The Centers for Medicare & Medicaid Services finalized physician payment rules for 2027, reducing the base conversion factor by 2.31% for most clinicians and imposing a 20% cut on same-day evaluation services. Medical groups and leaders like American Academy of Dermatology Association President Murad Alam warn that the cuts severely threaten independent practices and skin cancer care. Meanwhile, CMS Administrator Mehmet Oz defended the rules as fiscal stewardship that boosts incentives for Accountable Care Organizations.
Medicare conversion factor cuts finalized for 2027
- ▪The Centers for Medicare & Medicaid Services finalized a 2.31% cut to the 2027 Medicare physician fee schedule conversion factor for most clinicians
- ▪CMS said Clinicians participating in an Advanced Alternative Payment Model will see a 1.83% conversion factor decrease in 2027, from $33.5675 down by $0.62
Same-day evaluation payment reductions
- ▪The Centers for Medicare & Medicaid Services finalized a 20% payment cut for separately identifiable same-day evaluation and management modifier -25 claims alongside procedures with 0-, 10-, or 90-day global periods
- ▪The Centers for Medicare & Medicaid Services had originally proposed a 50% payment reduction for same-day evaluation and management services before finalizing the lower 20% cut
Dermatology leaders warn cuts threaten skin care
- ▪American Academy of Dermatology Association President Murad Alam stated that same-day care reductions represent the largest cut ever imposed on skin cancer care
- ▪Dermatologist Dustin Portela stated that Medicare payment cuts hit independent practices hardest, driving patient consolidation into higher-cost hospital systems
- ▪Early detection of melanoma carries an almost 99% survival rate compared with 35% when caught late, according to dermatology leaders
Medicare physician payment structure
- ▪Annual Medicare physician payment updates are required by law to be budget neutral, causing reimbursement to lag behind the rising cost of delivering care
- ▪Medical Group Management Association Senior Vice President Anders Gilberg stated that the finalized 2027 Medicare physician payment cuts amplify severe financial challenges from years of inadequate reimbursement
Accountable care Organization rule changes
- ▪Under finalized rules, Accountable Care Organizations will be permitted to reduce or eliminate Medicare Part B cost-sharing to attract more patients
- ▪CMS said Accountable Care Organizations can receive a payment per visit increase of over 30% under a new modifier recognizing longitudinal care costs starting in 2027
Accountable care Organization financial performance
- ▪The Centers for Medicare & Medicaid Services projected that accountable care organization incentive changes will add up to 1 million beneficiaries annually and save over $5 billion
- ▪CMS said Accountable Care Organizations in the Medicare Shared Savings Program generated approximately $2.5 billion in savings for the Medicare trust fund during the 2024 performance year
Merit-based Incentive Payment System transition
- ▪Federal regulators provided clinicians with additional time to transition away from standard Merit-based Incentive Payment System reporting compared to the initial proposed rule
- ▪The Trump administration's finalized rule sunsets standard Merit-based Incentive Payment System reporting by 2030, requiring clinicians to transition to MIPS Value Pathways or Advanced Alternative Payment Models
Congressional action on physician payment
- ▪Congress routinely intervenes to increase Medicare physician payment rates before finalized payment cuts take effect
- ▪Healthcare advocates cited bipartisan legislation designed to establish sustained Medicare physician payment reforms and prevent late-year temporary patches
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