The 2027 Medicare Physician Fee Schedule explained

What the Medicare Physician Fee Schedule is

The MPFS is the payment system CMS uses for services furnished by physicians, non-physician practitioners, and other suppliers under Medicare Part B — office and hospital visits, procedures, imaging, therapy, and the technical and professional components in between. Each year CMS issues one rule that updates the payment amounts and the policies that govern them, and that rule applies nationwide.

Because nearly every commercial and state payer benchmarks against Medicare rates, the MPFS does not just determine Medicare payment — it moves the floor for a large share of professional-services revenue across the system. A change to how one code is valued can ripple through every contract that references the Medicare rate.

How a fee-schedule payment is calculated

Every code's payment is built from three relative value units (RVUs), adjusted for local cost differences, and multiplied by a single dollar figure called the conversion factor:

• Work RVU: The clinician's time, skill, and intensity for the service.
• Practice expense RVU: The cost of running the practice — staff, supplies, equipment, space — split into facility and non-facility settings.
• Malpractice RVU: The professional-liability cost attributable to the service.
• Geographic adjustment (GPCI): Each RVU component is scaled by a Geographic Practice Cost Index so payment reflects local cost differences.
• Conversion factor (CF): The geographically adjusted RVUs are summed and multiplied by the conversion factor — a single dollar amount — to produce the payment.

Why payments move even when the conversion factor is flat

By statute, changes to RVUs that CMS estimates would raise spending by more than $20 million in a year must be offset elsewhere in the fee schedule. This budget-neutrality requirement means the fee schedule is close to a zero-sum system: when CMS increases the value of some services, it generally has to reduce the conversion factor or other values to pay for it.

The practical consequence is that your payment for a given code can change from one year to the next even if the headline conversion factor barely moves — because the RVUs for that code, or the budget-neutrality adjustment applied across the schedule, shifted. This is why a specialty can see a net cut in a year the CF is described as flat, and why reading the rule at the code level matters more than the headline number.

The conversion factor and the two statutory updates

The conversion factor is the single number most people watch, because it scales every payment. Its annual update is set partly by statute and partly by the budget-neutrality adjustment described above.

Beginning with CY2026, the Medicare Access and CHIP Reauthorization Act (MACRA) sets two different statutory updates: a higher annual update for clinicians who qualify as Advanced Alternative Payment Model (APM) participants and a lower one for everyone else. That produces two conversion factors — a qualifying-APM CF and a non-qualifying CF — so which update applies to a clinician now depends on their participation status. Expect the CY2027 rule to continue this two-track structure; the exact figures are set when the rule publishes.

What to watch in the CY2027 rule

Beyond the conversion factor, a handful of recurring provisions tend to carry the most operational impact. These are the areas to read first when the proposed rule lands:

• Telehealth policy: Which telehealth services remain payable, originating-site and audio-only rules, and the status of flexibilities that depend on statutory extensions rather than the rule itself.
• Visit-complexity add-on (G2211): The office/outpatient evaluation-and-management complexity add-on — its valuation and the billing conditions CMS attaches to it.
• Practice-expense and MEI methodology: Updates to practice-expense inputs and the Medicare Economic Index can shift value between specialties even with no code-level change.
• Specialty RVU revisions: Reviewed and potentially-misvalued codes whose RVUs change — the line-level moves that budget neutrality then spreads across the schedule.
• Quality Payment Program (QPP / MIPS): The performance threshold, category weights, and measure changes that determine payment adjustments two years out.
• New, revised, and deleted codes: Code-set changes that take effect alongside the fee schedule and drive claim-edit and charge-master updates.

How CLV Intelligence tracks the fee schedule

The fee-schedule rule is one document, but its effects are scattered across thousands of codes and arrive on a fixed regulatory clock. CLV Intelligence monitors the Federal Register and CMS for the proposed and final MPFS rules, reads each for the provisions that change coverage or payment, and surfaces them as signal-scored alerts linked back to the source — so the change reaches the people who code and bill before its effective date, not after the first denial.

Because the fee schedule interacts with the contractor layer — Local Coverage Determinations, Billing & Coding Articles, and NCCI edits — CLV tracks those alongside it, so a payment change and the coverage rule that governs the same code surface together rather than in separate inboxes.