The following article was provided by Capitol Associates, Inc.
On July 14, CMS released the CY 2027 Medicare Physician Fee Schedule (PFS) proposed rule, which includes annual Medicare Part B payment and coverage updates for physicians and other clinicians.
The rule contains the routine payment adjustments expected each year and advances several broader policy objectives that have become prominent within CMS. Many of the proposals align with the federal initiative, Make America Healthy Again, while also continuing CMS’s efforts to modernize physician payment methodology, expand technology-enabled care, and update the quality payment program (QPP).
Changes to the conversion factor
The Physician Fee Schedule conversion factor (CF) would decrease by 2.5% following the expiration of the temporary payment increase enacted by Congress for CY 2026. CMS also proposes a budget neutrality adjustment of 0.53%, which partially offsets the reduction.
This is the second year CMS is implementing permanent statutory payment updates established under the Medicare Access and CHIP Reauthorization Act (MACRA), which provides an annual 0.75% conversion factor increase for qualifying Advanced Alternative Payment Model (APM) participants and a 0.25% increase for all other clinicians. The resulting proposed conversion factors differ depending on APM participation status, and CMS estimates varying payment impacts across physician specialties.
Annual conversion factor updates remain largely dictated by statutory requirements and budget neutrality adjustments. The conversion factor continues to be a concern for providers as Medicare payments have not kept pace with inflation and rising practice costs.
CMS reexamines physician payment methodology
A notable long-term policy proposal in the CY 2027 PFS is CMS’s effort to reevaluate how Practice Expense (PE) Relative Value Units (RVUs) are developed.
Historically, CMS has relied on recommendations from the American Medical Association’s CPT Editorial Panel and Relative Value Scale Update Committee (RUC) when establishing physician payment values. While CMS is not required to adopt these recommendations, CMS typically adopts most of the AMA’s RVU recommendations.
Building on significant practice expense reforms finalized for CY 2026, CMS proposes additional revisions to the methodology used to calculate PE RVUs. The agency would gradually phase out portions of its existing methodology while introducing a new practice expense stabilizer intended to reduce short-term payment volatility. CMS would continue to incorporate direct and indirect practice expense inputs, along with specialty-specific data, while modifying how those inputs are used to establish PE values.
The proposed rule also includes a request for information (RFI) seeking public comment on potential alternatives to the current CPT and RUC processes. CMS requests feedback on whether more objective methodologies could be developed to inform physician payment, including whether ICD-10 diagnosis information could play a greater role in reimbursement. The agency also seeks stakeholder input on how alternative approaches could affect innovation, coding, and physician payment.
While the proposal does not establish a new methodology, it indicates that CMS is continuing to evaluate how physician payment values are developed and whether additional data sources or methodologies could supplement or replace elements in future rulemaking.
MAHA priorities continue
The CY 2027 PFS continues to reflect the administration’s broader Make America Healthy Again initiative by emphasizing prevention, primary care, chronic disease management, and early intervention. CMS signals an interest in shifting Medicare payment toward services that promote longitudinal patient relationships, coordinated care, and improved management of chronic conditions rather than episodic treatment alone.
Consistent with these priorities, CMS issued an RFI on redesigning primary care payment beginning in CY 2027. The agency seeks feedback on whether office and outpatient evaluation and management (E/M) visits, annual wellness visits, and care management services remain appropriately valued under the physician fee schedule. CMS requests comments on how technology is changing primary care delivery and implementing prospective primary care payment models within the Medicare Shared Savings Program and original Medicare.
CMS proposes establishing Medicare coverage for group-based shared medical appointments, allowing beneficiaries with common health conditions to receive clinical guidance while participating in peer-supported care.
CMS also addresses preventive care directly by proposing expansion of advance care planning, community-based palliative care, and intensive lifestyle interventions intended to slow the progression of Alzheimer’s disease.
Changes to the Quality Payment Program
The proposed rule also advances several updates to the Medicare Quality Payment Program (QPP). CMS proposes sunsetting the traditional MIPS reporting option after the CY 2028 performance period. MVPs will be required beginning CY 2029, and will impact the CY 2031 payment period.
Additional proposals include new MVPs, revised core measure reporting requirements, expanded participation options for virtual groups, and several RFIs, including topics like scoring methodology and a transition timeline for Fast Healthcare Interoperability Resources standards.
Additional proposals within the PFS proposed rule
Beyond these broader policy initiatives, the proposed rule includes several additional payment and operational changes.
CMS proposes converting the HCPCS code G2211 add-on code into a modifier appended to the associated E/M service. Rather than paying a flat amount, the modifier would increase payment for the underlying E/M visit by 32% for Accountable Care Organizations (ACOs) and 16% for all other clinicians.
CMS proposes reducing payment to 50% when a separately identifiable office or outpatient E/M visit occurs on the same day as a procedure with a global surgical period. (Allergy procedures are not under the global caps.) Under the proposal, the highest-valued service would continue to receive full payment.
Conclusion
Although the proposed rule includes the routine annual payment and coverage updates, many of its most significant provisions extend beyond the CY 2027 payment year. The combination of payment methodology reforms, MAHA-driven primary care initiatives, and multiple requests for information, indicates CMS is evaluating broader changes to how Medicare pays for and measures physician services. Stakeholder feedback on these proposals could influence the direction of future physician payment policy.
Editor’s Note:
More details on the proposed rule are available on the CMS Newsroom.
On Wednesday, July 15, the College notified all members about CMS’s request for comments on the current definition of an allergy immunotherapy “dose,” proposed revisions to Medically Unlikely Edits (MUEs), and whether annual utilization limits should be based on treatment patterns. Members are encouraged to review the details.
A more focused summary of the proposed rule on allergy-specific issues is forthcoming. The College’s Advocacy Council will be providing appropriate comments to CMS.
The Advocacy Council – ADVOCATING FOR ALLERGISTS AND THEIR PATIENTS.
