Quick facts
- What: CMS's final 2027 Medicare Physician Fee Schedule (released November 4, 2026)
- Who: Every practice that bills Medicare Part B, in every specialty
- Change: conversion factor $33.40 → $32.63 (−2.31%); qualifying APM participants $33.57 → $32.95 (−1.83%)
- When: Services on or after January 1, 2027
- Status: Final rule
What is the conversion factor, in plain English?
Think of the conversion factor as Medicare's "price per point." Every service you bill has a number of points (called RVUs). Medicare multiplies those points by the conversion factor, adjusts for your location, and that's your payment. When the conversion factor goes down, almost everything you bill to Medicare pays a little less, even if nothing else changes.
Here's a simple example. Say a visit is worth 3.00 RVUs (we're ignoring geographic adjustments to keep the math simple). In 2026 that's 3.00 × $33.40 = $100.20. In 2027 it's 3.00 × $32.63 = $97.89. That's $2.31 less on one visit. Multiply that across a full year of Medicare visits and it adds up.
Why is Medicare paying less in 2027?
Mostly because a one-time boost is ending. Congress gave physicians a 2.5% increase for 2026 only, and it does not carry into 2027. CMS's fact sheet lists three pieces that make up the 2027 number:
- The one-year 2.5% increase for 2026 ends.
- A small built-in yearly update of +0.25% (or +0.75% for qualifying APM participants).
- An estimated −0.12% adjustment tied to changes in how work RVUs were valued.
The final cut is also deeper than what CMS proposed in July, when the cut was projected at 1.68%.
How does this affect my practice?
Less Medicare revenue for the same work. If Medicare is a big part of your payer mix, budget for roughly 2% less per Medicare service.
Some commercial contracts may drop too. If any of your insurance contracts pay "a percentage of Medicare," check whether they follow the current year's Medicare rates. If they do, those payments may drop too.
Thinner margins make every denial hurt more. When each claim pays less, a denied or underpaid claim is a bigger share of your profit.
Same-day visits and G2211 also change. The same rule changes how same-day visits with minor procedures are paid and replaces G2211 with a modifier. See the related guides below.
What should I do before January 1, 2027?
How HealthRescue Partners can help
We can model your 2027 Medicare impact, review your payer contracts, and clean up open A/R so the cut hurts less. Our billing audits are free. Full medical billing is 4% of collections. Denial and A/R recovery is 15% of what we recover. Insurance contract negotiation is $500.
Want to know what this means for your practice in dollars? We'll run your 2027 Medicare numbers and check your contracts as part of a free billing audit.
Frequently asked questions
What is the 2027 Medicare conversion factor?
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CMS finalized $32.63 for most clinicians, down from $33.40 in 2026 (a 2.31% cut). For qualifying APM participants it is $32.95, down from $33.57 (a 1.83% cut). Both apply to services on or after January 1, 2027.
Why are Medicare physician payments going down in 2027?
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The main reason is that a one-year 2.5% increase Congress provided for 2026 expires. A small statutory update and a −0.12% work RVU adjustment make up the rest of the change.
Can the 2027 Medicare cut still be stopped?
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The rule is final, so only Congress can change the conversion factor now. Plan your budget around the cut unless a law is actually passed.
Does the Medicare cut affect my commercial insurance payments?
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It can. If a commercial contract pays a percentage of the current year's Medicare fee schedule, those payments may drop too. Check how each contract defines its Medicare benchmark.
Sources
This article explains payer and CMS rules in plain language for practice owners. It is not legal advice. Rules can change after publication, so always confirm against the source document before changing how you bill. Last reviewed November 9, 2026.