MEDICARE’S 2027 PROPOSED RULE:LOWER PAY, TIGHTER CODING

Every summer, one CMS document quietly resets the math for every practice that bills Medicare. This year it landed on July 14, 2026, when CMS released the CY 2027 Medicare Physician Fee Schedule proposed rule bringing Medicare reimbursement changes 2027. For practice managers, two things stand out: physicians are looking at another pay cut, and the way same-day services are billed is about to get stricter.

As reported by CMS and the American Hospital Association, the rule would reduce the qualifying APM conversion factor by 1.19% and the non-qualifying conversion factor by 1.68% for CY 2027 compared to CY 2026. In dollar terms, CMS proposes conversion factors of $33.1693 for qualifying advanced APM participants and $32.8409 for other clinicians. (AHA, McDermott+)

The frustrating part is why. These figures actually include positive statutory updates of 0.75% and 0.25%, plus a 0.53% adjustment for changes in work RVUs, but they’re wiped out because the one-year 2.5% increase that applied in CY 2026 will no longer be in effect for CY 2027. In plain terms: the temporary raise expires, and the baseline drops with it. (AHA)

Beyond the rate, CMS is tightening how bundled same-day services pay. According to the proposed rule, CMS wants to reduce payment when a separately identifiable office or outpatient 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. Alongside it, CMS is proposing changes to the use of modifier 25, updates to the practice expense calculation, and changes to the E/M visit complexity add-on coding. (Ascrs, Ecgmc)

For any practice that routinely bills an E/M with a minor procedure on the same date, this is the line to watch. The modifier 25 claims that pay cleanly today may not pay the same way in 2027.

The proposed rule also advances the mandatory Ambulatory Specialty Model, which CMS has set to begin January 1, 2027, and includes changes to the Medicare Shared Savings Program aimed at broader participation. Most provisions, if finalized, take effect January 1, 2027, and CMS is accepting comments through September 14, 2026.

A lower conversion factor shrinks every Medicare line item automatically. But the coding changes are where practices actually lose control: a modifier 25 or global-period E/M billed the old way could shift from paid to reduced overnight. The rate cut is unavoidable; the coding leak is preventable.

Model the proposed conversion factors against your top Medicare CPT codes to see the real dollar impact before January. Review how often you bill an E/M with a same-day minor procedure, and tighten modifier 25 documentation now. And remember this is still a proposed rule, the comment window through September 14 is the moment for specialty societies and practices to push back.

The 2027 rule cuts the rate and sharpens the rules at the same time. These Medicare reimbursement changes go beyond a simple pay cut. Practices that treat it as just a pay cut will miss the coding exposure sitting underneath it. The ones that adjust their same-day billing early will protect the revenue they still control.

Pyramids Global helps US practices model payment changes and tighten coding workflows before new CMS rules take effect, so revenue holds through the transition.

Sources: CMS.gov (CY 2027 Medicare Physician Fee Schedule Proposed Rule); American Hospital Association.