Disclaimer: This article is intended solely for informational and educational purposes only. It does not constitute medical advice.
On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year 2027 Medicare Physician Fee Schedule (MPFS) proposed rule, setting off the annual cycle of comment and analysis that shapes Medicare Part B payment for the following year (CMS, 2026). For physicians across specialties, the rule carries significant financial and administrative implications, and several provisions deserve close attention before the comment period closes on September 14, 2026.
The most immediate concern for many practices is the conversion factor. Because the temporary 2.5 percent payment increase authorized for 2026 under the Working Families Tax Cut legislation is set to expire, the statutory baseline effectively falls by that same margin heading into 2027 (CMS, 2026). The proposed qualifying-APM conversion factor would decline to roughly $33.17, a drop of about 1.19 percent from 2026, while the non-qualifying conversion factor would fall further to about $32.84, a decrease of 1.68 percent (CMS, 2026).
Anesthesiologists face an even steeper reduction: the proposed anesthesia conversion factor would fall to $20.42 for qualifying APM participants and to $20.21 for others, representing decreases of roughly 0.9 percent and 1.4 percent respectively (American Society of Anesthesiologists [ASA], 2026). These decreases highlight the continued strain within the healthcare system and the flaws of the payment system, particularly given rising practice costs, which apply pressure to anesthesia groups and other practices (ASA, 2026).
Beyond the conversion factor, CMS proposes a substantial overhaul of how practice expense relative value units are calculated. The goal is to phase out the Indirect Practice Cost Index over the next several years, replacing it with a stabilization mechanism that caps annual swings in any code’s practice expense RVU at 5 percent (Bipartisan Policy Center [BPC], 2026).
This shift is intended to reduce reliance on outdated, specialty-level survey data in favor of more current, auditable cost information, though it will inevitably redistribute payment across specialties in a budget-neutral fashion (CMS, 2026).
Several policy changes target evaluation and management services and care coordination. CMS proposes reducing payment when a same-day E/M visit overlaps with a global surgical period, paying the more expensive service at full rate and the remainder at 50 percent (CMS, 2026). The agency also proposes converting the G2211 complexity add-on code into a modifier and creating a separate, higher-value modifier for physicians in accountable care organizations performing longitudinal care (CMS, 2026).
Remote physiologic and therapeutic monitoring services would also see meaningful restructuring, including lower payment rates for several codes, a ban on third-party vendors delivering these services, new established-patient requirements, and a mandatory initiating visit before monitoring begins (BPC, 2026; CMS, 2026).
On the innovation front, CMS proposes renaming software-as-a-service billing codes to “Software as a Medical Service” and introduces a new incentive rewarding clinicians who adopt governance policies around responsible AI use in clinical workflows (BPC, 2026). The agency is also soliciting comment on how to value primary care differently, including technology-enabled care, and on expanding accountable care participation among rural and dually eligible beneficiaries (BPC, 2026).
The cuts to the physician fee schedule in the proposed changes for 2027 reflect the impact of Medicare’s long-held budget neutrality requirements—ultimately, they assert that for value-based care, chronic disease prevention, and administrative modernization to be rewarded, there must be cuts elsewhere. Physicians and practice administrators should review the specialty-specific impact tables closely, as aggregate conversion factor changes may mask more significant shifts within individual codes.
References
- American Society of Anesthesiologists. (2026, July 14). CMS proposes a decrease to anesthesia payments in 2027; makes significant changes to anesthesiology MIPS reporting. https://www.asahq.org/advocacy-and-asapac/fda-and-washington-alerts/washington-alerts/2026/07/cms-proposes-a-decrease-to-anesthesia-payments-in-2027
- Bipartisan Policy Center. (2026, July 23). Medicare 2027 physician fee schedule proposed rule: Policies with potential to improve health care affordability for patients and taxpayers. https://bipartisanpolicy.org/explainer/medicare-2027-physician-fee-schedule-proposed-rule-policies-with-potential-to-improve-health-care-affordability-for-patients-and-taxpayers/
- Centers for Medicare & Medicaid Services. (2026, July 14). Calendar year (CY) 2027 Medicare physician fee schedule proposed rule [Fact sheet]. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2027-medicare-physician-fee-schedule-proposed-rule