Medicare's 2027 conversion factor falls 2.31% to $32.63 for physicians outside a qualifying alternative payment model (APM), according to the final physician fee schedule rule CMS released on November 4, 2026. For qualifying APM participants the factor falls 1.83% to $32.95.
Both cuts are deeper than the July proposal, which would have cut the factors 1.19% and 1.68%. The rule takes effect on or after January 1, 2027. It also changes same-day visit payment, the G2211 add-on and practice expense allocation.
The 2027 conversion factors
The CMS fact sheet for the final rule sets the qualifying APM participant (QP) factor at $32.95, down $0.62 from the current $33.57. It sets the non-QP factor at $32.63, down $0.77 from $33.40. Holland & Knight reported the July proposal at $33.1693 for QPs and $32.8409 for non-QPs.
| Group | 2026 factor | 2027 final factor | Change from 2026 | 2027 proposed (July) |
|---|---|---|---|---|
| Qualifying APM participants | $33.57 | $32.95 | -$0.62 (-1.83%) | $33.17 (-1.19%) |
| Non-qualifying clinicians | $33.40 | $32.63 | -$0.77 (-2.31%) | $32.84 (-1.68%) |
Sources: CMS, CY 2027 Medicare Physician Fee Schedule Final Rule fact sheet, November 4, 2026. Proposed figures from Holland & Knight, July 20, 2026, rounded to cents.
To see the effect in a practice, multiply the factor by relative value units (RVUs). A service worth 100 total RVUs paid $3,340 at the 2026 non-QP factor and pays $3,263 at the 2027 factor, a $77 drop. At the QP factors the same service moves from $3,357 to $3,295, a $62 drop. A group whose Medicare claims total 50,000 RVUs a year loses $38,500 at the non-QP rate and $31,000 at the QP rate. This arithmetic uses only the CMS factors and ignores geographic adjustments.
Why the final cut is deeper than proposed
CMS states that a one-year 2.50% increase to the conversion factor applied only in 2026 and no longer applies in 2027. Current law therefore requires a 2.50% reduction. Statutory updates of 0.75% for QPs and 0.25% for non-QPs offset part of it.
The remaining gap comes from an adjustment for work RVU changes. The proposed rule estimated that adjustment at +0.53%. The CMS fact sheet puts it at -0.12% in the final rule. That is a 0.65 point swing, and Medical Economics attributes the difference between the proposed and final cuts to it.
Against the July proposal, the final non-QP factor is $0.21 lower per RVU ($32.84 to $32.63) and the final QP factor is $0.22 lower ($33.17 to $32.95). On a 50,000 RVU Medicare book, that is roughly $10,500 and $11,000 a year that practices modeled from the proposal will not receive. Practices that budgeted from the proposed figures need to reset 2027 Medicare revenue projections to the two final factors.
Same-day visits and the G2211 add-on
CMS finalized a payment reduction when a separately identifiable office or outpatient visit is billed with modifier 25 on the same day as a procedure with a 0-day global period. The other service is paid at 80%, rather than 50% as proposed. The proposal also covered procedures with 10-day and 90-day global periods, and CMS dropped those in the final rule.
As a hypothetical, if the lower-paid service on a same-day claim would pay $100, it pays $80 in 2027 and the higher-paid service is paid in full. Medical Economics reports that dermatology, otolaryngology and podiatry take the largest effect from this policy.
The G2211 visit complexity add-on becomes modifier B1 in 2027. The CMS fact sheet says B1 raises the payment of the associated visit code by 16%. A second modifier, B2, raises it by 32% for clinicians in a Medicare Shared Savings Program ACO or a LEAD Model ACO. Medical Economics reports that CMS expects minimal overall payment impact from the change.
Practice expense and specialty effects
CMS will phase out the Indirect Practice Cost Index over two years and replace it with a practice expense stabilizer. Holland & Knight reported that the proposed stabilizer limited most annual practice expense RVU changes to 5% in either direction. The CMS fact sheet for the final rule does not restate a percentage.
Indirect practice expense will be allocated on both the work RVU and the clinical labor practice expense RVU, rather than only the larger of the two. The change applies to all codes except those with 10-day and 90-day global periods.
Medical Economics, citing the rule's impact analysis, reports significant decreases for dermatology, otolaryngology, orthopedic surgery and hand surgery. It reports significant increases for clinical psychologists and clinical social workers. For total hip and total knee arthroplasty (CPT 27130 and 27447) the final work RVU is 16.70, down from 19.11 today. The proposal would have set the values at 15.37 and 15.94. CMS posted the full specialty table as a separate file and cautions that the figures are averages.
Program changes and dates
CMS delayed the end of traditional MIPS reporting to 2031, rather than 2029 as proposed, according to the American Hospital Association. Clinicians have through 2030 to move to MIPS Value Pathways, which CMS says cover about 98% of clinicians, or to advanced APMs. Three new pathways were finalized, for diabetes, hypertension and hospitalists. Starting in 2027, clinicians must report at least one specialty-specific core measure.
For ACOs, Medical Economics reports that the BASIC track Level E shared savings rate rises from 50% to 60%. The maximum weight on the ENHANCED track regional adjustment falls from 50% to 35%.
- January 1, 2027: the rule takes effect on or after this date, per the CMS fact sheet.
- April 1, 2027: ACOs may begin reducing or waiving Part B cost sharing for assigned beneficiaries.
- December 31, 2027: Medicare telehealth flexibilities extended by the Consolidated Appropriations Act, 2026 run through this date.
- September 30, 2027: the first quarterly 340B claims data submission is due.
- January 1, 2029: the requirement that remote monitoring services be furnished by the practice's own employed clinical staff begins.
- 2027 through 2029: clinical laboratory payment reductions are limited to 15% a year.
Sources
- CMS, Calendar Year (CY) 2027 Medicare Physician Fee Schedule Final Rule fact sheet, November 4, 2026
- American Hospital Association, CMS issues CY 2027 physician fee schedule final rule, November 4, 2026
- Medical Economics, Medicare's final 2027 fee schedule cuts physician pay more than proposed but softens the same-day visit penalty, November 4, 2026
- Chief Healthcare Executive, CMS' final 2027 physician fee schedule cuts pay and reworks ACO incentives, November 4, 2026
- Holland & Knight, CMS Issues CY 2027 Medicare Physician Fee Schedule Proposed Rule, July 20, 2026
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