CMS’s CY 2027 Physician Fee Schedule: Why RCM Teams Can’t Ignore This Rule

CMS released the CY 2027 Physician Fee Schedule proposed rule on July 14, 2026. If you're in revenue cycle management, this one hits differently than the usual annual update. The conversion factor is dropping, the way E/M visits get paid alongside procedures is changing, and RPM programs built around third-party vendors could be dead under Medicare by January.CMS is accepting public comments through September 14, 2026. If finalized, most of these changes will take effect on January 1, 2027. Here's what your team should prepare for. For a summary of the proposed changes, see the official CMS CY 2027 Physician Fee Schedule Fact Sheet.

What Is the CY 2027 Physician Fee Schedule Proposed Rule

The Medicare Physician Fee Schedule (PFS) determines how Medicare pays physicians and other qualified healthcare professionals for covered Part B services. CMS updates the fee schedule every year to reflect changes in payment rates, billing policies, and Medicare program requirements.

The CY 2027 Physician Fee Schedule proposed rule (CMS-1848-P) goes beyond the usual annual payment update. It includes proposed changes to reimbursement rates, E/M billing, practice expense RVUs, remote patient monitoring, global surgical packages, and several other Medicare billing policies that could affect how practices bill and get paid.

The rule is still in the proposal stage, so some provisions may change before the final version is released. Even so, billing teams do not need to wait. Reviewing the proposed changes now gives practices more time to evaluate their financial impact, update workflows, and prepare for any changes that take effect in 2027.

"The CY 2027 PFS proposed rule is one of several proposed rules that reflect a broader Administration-wide strategy to create a healthcare system that results in better quality, efficiency, empowerment, and innovation for all Medicare beneficiaries." — CMS Fact Sheet, July 14, 2026

The Conversion Factor Cuts: What They Mean for Your Revenue

This is the number that touches every Medicare claim you submit.

For CY 2027, CMS is proposing two conversion factors:

• $33.17 for qualifying APM participants

• $32.84 for nonqualifying clinicians

Compared with 2026, that works out to proposed reductions of about 1.19% and 1.68%, respectively.

The biggest reason for the decrease is the expiration of the temporary 2.5% payment increase that applied only during 2026. CMS is also applying the required statutory updates and budget-neutrality adjustments.

A lower conversion factor doesn't always translate into the same percentage drop in revenue. Actual reimbursement also depends on changes to RVUs, practice expense calculations, geographic adjustments, and the mix of services your practice provides.

For example, a practice with $2 million in annual Medicare Part B revenue could see a significant reduction if service volume stays the same. The final financial impact, however, depends on the CPT and HCPCS codes billed, specialty-specific RVU changes, and payer contracts tied to Medicare rates.

Instead of relying on one overall percentage, RCM teams should review their highest-volume codes, Medicare Advantage contracts, and major service lines to understand how the proposed rule could affect reimbursement in 2027.

The Biggest Structural Change: E/M Billing and Global Periods

This one deserves your full attention.

CMS is proposing to change how same-day E/M visits and procedure codes get paid when they fall within a global period. Under the proposal, the most expensive service gets paid at 100%, and everything else billed on the same day drops to 50%.

Right now, providers who perform a procedure and bill a same-day E/M can capture both at full rates with the right modifier. That model goes away under this proposal. The secondary service takes a 50% cut.

For surgical specialties and practices that routinely bill E/M visits alongside procedures, this change alone could hit revenue harder than the conversion factor reduction.

What your billing team should do now

• Pull a 12-month report on all claims where E/M codes and procedure codes were billed on the same date of service.

• Estimate the impact of a 50% reduction on the lesser-valued service for each high-volume code pair.

• Flag the top procedure types for provider education sessions before year-end.

Practice Expense RVUs: A Methodology Overhaul Is Coming

CMS is proposing a significant change to how indirect practice expense (PE) relative value units are calculated. The agency is moving away from older specialty-specific data toward a blended approach that mixes input data with a "PE stabilizer" designed to cut down on year-over-year volatility in RVU values.

In plain terms: the formula that determines how much overhead cost gets factored into your reimbursement rates is being rebuilt. Some specialties will come out ahead. Others won't.

The full specialty-level impact depends on your service mix. Model it carefully once the final rule publishes in November. This one can quietly move significant dollars without making headlines.

Good News Buried in the Rule: Telehealth Wins

Not every proposed change reduces payment. CMS is also extending several important telehealth flexibilities.

If finalized, geographic restrictions and audio-only telehealth coverage will continue through December 31, 2027. The in-person visit requirement for mental health telehealth services will remain waived until January 1, 2028.

CMS also proposes adding five new HCPCS G-codes for advance care planning, shared medical appointments, pediatric speech-language services, and vaccine adverse effect management.

The telehealth originating-site facility fee (HCPCS Q3014) would also increase slightly from $31.85 to $32.65 for CY 2027.

This gives practices time to update their coding and billing workflows before the new policies take effect.

RPM and RTM: Major Restrictions Are Coming

Remote patient monitoring has been a reliable growth area for a lot of practices over the past few years. The CY 2027 proposed rule tightens the rules hard.

CMS is proposing three specific changes:

• RTM limited to established patients only. New patients can't be enrolled in remote therapeutic monitoring under this proposal.

• Face-to-face visit required before RPM or RTM begins. That visit can be in-person or via telehealth, but it has to happen first.

• Outsourced third-party monitoring vendors are out. Billable RPM and RTM services would be limited to clinical staff employed directly by the billing practice.

If your practice offers RPM or RTM services, now is the time to review your workflows, staffing model, and billing process.

What RCM Teams Should Do Before September 14, 2026

Before the public comment period closes, RCM teams should focus on a few key areas:

1. Model the conversion factor impact on your top 20 procedure codes by Medicare volume.

2. Run a same-day E/M and procedure audit to quantify the global period payment change for your specialty mix.

3. Review your RPM program structure and confirm whether monitoring staff are employed or third-party.

4. Map new telehealth G-codes to existing services your practice already delivers.

5. Schedule a MIPS review and compare your current reporting pathway against available MVPs.

6. Submit formal comments if any proposal creates significant financial or operational hardship.

CMS plans to phase out traditional MIPS reporting by 2029 and transition clinicians to MIPS Value Pathways (MVPs). Performance in 2027 will affect Medicare payments in 2029, so practices should start preparing for the new reporting approach now.