Medicare cuts physician pay 2.31% for 2027, deeper than it proposed
Nov 5, 2026
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The Centers for Medicare & Medicaid Services cut the physician fee schedule conversion factor 2.31% for 2027 on Wednesday, to $32.63, a deeper reduction than the 1.68% it proposed in July.
Clinicians in qualifying alternative payment models take a 1.83% cut. Most of the decline reflects the expiration of a one-year 2.5% increase for 2026, partly offset by statutory updates of 0.25% and 0.75%, Medical Economics reported. The same rule pays 20% less for a visit billed the same day as a minor procedure, replaces the G2211 add-on with modifiers worth 16% or 32% of a visit, and tightens remote monitoring billing. A companion outpatient rule raises hospital rates 2.3% and creates Medicare's first payment category for AI and other software services.
"Physicians will once again begin the year with lower rates as practice costs continue to rise," the American Academy of Family Physicians said, according to Chief Healthcare Executive. CMS Administrator Dr. Mehmet Oz said fee-for-service payment "has rewarded volume over value."
THE DETAILS
- ActRegulation Nov 4, 2026
The new conversion factors, the B1 and B2 visit modifiers and the same-day reduction apply from Jan. 1, 2027, under the final rule.
The Centers for Medicare & Medicaid Services finalized a conversion factor of $32.63 for clinicians outside qualifying alternative payment models, down from $33.40, and $32.95, down 1.83%, for those in them, according to its fact sheet. The July proposal had projected a 1.68% cut, Medical Economics reported. When an office visit is billed with modifier 25 on the same day as a 0-day global procedure by the same physician or one of the same specialty in the group, the lower-paid service is paid 20% less; CMS had proposed 50% and had included 10- and 90-day globals, and dermatology, otolaryngology and podiatry still take the largest hits, Medical Economics reported. The G2211 complexity add-on becomes modifier B1, worth 16% of a visit, or B2, worth 32%, for clinicians in Shared Savings Program accountable care organizations and the LEAD model. Traditional MIPS reporting now ends after the 2030 performance period, CMS said. Correction (Nov. 5): This item has been corrected. An earlier version said traditional MIPS reporting ends with the 2031 performance period; CMS said it will sunset the traditional MIPS reporting option beginning with the 2031 performance period, giving clinicians through 2030 to transition. - WatchMoney Nov 4, 2026
CMS called its 2027 software payment an interim step toward a broader policy; the new rates apply from Jan. 1, 2027.
The final 2027 hospital outpatient rule renames software as a service as Software as a Medical Service and assigns those services to New Technology payment groups, which CMS called "an interim step toward a broader payment policy." Fourteen codes for stand-alone algorithmic analysis of existing lab data move from the Clinical Laboratory Fee Schedule to other diagnostic tests in January 2027, at outpatient rates from $350.50 to $2,250.50, and the physician fee schedule sets national prices for the same codes instead of leaving them to Medicare contractors, according to an analysis on the Discoveries in Health Policy blog. General software services need FDA marketing authorization for Medicare payment, while the lab category does not, the analysis said, and regular coinsurance now applies to the lab codes. - ActRegulation Nov 4, 2026
From Jan. 1, 2027, Medicare pays remote monitoring only for established patients after a separately billable initiating visit, the final rule says.
Remote physiologic and remote therapeutic monitoring will be paid in 2027 only for established patients, and the billing practitioner must furnish a separately reportable initiating visit at the start of services, according to the American Hospital Association's summary of the final fee schedule rule. CMS delayed to Jan. 1, 2029, the requirement that only clinical staff employed by the billing practitioner, not contractors, furnish the services. Rural health clinics and federally qualified health centers keep waivers of in-person requirements for mental health visits and can keep using telecommunications for other visits through Dec. 31, 2027, CMS said.Sources: CMS fact sheet, American Hospital Association - WatchRegulation Nov 4, 2026
Both firms may appeal within 30 business days, and the departments are reviewing eight more firms' recertification petitions.
The departments that run the No Surprises Act's independent dispute resolution process denied recertification on Nov. 4 to Island Peer Review Organization and Network Medical Review Co., saying both failed minimum performance standards, and the firms can no longer accept new disputes. Parties with open disputes should expect further guidance, the agencies said. In 2023 cases, IPRO found for providers 89% of the time and awarded 529% of the qualifying payment amount on average, against an 81% provider win rate across all arbitrators, according to a Health Affairs Scholar study by Philip Valtadoros of the University of Texas at Austin. Seventeen firms had been certified. - FYIDeployment Nov 5, 2026Monument Health, which serves South Dakota and Wyoming, cut off clinicians' access to the free clinical AI tool OpenEvidence, STAT reported Thursday. Chief information officer Patrick Woodard told one "super user" who was storing more than 100 patient records in the tool and using it to help make medical decisions that the practice had to stop, according to STAT. Free clinician chatbots such as OpenEvidence, Doximity Ask and ChatGPT for Clinicians are used by hundreds of thousands of doctors and say they are HIPAA compliant, letting users share protected health information after signing an agreement, STAT reported.Source: STAT
- FYIDeployment Nov 2, 2026Athenahealth launched athenaPatient MCP on Nov. 2, a connector that lets Claude Pro and Max subscribers in the United States sign in with their athenahealth portal credentials and let Anthropic's chatbot query their labs, medications, problem lists, imaging narratives and care plans, HIT Consultant reported. Athenahealth's position is that HIPAA does not apply to this patient-directed sharing because the chatbot is neither a covered entity nor a business associate, GovInfoSecurity reported; regulatory attorney Rachel Rose said the analysis could change if a business associate contracts with an AI provider for a regulated organization, and attorney Maggie Hales said patients may not understand the risks. Data sent to Claude is kept only for the session, and patients can revoke access by category, the company said.Sources: HIT Consultant, GovInfoSecurity
- FYIIncident Nov 3, 2026Philips Respironics reached an agreement in principle with the Justice Department to resolve its criminal and civil investigations of the recall and recorded a provision of 288 million euros, about $322 million, in the third quarter, the company said in its quarterly report filed with the Securities and Exchange Commission. Payment is expected in the first quarter of 2027. The recall of more than 15 million CPAP, BiPAP and ventilator devices began in 2021 over soundproofing foam that could break down and be inhaled, MedTech Dive reported, and the settlement is separate from the company's 2024 consent decree with the FDA. "We are not in control of any timing around the return to market," Chief Executive Roy Jakobs said on an earnings call, according to MedTech Dive.
- FYIIncident Nov 4, 2026An unvaccinated Jefferson County resident died with measles, the Pennsylvania Department of Health said Nov. 4, bringing the state's confirmed measles-associated deaths this year to six, with a reported October death in Franklin County still under review. Cases reached 1,467 in 45 counties, 34 of them confirmed since Nov. 2, and fewer than 1% occurred in vaccinated people. The department advises an early dose for infants 6 to 11 months old who live in or travel to counties with sustained community transmission, which does not replace the two routine doses.