The proposed 2027 Medicare physician cut: how the calculation works and what to check

What was proposed

CMS's proposed 2027 physician fee schedule would lower the Medicare conversion factor by about 1.68% for physicians who are not qualifying alternative payment model (APM) participants, from $33.4009 to $32.8409, according to Becker's Hospital Review. Qualifying APM participants would see a smaller cut of about 1.19%. Much of the drop reflects the end of a one-time 2.5% increase for 2026. Verify these figures against the CMS proposed rule (CMS-1848-P).

How a Medicare payment is calculated

Each service is paid by this formula:

Payment = [(work RVU x work GPCI) + (practice expense RVU x PE GPCI) + (malpractice RVU x MP GPCI)] x conversion factor

RVUs are the relative value units CMS assigns to each CPT code. GPCIs adjust for local costs. The conversion factor turns the result into dollars. As an illustration only, a service with 4.00 total adjusted RVUs pays about $133.60 at the current factor and about $131.36 at the proposed one.

Why the headline number understates the effect for some groups

• Code revaluation. CMS can change the RVUs for individual codes, which can outweigh the conversion factor change for a given specialty.
• Payment policy. Reported specialty estimates are driven partly by policy changes, including how same-day office visits are paid when billed with a procedure.
• Locality. The effect varies by geography.
• Specialty mix. Published analyses estimate steeper cuts for some specialties, such as dermatology, ENT, and orthopedics, and gains for others. Treat these as estimates, not facts about your group.

What a group can check now

• Reprice your own claims under the proposed rates, by code and by physician, instead of relying on averages.
• Check that Medicare remittances match what the fee schedule says should have been paid.
• Review E/M coding, modifier use, and documentation support.
• Find commercial contracts priced as a percentage of Medicare and see how the cut would flow through.

Where we help

We offer a 2027 Medicare fee schedule impact review for independent physician groups. It does not change what Medicare pays. It shows what the change costs your group and checks that you are being paid what you are owed.

This article is general information, not legal, coding, or financial advice. It is based on a proposed rule that CMS may change.