Every summer, healthcare organizations brace for one of the biggest regulatory releases of the year: the Medicare Physician Fee Schedule proposed rule.

On July 14, CMS released the CY2027 Physician Fee Schedule proposed rule (CMS-1848-P). At 1,592 pages, it covers everything from physician reimbursement and quality reporting to accountable care and specialty payment models. While much of the attention naturally goes to the proposed payment updates, several policy changes could have an equally meaningful impact on physician practices over the next few years.

The important word, of course, is proposed.

Nothing is final yet. Organizations have until September 14 to submit comments before CMS issues the final rule later this fall. That gives physician groups, health systems, and specialty organizations time to evaluate what these proposals could mean for their operations, finances, and long-term planning.

The Headlines

Several proposals stand out.

1. The physician conversion factor would decrease to $33.1693 for qualifying Alternative Payment Model (APM) participants, a net 1.19% reduction from 2026. For non-qualifying participants, the proposed conversion factor is $32.8409, representing a 1.68% reduction. Both figures already include the statutory payment updates before the overall reduction is calculated.
2. Anesthesia conversion factors would also decline, with proposed rates of $20.4165 for qualifying APM participants and $20.2143 for non-qualifying participants.
3. Traditional MIPS reporting would sunset after the 2028 performance year, with all eligible clinicians transitioning to MIPS Value Pathways (MVPs) beginning with the 2029 performance year, affecting payments in 2031. CMS also proposes three new MVPs focused on diabetic disease, hypertension, and hospital medicine.

We see this every year. A rule comes out in July, and by the time it's final, it's already reshaping how the practices we work with handle compensation models, staffing decisions, and reporting workflows well before January 1. This year is no different.

Operational Changes Worth Watching

Several proposed policy changes could affect day-to-day physician operations just as much as reimbursement rates.

One notable proposal would change how G2211, the evaluation and management complexity add-on, is billed. Rather than remaining a separate billable code, CMS proposes converting it into a modifier attached to the underlying E/M service. While this may simplify claims submission, organizations will want to understand how documentation, coding workflows, and reimbursement could change if finalized.

CMS is also proposing payment reductions when a separately identifiable E/M visit occurs on the same day as a 0-day, 10-day, or 90-day global procedure performed by the same physician or another physician within the same practice. This proposal has the potential to affect surgical specialties and practices that frequently combine procedural and evaluation services during the same encounter.

Another area drawing attention is practice expense.

CMS is proposing reforms to the methodology used to calculate practice expense relative value units (RVUs). While the technical details are extensive, any changes to practice expense calculations can ultimately affect reimbursement differently across specialties, making this an area many physician organizations will examine closely during the comment period.

Continued Movement Toward Value-Based Care

The proposed rule also includes significant updates for accountable care organizations participating in the Medicare Shared Savings Program (MSSP).

CMS proposes updating financial benchmarking methodologies, revising beneficiary assignment, allowing all participating ACOs to reduce or eliminate Medicare Part B cost sharing, and introducing a new modifier to better identify longitudinal care relationships between clinicians and patients.

Perhaps one of the most closely watched proposals is the introduction of the Ambulatory Specialty Model (ASM) beginning January 1, 2027.

The mandatory model would initially apply to specialists managing patients with heart failure or low back pain, making it the first mandatory specialist-focused accountability model in traditional Medicare. Specialists who haven't dealt with mandatory value-based participation before will want to start paying attention now, not after the final rule lands.

What Practices Should Do Now

Because this is a proposed rule, today is less about reacting and more about preparing.

Practice leaders should begin evaluating how these proposals could affect reimbursement, physician compensation, coding workflows, quality reporting strategies, and participation in value-based care models. Specialty societies and professional associations will spend the next several weeks analyzing the details, and many organizations will submit formal comments before the September 14 deadline.

The final rule is expected by November 1, 2026, with most provisions taking effect on January 1, 2027. Between now and then, there is still an opportunity for meaningful revisions. We'll be watching closely and sharing what we find.

Resources

• CY 2027 Medicare Physician Fee Schedule Proposed Rule (CMS-1848-P)
• CMS Fact Sheet: Calendar Year 2027 Medicare Physician Fee Schedule Proposed Rule
• CMS Fact Sheet: Medicare Shared Savings Program Proposals in the CY 2027 PFS Proposed Rule
• Submit Public Comments on CMS-1848-P via Regulations.gov

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