What the Proposed 2027 Medicare Fee Cuts Mean for Practices

CMS's proposed 2027 Medicare Physician Fee Schedule cuts the standard conversion factor by 1.68%, from $33.40 to $32.84. Practices billing outside an alternative payment model absorb that drop on every Medicare-paid service starting January 1, 2027, unless the final rule changes course.

The Conversion Factor Drop, By the Numbers

The Centers for Medicare and Medicaid Services released the CY 2027 Physician Fee Schedule proposed rule on July 14, 2026, according to the American Hospital Association. Two conversion factors apply depending on a practice's participation status. Physicians who do not qualify for an alternative payment model bonus see a conversion factor of $32.84, down 1.68% from $33.40 in 2026. Physicians who do qualify see $33.17, down 1.19% from $33.57.

Both figures include a statutory update, 0.25% for non-qualifying practices and 0.75% for qualifying ones, plus a proposed 0.53% adjustment tied to revised work relative value units, according to Holland & Knight's analysis of the rule. Those additions do not offset the larger change: a one-time 2.50% conversion factor increase that Congress approved for 2026 alone expires at the end of the year and does not carry into 2027. CMS is also proposing to move practice expense calculations away from AMA-collected specialty survey data and toward objective, auditable cost data, phased in with a stabilizer meant to limit year-to-year swings. CMS is accepting public comment on the full proposed rule through September 14, 2026.

Which Specialties Gain and Which Lose

The conversion factor cut does not land evenly across specialties. Budget-neutrality adjustments inside the rule shift payment toward primary care and behavioral health and away from procedural specialties, based on HFMA's specialty impact analysis of the proposed rule.

Source: HFMA analysis of CMS proposed rule CMS-1848-P.

A single-specialty dermatology or otolaryngology practice billing mostly procedural codes should model a revenue drop closer to 9% than the headline 1.68%, since the specialty-level number already reflects the conversion factor change layered on top of the RVU reshuffling. A geriatrics or behavioral health practice sits on the other side of that same reshuffling, with a projected gain instead of a loss.

A Same-Day Visit Cut That Touches Every Specialty

One proposal applies across specialties regardless of where a practice lands in the table above. When a practice bills an evaluation and management visit on the same day as a global surgical procedure using modifier 25, CMS proposes paying the highest-value service in full and cutting the second service by 50%. Practices that regularly stack a same-day E/M visit with a minor procedure would see that revenue cut in half on the secondary line, a change that hits high-volume procedural clinics hardest.

Two other coding changes move in the opposite direction. HCPCS code G2211, currently a flat add-on payment for visit complexity, would convert to a modifier that adds 16% to the underlying E/M payment. A separate modifier for clinicians in the Medicare Shared Savings Program or the ACO LEAD model would add 32% to qualifying longitudinal-care visits, on top of whatever the base E/M code pays.

Changes for ACOs, Telehealth, and Anesthesia

Practices in accountable care arrangements face a mix of proposed changes. The Medicare Shared Savings Program's BASIC Track Level E shared-savings rate would rise from 50% to 60%, and the scaling factor CMS applies to an ACO's prior savings would move from 50% to 75%, according to Holland & Knight's summary of the rule. Both changes increase the upside for ACOs that already hit savings targets.

Telehealth billing authority, currently set to lapse, would extend through December 31, 2027, under the proposal, giving practices another year of certainty on virtual visit billing. Anesthesia services run on a separate conversion factor, proposed at $20.4165 for qualifying APM participants and $20.2143 for non-qualifying participants, each incorporating a 0.30% specialty-specific adjustment for practice expense and malpractice costs.

What to Do Before the Comment Period Closes

HFMA's 2026 Revenue Cycle Benchmark Report, based on a survey of 102 healthcare finance and revenue cycle professionals published July 28, 2026, found denials and appeals already rank as the industry's top concern this year, before any conversion factor cut takes effect. A further 1.68% reduction layered on top of existing denial pressure raises the stakes on getting 2027 budget projections right, particularly for practices that run tight margins on Medicare volume.

The rule also proposes ending traditional MIPS reporting after the 2028 performance year, according to HFMA's analysis, which gives practices roughly two more reporting cycles to plan a shift toward MIPS Value Pathways or an alternative payment model. Practice administrators have until September 14, 2026, to submit comments on the proposed rule, and the months after that to model the specialty-specific and coding-level effects on their own payer mix before CMS finalizes the numbers for January 1, 2027.

Sources

• CMS, "Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule," July 14, 2026
• AHA News, "CMS issues CY 2027 physician fee schedule proposed rule," July 14, 2026
• Holland & Knight, "CMS Issues CY 2027 Medicare Physician Fee Schedule Proposed Rule," July 2026
• HFMA, "2027 Medicare Physician Fee Schedule proposed rule includes broad payment changes," 2026
• HFMA, "CY 2027 Physician Fee Schedule Proposed Specialty Impact Tables," 2026
• HFMA, "2026 Revenue Cycle Benchmark Report: Where Leading Providers Are Adapting and Where They're Struggling," July 28, 2026
• Healthcare Dive, "Doctor pay to drop in 2027 under proposed Medicare pay rule," July 15, 2026