ClinicOps / Briefings / Analysis
Analysis · Published Aug 18, 2026
Medicare 2027 Fee Schedule: What Independent Practices Need to Know
The proposed 2027 conversion factor is down again, but the rate cut is small and the structural changes underneath may matter more. Here is what the proposed rule says, what is still proposed rather than final, and what an independent practice should actually do about it.
Jareer Ali·
Research & field notes·
10 min read
Under the CY 2027 Medicare Physician Fee Schedule proposed rule, the conversion factor falls to a proposed $33.17 for qualifying-APM participants and $32.84 for others, down roughly 1.19% and 1.68%, mostly because the 2026 temporary 2.5% increase expires. These are proposed figures pending the final rule, and the structural changes underneath may matter more than the rate.
Key takeaways
- Proposed CY 2027 conversion factors: $33.17 qualifying-APM and $32.84 non-APM, down ~1.19% and ~1.68%.
- The cut is driven mainly by the temporary 2.5% increase for 2026 expiring at year end.
- This is a proposed rule. The final rule is expected in the fall and the figures can change, so confirm them.
- Structural proposals, practice expense, G2211 as a modifier, same-day E/M reductions, remote-monitoring rules, may matter more than the rate.
- The durable response is to control administrative waste, which protects margin no matter what the final rate is.
Every year the Medicare fee schedule lands and the headline is the conversion factor. For 2027 it is down again, and it matters, but the number is small and the fixation on it misses the bigger picture. And a critical caveat first: as of this writing, this is a proposed rule, not final. The figures below can change before the final rule, so treat them as direction, and confirm against the final rule when it publishes.
A timing note: this analysis covers the CY2027 proposed rule (released July 2026, comments due September 2026). Confirm the final conversion factors against the CY2027 final rule, expected in early November 2026, before relying on the exact figures.
The conversion factor, and why it is falling
Under the proposed rule, the conversion factor drops for both payment tracks CMS CY 2027 proposed rule, July 2026. Here are the proposed figures against the current 2026 ones.
| Track | CY 2026 | Proposed CY 2027 |
|---|---|---|
| Qualifying-APM participants | $33.57 | $33.17 (down ~1.19%) |
| Non-APM physicians | $33.40 | $32.84 (down ~1.68%) |
The reason for the drop is not a new cut so much as an old boost ending. Congress gave physicians a temporary 2.5% increase for 2026; that increase expires at the end of the year, and even with small positive statutory updates and a modest work-RVU adjustment, its expiration nets out to a reduction for 2027. In other words, the cut is mostly the sunset of a one-year patch, which is exactly the pattern that keeps repeating.
Beyond the rate: the changes that may matter more
For many practices the structural proposals will affect the bottom line more than the fraction of a percent on the conversion factor. The proposed rule includes several, and each is worth watching in the final rule: a change to the practice-expense methodology that shifts how overhead is valued; G2211, the complexity add-on, proposed to be paid as a modifier tied to the base code; a proposed reduction for office visits billed the same day as a procedure; tighter rules on remote monitoring that would tie payment to clinical staff being direct employees; and the MIPS performance threshold held steady. Depending on your specialty and billing mix, one of these can outweigh the headline rate change entirely, which is why reading past the conversion factor matters.
The free Leak Audit finds the administrative waste that hurts more than a fee-schedule cut, and what to do about it.
Start with a free Leak AuditThe real story: payment keeps lagging inflation
Step back from any single year and the pattern is the point. Medicare physician payment updates continue to lag the growth in practice costs, measured by the Medicare Economic Index, so even in years with a nominal increase, real payment erodes. The 2027 proposed cut is one more instance of a structural trend: a temporary patch, its expiration, a small nominal move, and costs rising faster than payment underneath it all. For an independent practice, the lesson is not to chase the annual number but to recognize that the rate environment trends against you and to plan accordingly. This is one of the same pressures pushing practices toward consolidation, documented in the ownership statistics.
What an independent practice should actually do
You cannot control the conversion factor, so do not build your plan around it. What you can control is the administrative waste that quietly costs more than a sub-2% rate change ever will. A practice losing 13 hours a week per physician to prior auth, or writing off winnable denials, is bleeding more margin than the fee schedule is taking. Close those leaks and you protect the bottom line regardless of what the final rate turns out to be, which is a far more reliable strategy than hoping for a better number. Start with the measurable waste in the revenue leakage guide, the prior auth burden in the 2026 statistics, and the recovery in the appeal data. And when the final rule publishes, confirm the figures above against it, since this analysis is built on the proposal.
Where to go next
- 42.2% of Physicians Still Own Their Practice. In 2012 It Was 60%. live
Physician ownership statistics: 42.2% own their practice in 2024, down from 60.1% in 2012, why.
- The 3 Leaks That Never Show Up on Your P&L live
The three hidden revenue leaks a medical practice P&L never shows: unbilled time, enrollment.
- 40 Prior Auths Per Physician, Every Week: 8 Numbers From the AMA's 2025 Survey live
8 verified prior authorization statistics for 2026, sourced to the AMA's 2025 survey, Experian,.
Find the leak before you fix it
Two ways to start, both free.
Run the free Rescue Kit and its tools yourself, or book a 20-minute Leak Audit where we put a real number on what this is costing, using your own volume. A diagnosis, not a pitch.
Frequently asked questions
What is the 2027 Medicare conversion factor?
In the CY 2027 proposed rule, CMS proposed a qualifying-APM conversion factor of $33.17 and a non-APM factor of $32.84, down about 1.19% and 1.68% from the 2026 factors of $33.57 and $33.40. These are proposed figures; confirm against the final rule.
Is the 2027 Medicare fee schedule final?
No. As of this writing it is a proposed rule, released July 2026 with comments due in September. The final rule is expected in the fall, and the numbers and policies can change. Treat everything here as proposed until the final rule confirms it.
Why is the 2027 Medicare fee schedule going down?
Because the temporary 2.5% payment increase Congress provided for 2026 expires at the end of that year. Even with small positive statutory updates, its expiration produces a net cut for 2027 under the proposed rule.
How much are Medicare payments dropping in 2027?
Under the proposed rule, roughly 1.19% for qualifying-APM participants and 1.68% for non-APM physicians, driven mainly by the 2026 boost expiring. The exact figure depends on your services and will be confirmed in the final rule.
What else is in the 2027 proposed rule besides the rate?
Several structural proposals that may matter more than the rate: a practice-expense methodology change, G2211 paid as a modifier, a proposed reduction for office visits billed the same day as a procedure, tighter rules on remote monitoring, and the MIPS threshold held steady.
What should an independent practice do about the 2027 fee schedule?
Do not build around a rate you do not control. The proposed cut is real but small; the larger issue is that Medicare pay keeps lagging inflation. The durable response is to reduce the administrative waste you can control, which protects margin regardless of the rate.
- CMS CY 2027 proposed rule, July 2026. cms.gov