Final rule cuts Medicare physician payment rates for 2027, deeper than CMS proposed

Medicare will cut the conversion factors it uses to pay physicians starting Jan. 1, 2027, under a final rule the Centers for Medicare & Medicaid Services issued Nov. 4.

The physician fee schedule is Medicare's main way of paying doctors and other clinicians. Each service is assigned relative values for the clinician's work, practice expenses such as rent and staff wages, and malpractice costs, adjusted for local costs. Those values are multiplied by the conversion factor, a dollar multiplier, to set the payment.

Since 2026, federal law has required two conversion factors. For clinicians who don't qualify through alternative payment models, the factor falls 2.31%, to $32.63 from $33.40. For clinicians who do, it falls 1.83%, to $32.95 from $33.57.

Both cuts are deeper than CMS proposed in July, when the figures were $33.17 and $32.84. A budget-neutrality adjustment that was positive in the proposed rule turned negative in the final one. CMS attributed the cuts to statutory updates, an estimated -0.12% adjustment for changes in work values and the expiration of a one-year 2.5% increase for 2026. CMS received about 43,100 comments on the proposal.

The physician rule is separate from Medicare's hospital outpatient rule, which will pay Alaska hospitals more for outpatient care in 2027 to cover higher supply costs.

The cuts "further degrade an already fragile payment system and amplify severe financial challenges caused by years of inadequate Medicare reimbursement," Anders Gilberg, senior vice president of government affairs at the Medical Group Management Association, said in a Nov. 5 statement.

His association and the American Academy of Neurology are asking Congress to stop the cut.