CMS proposes to pay 100% for the highest-valued service and 50% for every other service when a physician bills an office E/M visit with modifier 25 on the same day as a procedure. In a Coker Group worked example, a 99212 visit billed with a 11301 lesion shave loses 16.9% of its combined relative value units (RVUs) under that rule.
What the 2027 proposal says
CMS released the CY 2027 Physician Fee Schedule proposed rule on July 14, 2026. It applies to a separately identifiable office or outpatient E/M visit billed on the same day as a procedure with a 0-day, 10-day or 90-day global period, by the same physician or another physician in the same practice. The CMS fact sheet says the most expensive service, whether surgical or E/M, is paid at 100%. Every other surgical procedure or E/M visit that day is paid at 50%.
CMS also asked for comment on a smaller cut. The Coker Group's August 24, 2026 analysis reports that the agency is soliciting comment on a 25% reduction in place of 50%. If CMS finalizes the proposal, it takes effect on January 1, 2027.
The AMA describes the proposal as a 50% cut that applies to most procedures. Modifier 25 marks an E/M visit as significant and separately identifiable from the procedure. Under current rules the visit is paid in full. Under the proposal, the visit is the piece that drops to 50% whenever the procedure has the higher value.
A worked example in RVUs
Coker Group lists three 2026 RVU values: 1.78 for the 99212 established patient visit, 2.89 for the 11300 shave of a lesion up to 0.5 cm, and 3.48 for the 11301 shave of a lesion 0.6 to 1.0 cm. Coker does not state which RVU component those values represent. The totals below are simple sums of the listed values.
| Same-day pair | Current RVUs | Proposed RVUs | Change |
|---|---|---|---|
| 99212 (1.78) plus 11301 (3.48), 50% rule | 5.26 | 4.37 | -16.9% |
| 99212 (1.78) plus 11300 (2.89), 50% rule | 4.67 | 3.78 | -19.1% |
| 99212 (1.78) plus 11301 (3.48), 25% alternative | 5.26 | 4.815 | -8.5% |
Source: RVU values from Coker Group, August 24, 2026. Totals and percentages are calculated from those values. The base for each percentage is the current combined RVU total for the two services.
The lower-valued procedure loses more in percentage terms because the visit is a larger share of the total. In both 50% rows the visit gives up 0.89 RVUs, half of its 1.78. Under the 25% alternative the visit gives up 0.445 RVUs.
Timeline and the payment rate underneath
The comment period closed on September 14, 2026, and MGMA filed its comments that day, according to Medical Economics on September 28, 2026. CMS is expected to publish the final rule by November 1. Practices will not know the outcome until then. MGMA lists other dates that fall near the same window: federal funding expires December 11, 2026, and the electronic prior authorization requirement starts January 1, 2027. MIPS sunsets after the 2028 performance year.
The cut would sit on top of a lower conversion factor. The CMS fact sheet lists a 2027 conversion factor of $32.84 for non-qualifying physicians, down $0.56 or 1.68% from $33.40 in 2026. For qualifying alternative payment model participants it is $33.17, down $0.40 or 1.19% from $33.57. CMS attributes the net 2.50% reduction to the expiration of a one-time 2.50% increase that applied to CY 2026 only.
Each RVU is worth $32.84 to a non-qualifying practice in 2027. At that rate the 0.89 RVUs a visit gives up in the first two table rows equal $29, if the listed values are payment RVUs.
Who has the most exposure
ECG Management Consultants reads the proposed rule as producing significant decreases for dermatology, otolaryngology, orthopedic surgery and hand surgery. It links those changes to practice expense methodology, modifier 25 and removal of the Indirect Practice Cost Index. ECG does not give a percentage per specialty. Assembly Health lists pain management, ophthalmology, dermatology, orthopedics, podiatry and otolaryngology as affected specialties.
MGMA told Medical Economics that the cut "would impact everybody, and it would undermine the ability of independent groups as well to operate." The AMA reports that CMS proposed a similar policy in July 2018 and dropped it after physician objections. The AMA Federation's August 27, 2026 comment letter notes that CMS declined a similar proposal in 2019.
Budget neutrality rules add to the pressure. MGMA says any change projected to raise spending by more than $20 million forces an offsetting cut across the fee schedule, and that the G2211 complexity add-on code took roughly $1 billion out of the fee schedule this way. The AMA puts the inflation-adjusted decline in Medicare physician payment since 2001 at approximately 33%.
Documentation is the other exposure. Assembly Health cites the AMA standard that modifier 25 reporting needs documentation of independent, reportable work beyond the usual pre-operative or post-operative services. It also points to a Medicare claims analysis of intravitreal injections that found significant documentation deficiencies in sampled E/M services billed with modifier 25. Practices with weak notes have the most to lose from a policy that already asks for proof.
For 2027 planning, the number to pull from a practice's own billing system is the count of Medicare claims that pair a modifier 25 E/M visit with a 0-day, 10-day or 90-day global procedure. Multiply that count by the RVU reduction per pair and by the $32.84 conversion factor.
Sources
- CMS, Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule fact sheet, July 14, 2026
- Coker Group, CMS Proposes Major Cuts to Modifier-25 Billing for 2027, August 24, 2026
- Medical Economics, MGMA outlines 2027 pay cut, end of MIPS and other federal changes coming for physicians, September 28, 2026
- AMA, 2027 proposed Medicare fee schedule: What physicians need to know, 2026
- AMA Federation via AANS, Comments on CY 2027 Medicare Physician Fee Schedule Proposed Rule, August 27, 2026
- ECG Management Consultants, CMS Issues CY 2027 Medicare Physician Fee Schedule Proposed Rule, 2026
- Assembly Health, 2027 Medicare Modifier 25 Change: What Practices Need to Know, 2026
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