2027 PFS Rate Setting and Conversion Factor
For 2027, the Physician Fee Schedule (PFS) conversion factors will decrease compared to 2026. This is mainly because the temporary 2.5% payment increase for 2026 expires. That increase was provided by Public Law 119-21, which Centers for Medicare and Medicaid Services (CMS) calls the Working Families Tax Cut legislation (also known as the One Big Beautiful Bill Act). The statutory updates (+0.75% for qualifying Alternative Payment Model (APM) participants and +0.25% for all others) partly offset the cut. As a result, the conversion factor for:
- Non-qualifying APM participants will decrease by $0.77 (-2.31%), from $33.40 to $32.63; and
- Qualifying APM participants (QPs) will decrease by $0.62 (-1.83%), from $33.57 to $32.95.
The 2027 conversion factors include an estimated -0.12% adjustment to account for changes in work Relative Value Units (RVUs) for certain services. RVUs measure the relative resources required to furnish a service, including physician work, practice expenses, and malpractice expenses. Changes to RVUs can therefore affect reimbursement independently of the conversion factor. CMS is also phasing out the indirect practice cost index (IPCI) over two years and replacing it with a practice expense stabilizer to limit short-term payment volatility. Indirect practice expenses will also be allocated using both work RVUs and clinical labor RVUs for most services, excluding procedures with 10- and 90-day global periods.
Why This Matters
This across-the-board reduction will directly impact baseline reimbursement for all services paid under the PFS. Practices should proactively forecast how these lower conversion factors will affect 2027 revenue and evaluate whether the slightly higher QP conversion factor makes transitioning to an Advanced APM a strategic priority.
Same-Day E/M Visits and 0-Day Global Procedures in 2027
CMS has finalized a significant payment policy change for office/outpatient evaluation and management (E/M) visits furnished on the same day as a 0-day global procedure (e.g., injections, endoscopies, and simple biopsies). Beginning January 1, 2027, when a separately identifiable office/outpatient E/M visit (reported with modifier 25) is furnished by the same physician, or a physician of the same specialty in the same group, on the same day as a 0-day global procedure, CMS will pay 100% of the higher-valued service (either the procedure or the E/M visit) and 80% of the lower-valued service. This is a 20% reduction, rather than the 50% reduction CMS originally proposed.
Notably, CMS limited the reduction to 0-day global procedures only. The proposed rule would have also applied it to procedures with 10-day global periods (generally minor surgical procedures) and 90-day global periods (generally major surgical procedures). However, those procedures will not be subject to the same-day reduction, and their existing global payment policies remain in effect.
Why This Matters
Specialties that routinely perform 0-day global procedures alongside E/M visits, such as dermatology, orthopedics, and gastroenterology, should assess the potential financial impact of this change. Practitioners and billing teams should also review coding, documentation, and reimbursement workflows to ensure that separately identifiable E/M services are properly supported and reported under the new policy.
E/M Visit Complexity Add-On (HCPCS G2211)
CMS finalized two significant changes to how the E/M visit complexity add-on is reported and paid. First, Healthcare Common Procedure Coding System (HCPCS) code G2211 will be replaced by modifier B1, which is appended to the associated E/M base code. Second, instead of a separate flat payment, modifier B1 increases payment for the associated E/M visit by 16%, providing the same percentage increase at every E/M level. In addition, clinicians in Medicare Shared Savings Program Accountable Care Organizations (ACOs) and participant providers in the Long-term Enhanced ACO Design (LEAD) Model may instead append modifier B2, which increases the associated E/M payment by 32%.
Why This Matters
Practices will need to update their billing systems, coding workflows, and charge capture processes to accommodate the new modifiers. Because the payment is now a percentage of the base visit, practices that typically append the add-on to lower-level visits may receive less than under the flat G2211 payment, while those that append it to higher-level visits may receive more. Billing teams should confirm that the modifier is applied only to eligible services and that the resulting payment is accurately reflected.
Remote Physiologic and Therapeutic Monitoring
In the 2027 proposed rule, CMS proposed four changes to the payment and billing requirements for remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM) services, as discussed in our previous client alert:
- Established patients: RTM services may be furnished only to established patients (RPM is already subject to this requirement).
- Initiating visit: Practitioners billing RPM or RTM services must furnish a separately reportable initiating visit when these services begin.
- Valuation: CMS will update how RPM and RTM services are valued under the PFS.
- Employed clinical staff: Payment for RPM and RTM services will be limited to services performed by clinical staff employed by the practice, excluding services furnished by contractors.
As anticipated, and despite considerable pushback from stakeholders, CMS did not abandon its proposed changes and instead finalized the first three proposals effective January 1, 2027. CMS also finalized the fourth proposal, the employed clinical staff requirement, but delayed its effective date to January 1, 2029, to give practices that rely on contractors two additional years to adapt.
Why This Matters
These finalized changes will affect how practitioners initiate, furnish, document, and bill RPM and RTM services. Before January 1, 2027, practices should confirm that their workflows meet the new established-patient and initiating-visit requirements and evaluate how revised valuations will affect reimbursement. Although the employed-staff requirement does not take effect until 2029, practices that rely on contracted clinical staff or third-party vendors should begin evaluating how this change will affect their remote monitoring programs and determine whether and how restructuring is feasible.
Garfunkel Wild, P.C., and Garfunkel Health Advisors (GHA) frequently collaborate with providers to respond to medical record requests, challenge audits and reviews, and provide assistance at all stages of the process. GHA also offers services that allow providers to have their documentation and coding evaluated proactively to prepare for future audits and educate staff on best practices going forward.
Should you wish to learn more about medical coding services, you can contact Garfunkel Health Advisors by calling Simon Chaykler at 833.355.1333 or by email at [email protected].
If you wish to learn more about Garfunkel Wild’s legal services, you may contact Robert A. Del Giorno at 516.393.2505 or by email at [email protected].