Article
A deeper cut than expected
CMS released the calendar year 2027 physician fee schedule on Nov. 4, effective Jan. 1. The conversion factor for clinicians outside advanced alternative payment models drops 2.31%, to about $32.63. Qualifying APM participants see a 1.83% decline, to about $32.95. In July, CMS had projected cuts of 1.68% and 1.19%.
Most of the reduction comes from the expiration of a one-time 2.5% increase Congress provided for 2026. Small statutory updates offset only part of it, and a work RVU adjustment moved from slightly positive to slightly negative between the proposed and final rules.
Where employed groups feel it
- Same-day procedures. When an E/M visit with modifier 25 is billed on the same day as a 0-day global procedure by the same physician or group specialty, the lower-paid service is reduced 20%. That is narrower than the 50% cut CMS proposed, but dermatology, otolaryngology, orthopedic surgery and hand surgery are still projected to lose revenue.
- Practice expense. The indirect practice cost index is phased out over two years, which will move payments among specialties.
- Telehealth. Medicare telehealth flexibilities remain in place through Dec. 31, 2027, under the Consolidated Appropriations Act, 2026.
ACOs get better terms
The rule tilts toward accountable care. The BASIC track’s Level E sharing rate rises from 50% to 60%, while ENHANCED stays at 75%. A new modifier raises office and outpatient E/M payment by 32% for ACO clinicians, compared with 16% for others. Beginning April 1, 2027, approved ACOs may reduce or eliminate Part B cost sharing for many services. On the other side, CMS removes the prepaid shared savings option and lowers the maximum positive regional adjustment for ENHANCED ACOs from 50% to 35%.
For systems weighing whether to deepen ACO participation, these changes make the case stronger, particularly for primary care-heavy networks. For specialty-heavy groups outside an ACO, 2027 looks like a straight pay cut.