Independent practices need to separate payment-rate changes from encounter-level adjustments, eligibility conditions, staffing arrangements, and reporting preparation. These effects reach different parts of a practice’s activity and should not be treated as interchangeable. The 2027 Medicare Physician Fee Schedule Proposal includes several changes that independent practices should evaluate separately when estimating potential revenue effects.
The goal is an updateable planning model, not a prediction that every proposal will become policy. Start with current Medicare allowed payments, identify the activity exposed to each change, and keep potential offsets conditional. This gives owners and financial managers a clearer basis for budget decisions.
Establish a Reliable Payment Baseline
For more context, review independent billing audit.
A useful baseline separates the payment rules being tested from the practice activity being measured. Otherwise, a forecast can mix current receipts, proposed rates, and operational problems into one unexplained revenue change.
Distinguish Current Payments From Proposal Assumptions
Use a defined period of practice activity. Record Medicare service volume, participation status, locality, and payment setting. Keep actual collections separate so that payment-policy exposure is not confused with unpaid balances or collection timing.
Review unresolved billing issues before testing the proposal.
CMS issued the 2027 Medicare Physician Fee Schedule Proposal on July 14, 2026, with payment and other Part B policy changes proposed to take effect on or after January 1, 2027.
A conditional downside scenario can inform contingency planning without being presented as an enacted reduction.
The proposed conversion factor is $33.17 for qualifying alternative payment model participants, a projected decrease of 1.19%. For nonqualifying participants, the proposed factor is $32.84, a projected decrease of 1.68%. Use the category applicable to the activity being modeled.
The one-year 2.50% conversion-factor increase for 2026 would no longer apply in 2027. Do not add its expiration to the published decreases as another cut.
Payments also reflect work, practice-expense, and malpractice relative value units, together with geographic adjustments. Office and facility rates reflect different resource scopes. A conversion-factor comparison therefore isolates one input, not the final change for every service.
Identify Encounter-Level Losses and Conditional Offsets
Clinic owners may also find questions to ask your billing partner useful when planning their next steps.
Encounter-level proposals can create exposure that is not apparent from total visit counts. A proposed visit-payment increase may also apply only to a particular subset of activity, rather than offsetting losses across the practice.
Compare the Affected Encounter Populations
Separate the populations before calculating losses or offsets. Identify which services occur together, which physician or practice furnishes them, and which participation conditions apply. A broad category such as “office visits” is insufficient.
Preserve encounter relationships in the data. Reviewing services in isolation can miss an adjustment that depends on what else happened on the same day.
Isolate Same-Day Visits Accompanying Global Procedures
CMS proposes a payment reduction when a separately identifiable office or outpatient evaluation and management visit accompanies a procedure with a 0-, 10-, or 90-day global period on the same day. It applies when the services are furnished by the same physician or another physician in the same practice. The most expensive applicable surgical or evaluation and management service would receive 100% payment; other applicable services would receive 50%.
The American Medical Association opposes this proposal and describes it as a particular threat to independent practices. That is the AMA’s assessment, not evidence that every independent practice would experience the same loss.
Review Percentage-Based Visit Payments
CMS proposes replacing the longitudinal-care visit add-on with a modifier that increases the associated evaluation and management payment by 16%, instead of paying a flat amount. Compare this percentage-based payment with existing add-on receipts rather than counting it entirely as new revenue.
A separate proposed modifier would increase associated evaluation and management payment by 32% and would be available only to practitioners participating in Shared Savings Program accountable care organizations or Participant Providers in LEAD Model accountable care organizations. Keep offsets conditional until eligibility and interaction assumptions are established.
Stress-Test Remote-Monitoring Revenue
Remote-monitoring exposure is not limited to payment rates. Proposed conditions could change which activity qualifies for payment and which delivery arrangements support it. Leaving payable volume unchanged while adjusting rates can miss this distinction.
Review Eligibility Before Valuation
Create separate inventories for remote physiologic monitoring, or RPM, and remote therapeutic monitoring, or RTM. Record patient relationship information, initiating visits, and the employment arrangements of staff performing the services.
If an arrangement has not been reviewed against a proposed condition, label its modeled payment unresolved rather than automatically retained or removed. Management can then see how much revenue depends on unanswered questions and prioritize the review.
The proposal would limit RTM to established patients. Separately, it would require a separately reportable initiating visit associated with the start of RPM or RTM. Do not extend the stated established-patient restriction for RTM to RPM.
CMS also proposes allowing payment for RPM or RTM only when services are performed by practice-employed clinical staff, rather than contractors. Review employment arrangements separately from patient and visit requirements. Meeting one condition does not establish that the others are satisfied.
This exercise identifies financial uncertainties; it is not a recommendation about patient services or staffing decisions.
CMS proposes changing how remote-monitoring services are valued and sought comments on an alternative bundled payment structure. Revaluing existing services changes payment inputs; a bundle changes the payment unit being compared.
According to the AMA, remote-monitoring payment reductions are generally limited to 19% annually, but that limit does not apply to new services. Do not treat 19% as a guaranteed ceiling on every possible revenue reduction.
A rate limitation would not protect revenue lost through a smaller payable population or establish the effect of a new bundle. Compare bundle payments over the same activity period. Where information is insufficient, leave the result unresolved and identify the missing input.
When reviewing the 2027 Medicare Physician Fee Schedule Proposal, practices should document which assumptions are supported by the proposal and which remain dependent on practice-specific data.
Build a Traceable Practice-Specific Model
Use the payment and eligibility categories above to organize the working file. Separating these categories makes the forecast easier to review and revise when assumptions change.
Connect Payment Inputs to Actual Activity
Document the baseline period and any annualization. Show planned volume, staffing, or participation changes separately from policy effects so that business decisions do not appear to be Medicare payment changes.
Maintain an assumption register identifying each input’s source, status, applicable population, and effective date. Assign responsibility for resolving missing information. This turns uncertainty into a review task rather than a hidden default.
Use Supporting Files Without Replacing Practice Data
Use these materials when reviewing the proposed inputs. Match service mix, locality, and payment setting before drawing conclusions from aggregate specialty results.
The proposal includes a multiyear replacement of the final specialty-level practice-expense adjustment with a stabilizer while retaining underlying input data. A change to the final adjustment does not mean every resource input disappears.
Keep baseline volume, participation category, exposed encounters, and unresolved eligibility assumptions visible in the working file. Another reviewer should be able to trace each result to the activity and payment inputs that produced it.
Test Isolated Effects Before Combining Them
Run isolated scenarios first to reveal each proposal’s relative importance and detect double counting. Then build a combined scenario using the same underlying activity, rather than adding headline percentages.
Scenario | What changes | What remains explicit |
|---|---|---|
Current baseline | No proposal assumptions | Current inputs and measured activity |
Conversion-factor only | Applicable proposed factor | Volume and other payment inputs |
Encounter-policy only | Same-day adjustments and separately tested offsets | Encounter relationships and eligibility |
Remote-monitoring only | Eligibility and valuation | Staffing arrangements and activity period |
Combined proposal | Selected assumptions applied together | Interactions, exclusions, and unresolved inputs |
Recalculate exposed encounters using combined inputs because the same services may be affected by both changes.
Keep allowed-payment estimates separate from collections and operating margin.
Separate Reporting Preparation From Payment Exposure
Track the Transition and Applicable Exceptions
The proposal would sunset traditional Merit-based Incentive Payment System reporting after the 2028 performance year.
The AMA’s account identifies small-practice exceptions to the proposed core-measure requirement and an attestation policy for clinicians without applicable core measures. Review applicability before estimating implementation effort.
Identify who will review current reporting arrangements and when decisions are needed. Keep preparation expenses separate from the allowed-payment model. Do not assign an unsupported penalty or revenue effect merely because the framework could change.
Conclusion
Independent practices reviewing the 2027 Medicare Physician Fee Schedule Proposal should identify their largest specific exposure rather than assume the conversion-factor decrease tells the whole story.
Frequently Asked Questions
1. Can a specialty-impact estimate replace a practice-specific forecast?
No. Specialty estimates can be used as a reasonableness check, but they should not replace measured practice activity. A practice-specific forecast should account for its own Medicare service volume, participation status, locality, payment setting, encounter relationships, and applicable eligibility conditions.
2. How should independent practices model the 2027 Medicare Physician Fee Schedule Proposal?
Independent practices should begin with a reliable payment baseline and then test each proposed change separately. The model should distinguish conversion-factor changes, encounter-level adjustments, remote-monitoring eligibility, percentage-based visit payments, and other payment inputs. After isolated effects are reviewed, practices can combine applicable assumptions into a broader scenario.
3. Does the proposed conversion-factor decrease represent the total Medicare payment impact?
No. The conversion factor is only one component of Medicare payment. Payments can also depend on work, practice-expense, and malpractice relative value units, as well as geographic adjustments and the setting in which services are provided. A conversion-factor comparison should therefore not be treated as the expected change for every service.
4. How could same-day visits affect practice revenue?
The proposal would reduce payment for certain separately identifiable office or outpatient evaluation and management visits furnished on the same day as a procedure with a 0-, 10-, or 90-day global period. The proposed reduction would apply when the services are furnished by the same physician or another physician in the same practice. Practices should identify affected encounters in their own data rather than applying the adjustment to all office visits.
5. What should practices review before estimating remote-monitoring revenue?
Practices should separately review remote physiologic monitoring (RPM) and remote therapeutic
Offsite Resources For You
- Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule — CMS overview of the proposed 2027 Medicare Physician Fee Schedule changes, including payment updates and other Part B policies.
- 2027 proposed Medicare fee schedule: What physicians need to know — AMA analysis of key provisions in the proposed 2027 fee schedule and their potential effects on physicians.
- Calendar Year 2027 CMS PFS Proposed Rule | eCQI Resource Center — Resource outlining the CMS 2027 PFS proposed rule and related quality and reporting information.
- CMS-1848-P | CMS — CMS regulatory notice containing the official proposed rule and detailed Medicare physician payment policies.
- Proposed Medicare Pay Bump Falls Short, Doc Groups Say — Medscape coverage of physician-group reactions to proposed Medicare payment changes and concerns about their financial impact.
- Calendar Year (CY) 2027 Medicare Physician Fee Schedule Proposed Rule (CMS-1848-P) – Medicare Shared Savings Program Proposals — CMS summary of proposed Medicare Shared Savings Program and accountable care organization provisions included in the 2027 PFS proposal.
- PFS Federal Regulation Notices | CMS — CMS collection of official Physician Fee Schedule regulatory notices and proposed and final rules.
Next Steps
Discuss your revenue planning priorities and unresolved administrative questions with Zavisa RCM. Contact Zavisa RCM to start the conversation.