What the proposed 2027 Medicare cuts could cost an independent practice

Quick Answer

• CMS has proposed 2027 Medicare conversion factors that are 1.68% lower for most physicians and 1.19% lower for qualifying APM participants.

• On illustrative assumptions, an eight-provider practice with $1.8 million in Medicare collections could lose about $48,240 a year, including a proposed same-day visit cut.

• The final rule is pending, so practices should model five numbers now: Medicare share, revenue per visit, same-day volume, compensation exposure, and cash timing.

CMS has proposed a lower 2027 Medicare conversion factor and a new payment rule for visits billed on the same day as a procedure. The comment period closed on September 14, 2026, and CMS has not published the final rule. Industry coverage expects it in early November, ahead of the January 1, 2027 effective date.

The headline percentages are easy to find. What an owner needs is the dollar effect on their own P&L, and the answer depends on data the practice already holds. The example below shows the arithmetic, and the five numbers after it show where to find your own inputs.

A worked example: An eight-provider practice

This example is illustrative. The assumptions are chosen to make the arithmetic clear, they are not benchmarks, and each one should be replaced with your own data.

• Collections: $6,000,000 a year, of which $1,800,000 is Medicare fee schedule collections.

• Participation: All providers are non-qualifying APM participants, so the proposed 1.68% reduction applies.

• Same-day visits: 400 dates of service a year pair an office visit with a global-period procedure, and the visit is the lower-paid service, averaging $90.

• Compensation: Providers are paid 50% of collections.

• Offset: A 1% rate increase on $2,000,000 of renegotiated commercial collections.

Two more lines complete the picture. Under the assumed 50% pay formula, $24,120 of the higher-exposure gap would reach provider pay, and the practice would carry the other $24,120. With even volume, about $12,060 of the annual gap would arrive in each quarter. Run your own version of this table with the numbers below.

Five numbers to model before CMS publishes the final rule

A 5 to 30 employee healthcare practice rarely has a finance team to build this model, but the inputs sit in data it already has. Pull these five numbers, then run the three scenarios above with scenario planning.

Offsetting moves to test

Model each move in dollars before you rely on it:

• Commercial rates: Which contracts come up for renegotiation in 2027, and how much would they need to rise to cover the Medicare gap?

• Overhead: Which cost lines can flex without hurting patient access?

• Compensation formulas: Does a production formula still produce a sustainable draw at the lower rate?

Do not close the gap by coding higher. The goal of any coding review is coding that matches documentation.

What CMS proposed, and who pushed back

Medicare turns relative value units into dollars with a conversion factor. For 2027, the CMS fact sheet proposes two of them: one for qualifying alternative payment model (APM) participants and one for everyone else. The main driver is the expiration of the one-year 2.5% increase Congress provided for 2026, which CMS says means current law requires a 2.50% reduction compared with 2026.

Two other proposals can matter as much as the headline cut to practices that bill visits alongside procedures or use the G2211 add-on: a reduction for the lower-paid service when a visit and a procedure share a day, and a change that turns G2211 into a percentage-based modifier. The FAQ below explains how each would work. Both are proposals, and either could change in the final rule. For background on how a fee schedule sets what a payer will pay, see our glossary.

The AMA, which led more than 150 medical organizations in a sign-on letter, and the American Hospital Association, in its September 14 comment letter, both asked CMS not to finalize the same-day visit reduction. The AMA says it would fall hardest on independent, office-based practices that cannot offset it with facility revenue.

When the final rule lands

CMS has not published the final rule. When it does, rerun the model with the final conversion factors, check whether the same-day visit reduction and the G2211 change survived, and update your 2027 budget. Final rules can differ from proposals, so keep the model in a form you can rerun in a single sitting.

Every number above comes from your accounting and practice management data. Practices that reconcile collections by provider and payer each month can rerun the model as soon as the final figures publish. Practices without those reports have to rebuild the inputs first.

Frequently asked questions

What is the proposed same-day visit payment reduction?

When the same physician, or a physician in the same practice, bills a separately identifiable office or outpatient visit on the same day as a procedure with a 0-, 10-, or 90-day global period, CMS proposes to pay the most expensive service at 100% and every other same-day service at 50%. CMS says the aim is to address duplicated payment. It is a proposal, not final policy.

What does the G2211 proposal change?

CMS proposes to turn G2211, the visit complexity add-on, into a modifier appended to the visit code. The modifier would raise the visit payment by 16% instead of paying a flat amount, so the add-on would scale with the level of the visit. A separate modifier for practitioners in certain accountable care organizations would raise payment by 32%. Both are proposals.

Will the final 2027 Medicare rates match the proposal?

Not necessarily. The 2026 increase came from legislation, Public Law 119-21, so the final numbers can move if Congress acts again or if CMS changes the rule after reviewing comments. Until then, treat the proposed figures as your baseline, not a forecast, and rerun your model when the final rule publishes.

Numetix pairs AI-powered automation with experts in the loop to keep practice-level reporting current, including revenue by provider, revenue per visit, and AR aging, so a rate change shows up in your own numbers quickly. Explore our bookkeeping services or see how our accounting team supports medical practices.

Disclaimer: This article is for general information and does not constitute legal, billing, or coding advice. Consult a qualified professional about your practice's circumstances.