Your Medicare Pay Is Set to Drop on January 1, 2027
A shrinking conversion factor, a proposed 50% cut when you bill a visit and a procedure on the same day, and the end of G2211 as you know it. Here’s what’s in the 2027 Medicare fee schedule — and how to protect your revenue before it lands.
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The story in 60 seconds
- CMS’s proposed 2027 Physician Fee Schedule cuts the main conversion factor by 1.68% (1.19% for qualifying APM participants), effective January 1, 2027.
- The cut comes mostly from the expiration of a one-year 2.5% boost Congress gave for 2026.
- CMS also proposes paying 50% less for the lower-valued service when an E/M visit is billed with modifier 25 on the same day as a procedure.
- G2211 would be retired as a separate code and replaced by a modifier that adds 16% to the visit.
- The final rule is expected any day — numbers may still change.
01The headline number
Every Medicare payment under the physician fee schedule is built from one dollar figure: the conversion factor. When it falls, almost every code you bill pays less.
| Conversion factor | 2026 | Proposed 2027 | Change |
|---|---|---|---|
| Non-qualifying APM participants (most practices) | $33.4009 | $32.8409 | −1.68% |
| Qualifying APM participants | $33.5675 | $33.1693 | −1.19% |
| Anesthesia (non-qualifying) | $20.4976 | $20.2143 | −1.38% |
02Why rates are falling
For 2026, Congress added a temporary 2.5% increase to the conversion factor. That boost expires on December 31, 2026. The small annual updates built into current law (0.25% for most practices, 0.75% for qualifying APM participants) and a 0.53% budget-neutrality adjustment aren’t enough to make up the difference.
On top of that, the 2.5% “efficiency adjustment” CMS applied in 2026 to work values for many non-time-based services — procedures, imaging interpretations and similar codes — stays in place. New and revised 2027 codes are valued as if that adjustment already applies.
Practice costs keep rising while Medicare’s base rate does not. The AMA estimates Medicare physician payment has fallen about 33% since 2001 when adjusted for inflation, and is backing legislation for an automatic, inflation-linked update.
03The modifier 25 shock
This is the proposal many practices haven’t heard about yet. When a physician performs a separately identifiable office visit on the same day as a procedure and bills the visit with modifier 25, CMS proposes to pay the lower-valued of the two services at 50%. CMS also asked for comment on a 25% alternative.
Think of the patient who comes in for a diabetes follow-up and also gets a joint injection, or the dermatology visit that ends with a biopsy. Today both are paid in full when documentation supports them. Under the proposal, one of them would be cut in half.
The AMA strongly opposes the cut and is pressing CMS to drop it from the final rule. Whatever happens, documentation for modifier 25 will matter more than ever. Our CO-4 denial guide and 99214 billing guide explain how to support it.
04G2211 is changing
Since 2024, practices have billed add-on code G2211 for the added complexity of ongoing, longitudinal care. CMS proposes to retire G2211 as a separately billed code and replace it with a modifier on the E/M visit that increases its payment by 16%. A second modifier would add 32% for participants in certain ACO and accountable care models.
If finalized, your EHR templates, charge master and claim scrubber rules will need to change before your first 2027 claims. Coders and providers will also need clear guidance on when the new modifier applies.
05Other changes to know
- Telehealth: According to industry summaries, Congress extended broad Medicare telehealth flexibilities through December 31, 2027, and delayed the in-person requirement for mental health telehealth to January 1, 2028. CMS proposes adding five services to the telehealth list. See our telehealth mental health coding guide.
- Remote monitoring: CMS proposes limiting RTM to established patients, paying only for services by the practice’s employed clinical staff, and cutting practice expense values for some RPM/RTM codes, with annual reductions capped at 19%. Read our guide to RPM billing compliance.
- Practice expense: A proposed stabilizer would cap most codes’ annual practice expense changes at ±5%, while the indirect practice cost index is phased out over 2027–2028.
- MIPS: CMS proposes sunsetting traditional MIPS reporting in 2029 in favor of MVPs. Our MIPS guide explains the program today.
- Ambulatory Specialty Model: A mandatory specialty model finalized last year starts in January 2027.
06Example: what 1.68% really costs
Take a service worth 3.00 total RVUs at the national rate. In 2026 it pays about $100.20 (3.00 × $33.4009). Under the proposed 2027 conversion factor, it pays about $98.52 (3.00 × $32.8409) — a drop of $1.68 per service.
That sounds small. But a practice collecting $1.2 million a year in Medicare fee-schedule payments would lose roughly $20,000 from the conversion factor alone — before any modifier 25 reductions, efficiency adjustments or code-specific changes.
Illustrative only. Actual payment depends on your locality (GPCIs), code mix and the final rule.
07What to do now
- Model your 2027 Medicare revenue using your top 20 codes and the proposed conversion factor, then update it when the final rule is published.
- Count your modifier 25 claims. Pull 2026 claims with E/M + modifier 25 on the same day as a procedure to see how exposed you are.
- Prepare for the G2211 switch. Plan template, charge master and scrubber changes so you’re ready on January 1.
- Review commercial contracts tied to Medicare rates. Many contracts pay a percentage of Medicare, so the cut can spread. See our payer contract guide.
- Plug revenue leaks you can control — denials, underpayments and unbilled services. Start with our year-end revenue checklist and revenue leakage guide.
More headlines this month
Records show early delays and vendor problems in the WISeR model. Read Issue 04.
Expansion adults must show 80 hours a month of qualifying activity. Read Issue 06.
Frequently asked questions
Is the 2027 Medicare cut final?
Not yet. The numbers in this issue come from the proposed rule released July 14, 2026. CMS typically releases the final rule in early November, and figures can change. New rates take effect January 1, 2027.
Why is Medicare cutting physician pay again?
Mainly because a one-year 2.5% increase Congress approved for 2026 expires at the end of the year, and the small updates built into current law don’t fully replace it.
Will the modifier 25 cut definitely happen?
It’s a proposal. The AMA and many specialty societies are urging CMS to drop it. Check the final rule before changing workflows, but start measuring your exposure now.
What happens to G2211?
CMS proposes replacing the G2211 add-on code with a modifier that increases the E/M payment by 16%. If finalized, practices will need to update templates and billing rules for 2027.
Does this affect my commercial payments?
It can. Many commercial and Medicare Advantage contracts are tied to a percentage of the Medicare fee schedule, so a Medicare cut may reduce those payments too.
Sources
Related resources
This newsletter summarizes the CY 2027 proposed rule and publicly reported information as of November 2026. It is not legal or financial advice. Final figures may differ — confirm with CMS and your MAC.
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