CMS Finalizes 2027 Medicare Physician Fee Schedule, Prioritizing Primary Care and Payment Integrity

The Centers for Medicare & Medicaid Services (CMS) has finalized its 2027 Medicare Physician Fee Schedule, outlining significant changes to physician reimbursement, quality reporting, preventive care, and Medicare payment policies.

2027 Conversion Factors Decline

The rule, effective January 1, 2027, establishes separate conversion factors for qualifying participants in Advanced Alternative Payment Models and other clinicians, with both rates declining from 2026 levels:

• Qualifying participant conversion factor: decreases by 1.83%
• Non-qualifying participant conversion factor: decreases by 2.31%

Modifier 25 Payment Reduction Narrowed in Final Rule

CMS also finalized a payment reduction affecting services billed with Modifier 25, although with significant changes from its original proposal.

Beginning January 1, 2027, when a physician or another physician in the same practice provides a separately identifiable office or outpatient evaluation and management (E/M) service on the same day as a procedure with a zero-day global period, Medicare will pay the higher-cost service at 100% and reduce payment for the lower-cost service by 20%.

The policy was initially proposed to include procedures with zero-, 10-, and 90-day global periods and would have reduced payment for the lower-cost service by 50%. Following concerns raised by physician organizations and other stakeholders, CMS narrowed the scope and reduced the payment adjustment.

Traditional MIPS Reporting to Phase Out in 2031

The final rule also makes substantial changes to Medicare’s quality reporting and alternative payment programs. CMS will phase out the traditional Merit-based Incentive Payment System (MIPS) reporting option beginning with the 2031 performance period, giving clinicians through 2030 to transition to MIPS Value Pathways (MVPs) or Advanced Alternative Payment Models.

Additional changes include:

• Three new MVPs addressing diabetes, hypertension, and hospitalists
• A requirement for clinicians to report at least one specialty-specific core measure beginning in 2027

Expanded Incentives for ACO Participation

The rule also expands incentives for participation in Medicare Shared Savings Program accountable care organizations (ACOs), including allowing approved ACOs to reduce or eliminate certain Part B beneficiary cost-sharing beginning April 1, 2027.

New Payment Opportunities for Preventive and Behavioral Health Services

Other changes include expanding payment opportunities for:

• Health and well-being coaching
• Shared medical appointments
• Smoking cessation services
• Behavioral health assessments

The rule also establishes new billing codes for advance care planning.

Learn more

• CMS Press Release
• Physician Payment Schedule Fact Sheet
• Medicare Shared Savings Program Fact Sheet
• Quality Payment Program (QPP) Fact Sheet