CMS Finalizes 2027 Physician Fee Schedule: Deeper Pay Cut for Doctors, New Part B Cost-Sharing Option Through ACOs

What Happened
The Centers for Medicare & Medicaid Services (CMS) on November 4 released the final rule for the 2027 Medicare Physician Fee Schedule, which sets Part B payment policy for physicians and other clinicians. The rule takes effect January 1, 2027.

Payment Cut
According to the CMS fact sheet, the conversion factor for clinicians outside advanced alternative payment models falls from $33.40 to $32.63, a 2.31% reduction. For qualifying APM participants it falls 1.83%, from $33.57 to $32.95. Both cuts are deeper than the reductions CMS proposed in July. Physicians Practice reports that most of the decline comes from the expiration of a one-year 2.5% increase Congress provided for 2026.

Same-Day Visits and Billing Changes
When one physician, or physicians of the same specialty in the same group, bills an office visit and a minor procedure on the same day, Medicare will pay the higher-paid service in full and the second at 80%. CMS had proposed 50% and a broader reach before scaling the policy back after public comment. The rule also replaces add-on code G2211, which covers visit complexity, with new payment modifiers.

What It Could Mean for Beneficiaries
Beginning April 1, 2027, CMS-approved accountable care organizations (ACOs) in the Medicare Shared Savings Program may reduce or eliminate Part B cost sharing for many services for their assigned beneficiaries, according to the Shared Savings Program fact sheet. Durable medical equipment, prosthetics, orthotics, supplies and prescription drugs are excluded. CMS will collect initial applications in early 2027.

Telehealth and Eligibility
The rule notes that the Consolidated Appropriations Act, 2026, extended Medicare telehealth flexibilities through December 31, 2027. It also implements limits on Medicare eligibility under Public Law 119-21, restricting coverage to U.S. citizens and nationals, lawful permanent residents, Cuban and Haitian entrants, and people lawfully residing in the U.S. under a Compact of Free Association, and includes termination and appeal procedures.

Agency and Industry Response
In a CMS news release, CMS Administrator Mehmet Oz said the rule moves away from a fee-for-service model that has rewarded volume over value. Physician groups, including the Medical Group Management Association, had raised concerns about the proposed reductions during the comment period.

Sources: CMS Fact Sheet: CY 2027 Physician Fee Schedule Final Rule | Federal Register: Final Rule | CMS Fact Sheet: Medicare Shared Savings Program Final Policies | CMS News Release | Physicians Practice