In July, the Centers for Medicare and Medicaid Services (CMS) released the proposed Medicare Physician Fee Schedule (PFS) Rule for 2027 and is accepting public comments through September 14, 2026. The PFS includes programmatic and reimbursement policies affecting physicians who provide services to Medicare beneficiaries. It also proposes changes to the Merit-based Incentive Payment System (MIPS) and alternative payment model (APM) participation options and requirements for 2027.
The Michigan State Medical Society (MSMS), as well as other state and national associations, have been reviewing CMS’s proposal and will be preparing formal comments to submit. MSMS welcomes your reactions to the proposed policies as your input is critical in advocating for the inclusion, modification, or removal of issues of concern to physicians in the final rule, which is expected to be issued in November. Below are some key issues in the proposed PFS for which physicians should be aware and evaluate to determine the impact on their respective specialties and individual practice.
Rate Setting and Conversion Factor
Once again, the Medicare payment update does not reflect the growth in physician practice costs. The reductions are due mainly to the expiration of the temporary 2.5% increase to 2026 Medicare payment adopted by Congress as the statutorily mandated adjustments of +0.75% and +0.25% for qualified participants (QPs) and non-QPs, respectively, and +0.53% budget-neutral adjustment are not sufficient to offset the loss of the current year’s increase.
Medicare Conversion Factor | Medicare Anesthesia Conversion Factor | ||
|---|---|---|---|
For APM QPs | For non-APM QPs | For APM QPs | For non-APM QPs |
$33.17 (-1.19%) | $32.84 (-1.68%) | $20.42 (-0.89%) | $20.21 (-1.38%) |
CMS is limited by budget neutrality rules when it increases or decreases relative value units (RVUs) paid under the fee schedule. Therefore, Congressional action is needed to provide long-term reimbursement reform in order to halt these annual reductions.
Practice Expense Methodology
CMS is proposing major reforms to the methodology for determining practice expense (PE) RVUs including eliminating the Indirect Practice Cost Index (IPCI) from its PE calculations. This would negate steps 12 through 17 of its 18-step process. The transition would occur over a two-year period. If adopted as proposed, there would be a new indirect PE allocator formula to align with work and clinical labor RVUs, as well as a new PE stabilization adjustment to limit annual increases or decreases in PE RVUs to +/- 5% for most services.
They are also asking for comments on whether the site of service payment differential between Facility and Non-facility is still appropriate or whether a different approach should be considered. This is an opportunity to weigh in on how practice expense costs vary by employment model and site of service PE variation.
Global Procedure and Same-Day E/M appended with Modifiers 24 and 25
This provision proposes to reduce payment when a separately identifiable E/M visit is furnished by the same physician (or a physician in the same practice) on the same day as a 0-, 10-, or 90-day global procedure and would take effect beginning in 2027. CMS proposes paying the most expensive service, whether surgical or E/M visit, at 100% and the other surgical procedure or E/M visit furnished on the same day at 50%. While referred to as the Modifier 25 change, it should be noted that the 90-day global procedure uses modifier 24 not modifier 25.
This proposal is very similar to the policy proposed and paused by Blue Cross Blue Shield of Michigan this past spring. MSMS, the American Medical Association (AMA), and specialty societies were able to demonstrate that the manner in which the global procedure codes are valued does not result in a duplication of payment and would significantly impact the capacity to provide timely care to patients and viability of practices, especially smaller, independent practices.
HCPS Code G2211 Redesign
Under the proposed Rule, HCPS Code G2211 would become a modifier that would be appended to an evaluation and management (E/M) base code. They are proposing two modifiers – MOD1 and MOD2. MOD1 would increase payment of the associated E/M code by 16%. The increase for MOD2 would be 32%, but only practitioners in the Medicare Shared Savings Program (MSSP) or in the ACO LEAD model would be eligible to use it. Since modifiers do not have work RVUs (wRVUs) it will be important to evaluate whether the increase in revenue as proposed offsets a loss of the current 0.33 wRVU productivity credit if G2211 is no longer reported as a separate code.
Maternity Care Services
CMS proposes to adopt the AMA’s recommendations to update the Maternity Care Services coding structure to reflect modern obstetric practice. The changes would begin January 1, 2027, and are intended to provide greater transparency for patients and increased granularity that will improve the ability of physicians and researchers to better understand the drivers of maternal mortality.
Telehealth
COVID-era telehealth flexibilities that were extended most recently in the Consolidated Appropriations Act of 2026 are included in the proposed PFS and recommended to continue through CY 2027. Other proposals include 1) new codes for advance care planning involving directives, group based medical sessions for certain patients, specific speech/auditory services, and vaccine adverse events; 2) revised code descriptors related to telehealth critical care consultation; 3) conditions by which teaching physicians can bill for services involving residents; and 4) a $32.65 telehealth originating site facility fee.
Remote Monitoring
Accounts of fraud, waste, and abuse related to remote physiologic monitoring (RPM) and remote therapy monitoring (RTM) in an Office of Inspector General (OIG) report have prompted CMS to recommend strict guardrails related to the use of these services. For example, payment for RPM and RTM services would only be allowed if furnished by clinical staff who are direct employees of the practice. If adopted, this will be problematic for practices currently utilizing third-party vendors as they may not have the capacity to offer these services in-house.
Other proposed changes include an initial in-person or virtual face-to-face visit associated with the onset of RPM or RTM services and the revaluing of several RPM and RTM codes.
MSSP/ACO Enhancements
CMS proposes numerous changes to the Medicare Shared Savings Program (MSSP), such as modifying the financial methodology, updating beneficiary assignment methodology, allowing all MSSP accountable care organizations (ACOs) to reduce or eliminate Part B cost sharing, and adding a new modifier for providing longitudinal care.
Transitioning of MIPS to MVP
The proposed Rule proposes to sunset traditional MIPS beginning with the CY 2029 program year (CY 2031 payment year). As a result physicians will eventually need to transition to a MIPS Value Pathways (MVPs) or APM pathway. This proposal ignores previous concerns raised by physician organizations that MIPS is unduly burdensome; disproportionately harmful to small, rural, and independent practices; exacerbates health inequities; and is not aligned with meaningful clinical outcomes.
New MVPs
The PFS proposes to add three new MVPs related to diabetic disease, hypertension, and hospitalists.
Primary Care Service Valuation
For CY 2027, CMS is seeking comments on how to reconsider primary care service valuation to focus on preventive rather than reactive medicine. They are specifically asking for input on three main topics: 1) reconsidering relative primary care payment in the PFS; 2) understanding the payment implication of including technology in primary care; 3) establishing prospective primary care payment in the Medicare Shared Savings Program and potentially in the Original Medicare program broadly.
Physicians are encouraged to submit comments to CMS supported by stories and data about the impact on your patients, practice, and ability to provide patient-centric care. It is important to remember that CMS reviews all comments as they work to finalize the CY 2027 PFS. Therefore, comments from physicians, MSMS, the AMA, and others can influence the outcome of the final Rule. Comments are due by September 14, 2026, and can be submitted online.
Please contact Stacey Hettiger at shettiger@msms.org if you have questions or would like to share specific concerns or support for any of the rule’s proposed provisions.
Resources:
- CMS Press Release
- Physician Payment Schedule Fact Sheet
- Medicare Shared Savings Program Fact Sheet
- Quality Payment Program (QPP) Fact Sheet
- CMS Specialty Impact Table
- CMS CY 2027 PFS Proposed Rule Impact on Payment for Selected Procedures
- Proposed Rule
Sources:
- AMA 2027 Medicare Physician Payment Schedule and Quality Payment Program Proposed Rule Summary
- CMS Physician Payment Schedule Fact Sheet and Proposed Rule
- MGMA Proposed 2027 Medicare Physician Payment and Quality Reporting Changes
- PYA, P.C. Webinar – Health Care Regulatory Roundup #116, CY 2027 Medicare Physician Fee Schedule (MPFS) Proposed Rule: Key Changes and Strategic Implications, August 12, 2026