted at the lower rate, requiring reprocessing and creating a cash flow gap in Q1 regardless of how the year eventually ends.

What This Means for Planning

Budget using the final rule figure. Treat any congressional adjustment as upside, not as part of your financial plan.

Two additional points are worth understanding:

1. The gap between proposed and final figures has been small recently.

The CY 2026 non-qualifying conversion factor moved by only two cents between the proposal and final rule, from $33.4209 to $33.4009.

This is a reason to take proposed figures seriously as planning estimates, but not as guaranteed payment rates.

2. A conversion factor adjustment would not reverse every CMS proposal.

A congressional adjustment to the conversion factor would not automatically change the same-day E/M proposal or the G2211 changes.

These are CMS policy proposals rather than statutory rate adjustments. They may take effect on January 1 regardless of what Congress does about the conversion factor.

8. Frequently Asked Questions

What Is the 2027 Medicare Conversion Factor?

Under the CY 2027 proposed rule, the conversion factor is:

• $32.8409 for clinicians who are not qualifying APM participants.
• $33.1693 for qualifying APM participants.

These figures are before geographic adjustment and remain proposed amounts.

CMS will establish the final rates in the CY 2027 final rule (CMS-1848-F), expected in early November 2026, with an effective date of January 1, 2027.

How Much Is the 2027 Medicare Pay Cut?

The proposed reduction is:

• 1.68% for non-qualifying APM participants.
• 1.19% for qualifying APM participants.

These percentages are measured against the CY 2026 conversion factors of $33.4009 and $33.5675, respectively.

For a practice with $750,000 in annual Medicare fee schedule revenue, the non-qualifying rate represents an estimated annual reduction of approximately $12,600, before accounting for RVU changes and other proposals.

Why Is Medicare Cutting Physician Pay in 2027?

The reduction is driven almost entirely by the expiry of a temporary 2.5% increase that Congress provided for CY 2026 only under Public Law 119-21.

The statutory MACRA update of 0.75% or 0.25%, along with a 0.53% budget neutrality adjustment, partially offsets the reduction but does not come close to covering it.

What Is the 50% Same-Day E/M Rule?

CMS proposed that when an office or outpatient E/M visit is billed on the same day as a procedure with a 0-, 10-, or 90-day global period, the higher-valued service is paid at 100% and the lower-valued service at 50%.

The proposal applies whether one physician performs both services or a colleague in the same group practice bills one of them.

Is G2211 Going Away in 2027?

Under the proposed rule, yes.

G2211 would be replaced by a modifier appended to the base E/M code.

The proposed payment structure is:

• 16% of the base E/M payment under the standard rate.
• 32% for practitioners in Medicare Shared Savings Program ACOs or the ACO LEAD Model.

The actual two-digit modifier values will only be named in the final rule.

When Does the 2027 Medicare Fee Schedule Take Effect?

The CY 2027 Medicare Physician Fee Schedule is scheduled to take effect on January 1, 2027.

The final rule is expected in early November 2026.

For comparison, the CY 2026 final rule went on display October 31, 2025, and the CY 2025 final rule went on display November 1, 2024.

Should I Rebuild My Fee Schedule Now or Wait?

Wait for the final rule, then rebuild your fee schedule before December 31.

Building your systems using proposed figures risks doing the work twice.

Submitting January claims using 2026 rates can also create posting variances that may take a quarter to resolve.

Which Specialties Are Hit Hardest in 2027?

The conversion factor reduction applies uniformly, but the overall financial impact varies because RVU revaluations and practice expense methodology changes affect specialties differently.

Practices that routinely bill an E/M service alongside a same-day minor procedure may face the greatest additional exposure from the same-day proposal.

These include:

• Dermatology
• Podiatry
• Orthopaedics
• ENT
• Urology
• Primary care practices that perform procedures

Review the specialty impact table in the final rule to understand your own exposure rather than relying on general commentary.

9. Sources

Primary Sources

• CMS — CY 2027 Medicare Physician Fee Schedule Proposed Rule Fact Sheet.
• Federal Register — CY 2027 Payment Policies Under the Physician Fee Schedule (CMS-1848-P), 91 FR 43842.

Specialty Society and Legal Analysis

• Holland & Knight — CMS Issues CY 2027 Medicare Physician Fee Schedule Proposed Rule.
• APMA — CMS Releases CY 2027 Medicare Physician Fee Schedule.
• American Urological Association — CY 2027 Proposed Rule Highlights.
• ASCRS — 2027 Medicare Physician Fee Schedule Proposed Rule Released.
• SCAI — 2027 Medicare Physician Fee Schedule Proposed Rule Released.
• CodingIntel — Physician Fee Schedule Proposed Rule 2027.

All figures in this article are drawn from the CY 2027 proposed rule and remain subject to change in the final rule.

Verify conversion factors, modifier values, and any code-level amounts against CMS-1848-F before rebuilding fee schedules or reconfiguring billing systems.

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