2027 Medicare Physician Fee Schedule Final Rule: What Changes on January 1 and How to Prepare

CMS released the calendar year (CY) 2027 Medicare Physician Fee Schedule (PFS) final rule on November 4, 2026. Most of it takes effect for services on or after January 1, 2027, which leaves practices less than two months to update fee schedules, retrain staff and adjust claim edits. Some changes are simple rate updates. Others change how specific services must be coded, and those are the ones that create denials in January if nobody catches them.

This guide covers the provisions that matter most to independent practices and medical groups, in the order we would work through them with a client.

The 2027 conversion factor: a 2.31% cut for most clinicians

The conversion factor (CF) is the dollar amount Medicare multiplies by each service's relative value units (RVUs). For 2027, CMS finalized two of them, because the law now gives a slightly larger update to clinicians who qualify as Advanced APM participants (QPs).

The cut is deeper than the July proposal, which put the non-QP conversion factor at $32.84 (-1.68%). Three things drive the final number:

• The 2026 bump expires. Public Law 119-21 gave a one-time 2.5% increase for CY 2026 only. Losing it is the single biggest reason payment drops.
• Small statutory updates. The law provides +0.25% for non-QPs and +0.75% for QPs, which offsets only part of the loss.
• Budget neutrality. CMS applied an estimated -0.12% adjustment tied to work RVU changes elsewhere in the fee schedule.

G2211 is replaced by modifier B1 (and B2 for ACOs)

Since 2024, practices have billed HCPCS add-on code G2211 with office and outpatient E/M visits to capture the extra work of being a patient's continuing point of care for a serious or complex condition. For 2027, CMS finalized replacing that add-on code with a modifier:

• Modifier B1 is appended to the office/outpatient E/M code and increases that visit's payment by 16%.
• Modifier B2 increases the E/M payment by 32%. It is limited to Medicare Shared Savings Program ACO participants and providers, and LEAD Model participant providers. It is voluntary and can be used for all Medicare patients those clinicians see.

Operationally, this is the change most likely to cause front-end rejections in January. Any EHR charge template, superbill or coding rule that automatically adds G2211 needs to be changed so that visits on or after January 1, 2027 carry the modifier instead. Keep the documentation standard the same: the record still needs to show the longitudinal relationship that justifies the add-on payment.

Same-day E/M with a minor procedure: a new payment reduction

CMS finalized a payment reduction when a separately identifiable office/outpatient E/M visit (usually billed with modifier 25) is furnished on the same day as a procedure with a 0-day global period. The highest-valued service is paid in full and the other qualifying service is paid at 80%.

This is a meaningful softening of the proposal, which would have paid the second service at 50% and also applied to 10-day and 90-day global procedures. Those longer globals were dropped from the final policy. Dermatology, podiatry, orthopedics, pain management and urgent care will feel this most, because same-day injections, biopsies and minor procedures with an E/M are routine in those specialties.

Modifier 25 is still required, and so is documentation that clearly separates the E/M decision-making from the pre-procedure evaluation that is already included in the procedure's payment. Expect payers to keep auditing modifier 25 closely.

Remote patient monitoring and remote therapeutic monitoring

CMS finalized several changes to remote monitoring for 2027 and put others on hold:

• Initiating visit required. Practices billing RPM or RTM must furnish a separately reportable initiating visit at the start of services.
• RTM for established patients only. Remote therapeutic monitoring is now limited to established patients, matching the existing RPM rule.
• Revised valuation for remote monitoring services.
• Delayed to January 1, 2029: the requirement that RPM and RTM be furnished only by clinical staff employed by the billing practice, rather than by contracted vendors.
• Not finalized: proposed code bundling and four new G-codes. CMS may revisit them in future rulemaking.

If you run an RPM program through a third-party monitoring company, the 2029 delay gives you time, but it is a clear signal of where CMS is heading. We cover the full set of remote monitoring changes, including the newer short-duration codes, in our RPM billing guide for 2027.

Practice expense methodology changes

CMS is phasing out the indirect practice cost index (IPCI) over two years and replacing it with a practice expense stabilization adjustment. It will also allocate indirect practice expense using both work RVUs and clinical labor practice expense RVUs, rather than whichever is higher, except for 10-day and 90-day global codes. Indirect practice expense allocation is also adjusted for visits to patients in a Part A skilled nursing facility stay.

You do not code anything differently because of these changes, but they shift practice expense RVUs between services and specialties. That is another reason to model your own code mix rather than relying on the headline percentage.

Behavioral health, advance care planning and new services

• Behavioral health: smoking and tobacco cessation and SBIRT services join the final year of the four-year work RVU increase for timed behavioral health codes. Work RVUs for the Psychiatric Collaborative Care Model also increase.
• Advance care planning: new codes G0572 and G0573 cover advance care planning by clinical staff under direct supervision. CPT 99497 and 99498 are now limited to the billing practitioner's own time.
• Shared medical appointments: CMS created separate coding and payment for group visits, with an add-on code for additional time.
• Vaccine adverse effects: a new add-on code and payment for diagnosing and treating adverse effects of vaccines.

For mental health practices, these changes are mostly positive. See our mental health billing services if you want help capturing the higher rates correctly.

Telehealth for RHCs and FQHCs

For rural health clinics and federally qualified health centers, the in-person requirement for mental health telehealth visits is waived through December 31, 2027, and payment for non-behavioral telehealth visits through the telecommunications pathway is also extended through December 31, 2027.

Quality Payment Program and MIPS

CMS delayed the planned sunset of traditional MIPS reporting to 2031, two years later than proposed, and adopted three new MIPS Value Pathways (MVPs). If your practice was planning a move to MVPs, you now have more time, but MVP reporting remains where CMS is pushing clinicians.

Your January 1, 2027 readiness checklist

1. Load the 2027 Medicare fee schedule for your locality into your practice management system once your MAC publishes it, and check expected-payment tables so underpayment reports stay accurate.
2. Review commercial contracts paid as a percentage of Medicare. Many reimburse at "X% of the current Medicare fee schedule," which means the cut flows straight through to commercial revenue.
3. Replace G2211 with modifier B1 (or B2 if eligible) in charge templates, superbills and claim scrubber rules, by date of service.
4. Flag same-day E/M plus 0-day procedure encounters and confirm modifier 25 documentation is strong enough to defend the separate visit.
5. Audit your RPM and RTM enrollment workflow so every new patient has a documented, separately billable initiating visit.
6. Update ACP workflows so staff-delivered advance care planning uses G0572/G0573 and only practitioner time goes to 99497/99498.
7. Brief providers in one short meeting. Most of these changes affect a small number of habits, and a 20-minute huddle prevents weeks of rework.

If you want a second set of eyes on any of this, our team can review your charge templates and top codes against the 2027 rule as part of a free billing audit. For ongoing support, see our full-service medical billing and medical coding services.