The Centers for Medicare & Medicaid Services (CMS) has issued its Calendar Year (CY) 2027 Medicare Physician Fee Schedule (PFS) proposed rule, announcing proposed payment policy changes for physicians and other billing professionals effective January 1, 2027. Public comments are due September 14, 2026.
Conversion Factor Changes
For CY 2027, CMS proposes two separate conversion factors. The qualifying APM conversion factor drops to $33.17 (-1.19%), and the non-qualifying APM conversion factor drops to $32.84 (-1.68%). Both reductions primarily reflect the expiration of a one-year 2.5% payment increase under the Working Families Tax Cut (WFTC) legislation that had applied to CY 2026.
E/M Visit Complexity and Modifier -25 Changes
CMS proposes replacing HCPCS code G2211 with two new modifiers — MOD1 (a 16% E/M payment increase for all eligible practitioners) and MOD2 (a 32% increase exclusively for Shared Savings Program and LEAD Model ACO participants). The rule also proposes reducing Modifier -25 payments when a same-day E/M visit and global procedure are billed by the same physician, paying the most expensive service at 100% and all others at 50%. The AMA has formally opposed this provision.
Remote Monitoring Restrictions
RTM services would be limited to established patients. Both RPM and RTM would require a separately reportable initiating visit and must be performed by practice-employed clinical staff — not contractors. CMS is also seeking comment on restructuring the RPM and RTM code families into four new HCPCS G-codes.
Practice Expense Methodology Reform
CMS is phasing out its reliance on AMA survey-based PE/HR data — some of it dating to 2007 — in favor of more objective, routinely updated cost sources. A new PE stabilizer would replace the current methodology to reduce short-term payment volatility without anchoring values to an outdated baseline.
Chronic Disease, Behavioral Health, and Rural Access
The rule proposes new coding and payment for shared medical appointments to support chronic disease management, extends behavioral health payment adjustments to smoking cessation and SBIRT services, and creates two new HCPCS codes for advance care planning services delivered by clinical staff. For Rural Health Clinics, DSMT and MNT would be recognized as billable preventive services, and telehealth flexibilities for RHCs and FQHCs would be extended through December 31, 2027.
Medicare Eligibility Limitations
Implementing WFTC provisions, CMS proposes restricting Medicare enrollment to U.S. citizens, lawful permanent residents, Cuban and Haitian entrants, and individuals residing lawfully under a Compact of Free Association, with procedures established for termination and appeals.
What This Means for Healthcare Organizations
The 2027 PFS proposed rule touches nearly every dimension of physician payment. Conversion factor reductions will compress baseline rates across the board. The Modifier -25 proposal, if finalized, would meaningfully reduce reimbursement for same-day E/M and procedural billing in surgical and procedural specialties. RPM and RTM restrictions require an immediate review of contractor arrangements and patient eligibility protocols.
Revenue cycle teams should assess impact across high-volume service lines before the September 14 comment deadline.
ACO-affiliated organizations should evaluate MOD2 implications for E/M billing strategy. This is one of the broadest proposed rules in recent years — the comment window is a real opportunity to push back.
