Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule

Administration Payment Rules Share Fact Sheet: Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that announces and solicits public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2027. The calendar year (CY) 2027 PFS proposed rule is one of several proposed rules that reflect a broader Administration-wide strategy to create a healthcare system that results in better quality, efficiency, empowerment, and innovation for all Medicare beneficiaries. Background on the Physician Fee Schedule Since 1992, Medicare payment has been made under the PFS for the services of physicians and other billing professionals in a variety of settings. For most services furnished in a physician’s office, Medicare pays physicians and other professionals at a single rate based on the full range of resources involved in furnishing the service. In contrast, PFS rates paid to physicians and other billing practitioners in facility settings, such as a hospital outpatient department (HOPD) or an ambulatory surgical center (ASC), reflect only the portion of the resources typically incurred by the practitioner while furnishing the service. For many diagnostic tests and a limited number of other services under the PFS, separate payment may be made for the professional and technical components of services. The technical component is frequently billed by suppliers for which no institutional payment is made, like independent diagnostic testing facilities and radiation treatment centers, while the professional component is billed by the physician or practitioner. Payments are based on the relative resources typically used to furnish the service. Relative value units (RVUs) are applied to each service for work, practice expense, and malpractice expense. These RVUs become payment rates through the application of a conversion factor. Geographic adjusters (geographic practice cost indices) are also applied to the total RVUs to account for variation in costs by geographic area. Payment rates are calculated to include an overall payment update specified by statute. CY 2027 PFS Rate Setting and Conversion Factor As required by statute, beginning in CY 2026, there are two separate conversion factors: one for qualifying alternative payment model (APM) participants (QPs) and one for physicians and practitioners who are not QPs. By statute, QPs are those that meet certain thresholds for participation in an Advanced APM, which means generally that the payment model has features to ensure accountability for quality and cost of care. The update to the qualifying APM conversion factor for CY 2027 is +0.75% while the update to the non-qualifying APM conversion factor for CY 2027 is +0.25%. The changes to the PFS conversion factors for CY 2027 include these updates as required by statute and an estimated +0.53% adjustment necessary to account for proposed changes in work RVUs for some services. However, Public Law 119-21, which CMS refers to as the Working Families Tax Cut (WFTC) legislation, provided a one-year PFS conversion factor increase of 2.50% for CY 2026, which will no longer be in effect for CY 2027. This effectively means that current law requires -2.50% reduction in Medicare payment under the PFS compared to CY 2026. The proposed CY 2027 qualifying APM conversion factor of $33.17 represents a projected decrease of $0.40 (-1.19%) from the current conversion factor of $33.57. Similarly, the proposed CY 2027 nonqualifying APM conversion factor of $32.84 represents a projected decrease of $0.56 (-1.68%) from the current conversion factor of $33.40. Accounting for Overlap Between Stand-Alone E/M Visits and Global Periods For CY 2027, we are proposing to reduce payment when a separately identifiable office/outpatient evaluation and management (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. The most expensive service (either surgical or E/M visit) would be paid at 100% and all other surgical procedure(s) or E/M visit(s) furnished on the same day would be paid at 50%. This proposed policy is like a proposal in the CY 2019 PFS proposed rule, made in the context of a broader proposal that would have modified the payment structure of E/M visits. While we did not finalize the proposal at that time, we noted that we continued to believe that there are efficiencies when the same physician (or a physician in the same group practice) provides an E/M service for the same patient in conjunction with a procedure with a global period and that we are likely duplicating payment under the current payment methodology. The current proposal would address that overvaluation. E/M Visit Complexity Add-On (HCPCS code G2211) In the CY 2021 PFS final rule, we fin