The cut Congress wrote
Most of next year's Medicare cut to doctors is written into law. Congress should tie the yearly update to what practices pay, and the new same-day cut will move appointments more than money.
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read by an AI voiceMedicare will cut its standard base rate for physicians' services by about 2.3 percent next year, more than it proposed in July. The final fee schedule, released on Nov. 4, lowers the conversion factor, the dollar amount Medicare multiplies by the value it assigns each service. Every $100 Medicare paid this year becomes about $97.70 in January, unless the service's own value changes. “We are changing what Medicare pays for to change what our health system delivers,” said the health secretary, Robert F. Kennedy Jr.
Most of that cut was written in advance. Congress gave doctors a one-year raise of 2.5 percent for 2026, which ends on Jan. 1. The yearly increase the law provides, a quarter of a point, replaces only a sliver, so the Centers for Medicare and Medicaid Services, CMS, says current law requires a cut. Doctors who qualify through Medicare's advanced payment models lose 1.8 percent. The cut grew after July because a balancing adjustment turned slightly negative. Medicare's yearly update has fallen far behind the cost of running a practice. A cut built into the law costs doctors as a group more than anything CMS decided, and Congress should tie the update to those costs. The cut CMS chose on visits billed the same day as a minor procedure is likelier to move appointments than to save money.
Medicare's own figures show the gap. In July CMS projected that the Medicare Economic Index, its yardstick for practice costs, would rise 2.5 percent in 2027. The base rate will fall 2.3 percent. Costs and price will move nearly five points apart in one year. The American Medical Association calculates that Medicare's payment to physicians, adjusted for inflation in practice costs, has fallen about a third since 2001. In July its chief executive, John Whyte, wrote that “physicians remain the only Medicare provider type that does not receive an annual payment update tied to inflation.”
CMS's same-day cut is narrower. When a doctor bills an office visit as a distinct service on the same day as a minor procedure, one with no follow-up days built into its price, Medicare will pay the cheaper of the two at 80 percent. Its reasoning is that there are efficiencies when the same physician does both, and that it is “likely duplicating payment under the current payment methodology.” Patients pay part of that duplication too, the agency says. Opposing the July proposal, the AMA wrote that the procedures most affected were already priced to cover only the work and costs beyond the visit. Dermatologists, ear, nose and throat surgeons and podiatrists take the largest hits from it.
A procedure moved to another day is paid in full, and so is the visit. The American Academy of Family Physicians warned in September that CMS's proposal, a 50 percent cut, would encourage practices “to turn patients away for same-day procedures and have patients return another day to have the procedure performed.” Delayed or specialist care, it added, “could cost the agency more money” than paying for both at once. The final version is gentler. It points the same way. The academy said that is especially hard on patients of limited means or limited mobility. For them a second appointment is another ride and another lost afternoon, and the discount on their share of the bill is gone.
Medicare's advisers see little sign of a crisis. The Medicare Payment Advisory Commission found this year that, in some surveys, the share of clinicians accepting Medicare is comparable with the share accepting private insurance, and that very few opt out. Physician pay, in survey data it cited, rose 6 percent in one recent year, about twice the rate of inflation. Dr. Mehmet Oz, the CMS administrator, says fee-for-service payment has “rewarded volume over value, fueling a reactive system of sick care.” None of this defends the update. The commission asked Congress to raise 2027's update above current law, and a year earlier recommended an update equal to the cost index's projected rise, less a point. A flat cut rewards nothing.
Congress should stop patching. The Patients First Act, from Reps. John Joyce, Greg Murphy and Kim Schrier, two Republicans and a Democrat, all physicians, would set a permanent yearly update at the Medicare Economic Index minus one point, held between a quarter and three-quarters of the index's rise. At July's projection that is about one and a half points, short of costs but six times current law's quarter point. Rural doctors take the same national cut, and the bill would extend and raise the floor under Medicare's geographic adjustment for their work, which the AMA says helps physicians in many rural areas and 34 entire states.
Practices have less than eight weeks to load the new modifier, B1, which replaces the add-on for the complexity of ongoing care and adds 16 percent to the visit's payment. The same-day cut reaches only procedures with no follow-up days, so check the global period of those done most. The harder choice concerns patients. Where a procedure can safely be done that day, it should be, rather than sending people home to avoid a 20 percent cut on one of two services. CMS should publish within a year how often same-day procedures moved to a second visit.
Mr. Kennedy is right that what Medicare pays for changes what the health system delivers. From January it will pay less for each unit of work, and less again for two things in one visit. Doctors will fall further behind their costs, and some patients, as family physicians warned when the cut was proposed, may be asked to come back another day. Congress can fix the update before Jan. 1, and it should.
- The conversion factors for 2027CMS released the CY 2027 Medicare Physician Fee Schedule final rule on Nov. 4, 2026. Its fact sheet gives a CY 2027 nonqualifying APM conversion factor of $32.63, a projected decrease of $0.77 (-2.31%), and a qualifying APM conversion factor of $32.95, a projected decrease of $0.62 (-1.83%). The 2026 factors were $33.40 and $33.57. The statutory updates are +0.25% and +0.75%, and an estimated -0.12% adjustment accounts for changes in work RVUs for some services. Public Law 119-21, which CMS calls the Working Families Tax Cut legislation, provided a one-year increase of 2.50% for CY 2026 that will no longer be in effect for CY 2027; CMS writes that current law therefore requires a -2.50% reduction compared with CY 2026. The changes take effect Jan. 1, 2027.
- Why the final cut is deeper than proposedThe proposed rule of July 2026 projected cuts of 1.68% and 1.19%, to $32.84 and $33.17. Medical Economics reports that the gap between July and November sits in the adjustment for changes to work RVUs, estimated at +0.53% in the proposed rule and -0.12% in the final rule. The American Medical Association's summary of the proposal described the +0.53% as a budget neutrality adjustment to balance proposed coding and payment policy changes, partly due to savings from the review of potentially misvalued services. The pages read did not give CMS's explanation for the change between the proposed and final adjustment.
- The same-day visit reductionWhen a separately identifiable office or outpatient E/M visit is furnished on the same day as a 0-day global procedure, the most expensive service is paid at 100% and the other at 80%, rather than 50% as proposed; CMS also dropped 10- and 90-day global procedures from the policy. Medical Economics reports that it applies when the same physician, or a physician of the same specialty in the same group practice, furnishes both, and that dermatology, otolaryngology and podiatry take the largest hits. CMS cites its CY 2019 view that there are efficiencies when the same physician or group provides both and that it is likely duplicating payment; its announcement of Nov. 4 says the cut reduces duplication in payment by patients and the Medicare program. The AMA summary of the proposal said it would vigorously oppose the policy, writing that the most affected procedure codes are already valued to include only work and costs beyond the E/M visit.
- Other changes that move moneyHCPCS code G2211, the visit complexity add-on, becomes modifier B1, which increases payment of the associated E/M code by 16% at every level instead of a flat rate. Modifier B2, for practitioners in a Shared Savings Program ACO or a LEAD Model ACO, increases it by 32%. CMS is phasing out the indirect practice cost index over two years, replacing it with a stabilizer, and will allocate indirect practice expense on both work RVUs and clinical labor. Rural health clinics may bill diabetes self-management training and medical nutrition therapy as stand-alone visits, and the Consolidated Appropriations Act, 2026 extended CMS's authority to pay rural health clinics and federally qualified health centers for non-behavioral visits by telecommunication through Dec. 31, 2027. The American Hospital Association reports that CMS delayed the sunset of MIPS to 2031 rather than 2029 as proposed.
- Who gains and loses, by CMS's impact analysisMedical Economics reports that the final rule's impact analysis projects significant decreases for dermatology, otolaryngology, orthopedic surgery and hand surgery, largely because of the same-day (modifier -25) policy and the removal of the indirect practice cost index, and significant increases for clinical psychologists and clinical social workers, with smaller gains for physical and occupational therapists, interventional radiology and vascular surgery. CMS notes that the figures are averages that may not reflect any single practitioner's experience. The final specialty table itself, and its figures for family medicine, internal medicine and hospital medicine, were not available in the pages read for this piece.Source: Medical Economics, Nov. 4, 2026
- Practice costs and paymentThe AMA's summary of the proposed rule states that CMS projects the Medicare Economic Index, its index of growth in physician practice costs, at 2.5 percent for 2027; the American Academy of Family Physicians' comment letter of Sept. 11, 2026 refers to the same projected 2.5 percent. CMS's final-rule pages read for this piece do not state the final figure; Applied Policy's summary of the final rule, Nov. 6, 2026, reports that CMS updated the telehealth originating-site fee using "the most recent increase in the 2017-based MEI of 2.6 percent." AMA chief executive John Whyte, in a July 2026 letter supporting a House bill, wrote that when adjusted for inflation in practice costs, Medicare physician payment has fallen approximately 33% since 2001, citing the AMA's 2025 Medicare updates inflation chart, and that physicians are the only Medicare provider type without an annual payment update tied to inflation.
- What Medicare's advisers recommendedIn its March 2025 report the Medicare Payment Advisory Commission recommended that Congress, for calendar year 2026, replace the current-law updates with a single update equal to the projected increase in the Medicare Economic Index minus 1 percentage point. In its March 12, 2026 report it recommended a 0.5% increase above current law for 2027, which Medical Economics reports would bring the total to 1.25% for advanced APM clinicians and 0.75% for others. MedPAC reported that at least some surveys indicate the share of clinicians accepting Medicare is comparable with the share accepting private insurance, despite private insurers' higher payment rates, and that very few clinicians opt out. Medical Economics reports that physician pay increased 6% to $369,000 for 2023-2024, twice as fast as inflation, in SullivanCotter data cited by MedPAC, and notes that MedPAC regards the figure as indirect evidence.
- The bill and the family physicians' warningThe Patients First Act (H.R. 9693), introduced by Reps. John Joyce, MD (R-Pa.), Kim Schrier, MD (D-Wash.), and Greg Murphy, MD (R-N.C.), would create a permanent annual update linked to the Medicare Economic Index minus 1 percentage point (minus 0.5 point for qualifying APM participants), with the update no less than 25% and no more than 75% of the MEI, raise the budget neutrality threshold from $20 million to $57.64 million in 2028 with indexing, and extend and increase the work geographic practice cost index floor. The AMA and the AAFP support it. In its Sept. 11, 2026 comment letter on the proposed 50% same-day reduction, the AAFP wrote that it expects primary care practices unable to absorb the cut to be forced to ask patients to return another day or refer them to higher-cost sub-specialists.