August 3, 2026 · FPE Team
Navigating the CY 2027 PFS Proposed Rule
On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year 2027 Physician Fee Schedule (PFS) Proposed Rule — one of the most consequential regulatory packages in recent memory for physician practices, health systems, and care management organizations. From reduced payment rates and a structural overhaul of Remote Patient Monitoring (RPM) to the sunset of traditional MIPS reporting and new telehealth modifiers, the proposed rule touches nearly every operational and revenue layer of modern practice.
The public comment window closes September 14, 2026, and the final rule is expected in November — with changes taking effect January 1, 2027. That leaves a narrow runway for practices to understand what is changing, model the financial impact, and build a plan before the rule is finalized.
This article is your comprehensive guide to the CY 2027 PFS Proposed Rule. We break down every major change in plain language, explain what it means operationally, and help you identify where your practice is most exposed.
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What Is the Physician Fee Schedule Proposed Rule?
The Medicare Physician Fee Schedule is the framework CMS uses to set payment rates for more than 10,000 distinct services billed by physicians and other healthcare professionals each year. Every July, CMS publishes a proposed rule — inviting public comment — before issuing a final rule in November that becomes law on January 1.
The CY 2027 proposed rule (CMS-1848-P), published in the Federal Register on July 16, 2026, spans thousands of pages and proposes substantive changes across payment methodology, remote monitoring, telehealth, care management, quality reporting, and the 340B Drug Pricing Program. The breadth and depth of this rule make it unlike many prior years — practices that wait for the final rule to begin planning will already be behind.
Payment Rates and the Conversion Factor
The conversion factor is the single dollar multiplier applied to every relative value unit (RVU) in the fee schedule. For CY 2027, CMS is proposing two distinct conversion factors based on Alternative Payment Model (APM) participation status — a structure driven by the Medicare Access and CHIP Reauthorization Act (MACRA).
↓ 1.19% vs. CY 2026 ($33.57)
↓ 1.68% vs. CY 2026 ($33.40)
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The primary driver of these reductions is the expiration of the one-year 2.50% statutory increase provided by the Working Families Tax Cut legislation for CY 2026. While the rule incorporates statutory updates of +0.75% for qualifying APM participants and +0.25% for non-qualifying participants — plus a +0.53% budget neutrality adjustment — these cannot fully offset the loss of last year's temporary bump. Analysis from the American Hospital Association and the AAMC underscores that the cumulative impact of years of below-inflation updates continues to compress physician practice margins.
CMS is also proposing a multi-year reform to Practice Expense (PE) methodology, phasing out reliance on specialty-specific survey data from 2007 in favor of more auditable cost data. A "PE stabilizer" cap of ±5% annually would limit short-term volatility during the transition.
A 1.68% conversion factor reduction may appear modest in isolation — but compounded with proposed global surgery cuts and RPM reimbursement changes, the net revenue impact for many practices is significantly larger. Practices should run specialty-specific impact models before the November final rule.
Remote Patient Monitoring & RTM: The Most Disruptive Change
No section of the proposed rule has generated more immediate concern than the overhaul of Remote Physiologic Monitoring (RPM) and Remote Therapeutic Monitoring (RTM). Responding to Office of Inspector General findings on program integrity risks in remote monitoring, CMS proposes three structural changes that would fundamentally alter how practices deliver and bill these services.
1. Direct-Employee Requirement
Under current rules, practices may outsource RPM and RTM clinical services to third-party vendors who supply their own clinical staff. The proposed rule would end this model entirely. Clinical staff performing RPM and RTM services must be direct employees of the billing practice — not contractors or agency staff. Practices could still contract with vendors for technology, devices, and administrative support, but the billable clinical work must be performed by the practice's own employees. See the full legal analysis from Nixon Peabody and DLA Piper.
2. Mandatory Initiating Visit
A separately reportable, face-to-face (or telehealth) initiating visit would be required before enrolling any patient in RPM or RTM. This visit must involve the billing practitioner and include documented discussion of the monitoring program and patient consent. CMS aims to curb "cold calling" enrollment practices that have been identified as a source of billing abuse.
3. RTM Established-Patient Requirement
RTM would now require an established patient relationship — a requirement already in place for RPM. For RTM practices currently enrolling new patients without a prior relationship, this change would require significant workflow adjustments. Additional device reimbursement reductions are proposed, as CMS believes current PE valuations for device setup and supply are overvalued.
CMS is also seeking comment on consolidating the current 17 RPM and RTM CPT codes into just four new HCPCS G-codes (GRPM1, GRPM2, GRTM1, GRTM2), simplifying billing but requiring updated coding workflows. For a practical breakdown of these changes, see Carematix's detailed analysis and Prevounce's 2027 preview.
RPM & RTM Compliance — What Your Practice Must Do Before January 1
Our August 27 session includes a dedicated segment on the RPM/RTM proposals, with a practical compliance roadmap for practices currently using outsourced monitoring vendors.
FPE's RPM Program Is Designed for Compliance
FPE uses practice-integrated engagement specialists and fully documented clinical workflows — structured to align with CMS's proposed direct-employee and initiating visit requirements. If your current RPM vendor model may not survive January 1, now is the time to explore a compliant alternative.
Explore FPE's RPM Support →E&M Complexity Add-On: G2211 Becomes a Modifier
The HCPCS code G2211 — the office/outpatient Evaluation & Management (E/M) complexity add-on — is proposed to be deleted and replaced with a two-tier modifier system. This represents a fundamental change in how complexity-of-care payments are structured.
- MOD1 (16% modifier): Available to all eligible practitioners, this modifier increases payment of the associated E/M base code by 16%, replacing the current flat-rate G2211. Unlike G2211, this modifier scales proportionally with the E/M code level, providing more equitable payment across visit complexity levels.
- MOD2 (32% modifier): Available exclusively to practitioners participating in a Shared Savings Program ACO or the Long-term Enhanced ACO Design (LEAD) model, recognizing the additional resource burden of longitudinal care accountability and quality reporting. This modifier can be billed for all beneficiaries treated by the participant, not only those aligned with the specific ACO.
The global surgery billing change compounds this shift: when a separately identifiable E/M visit is furnished on the same day as a 0-, 10-, or 90-day global surgical procedure, the highest-paid service is reimbursed at 100% and all others at 50%. This "multiple procedure rule" for same-day E/M and surgical billing could materially reduce revenue for surgical subspecialties. Review the AUA's specialty-specific analysis and Kovor CM's highlights for more context.
Offset Revenue Pressure with Chronic Care Management
Chronic Care Management remains one of Medicare's most stable and consistently underutilized revenue streams. FPE's CCM program manages monthly patient outreach, care plan support, medication reminders, and documentation — allowing your clinical team to focus on care while your practice captures recurring reimbursement.
Learn About CCM Services →Telehealth & Behavioral Health: Extensions and New Modifiers
The CY 2027 proposed rule brings welcome continuity for telehealth: core flexibilities authorized by the Consolidated Appropriations Act, 2026, are extended through December 31, 2027. Patients may continue to receive telehealth services from any location nationwide — including their homes — without geographic or originating site restrictions. Audio-only services remain permitted through year-end 2027. The expanded list of eligible practitioners also stays in effect.
For behavioral health specifically, the statutory in-person visit requirement for mental health telehealth is delayed until January 1, 2028. Patients who begin receiving mental health telehealth services on or before December 31, 2027 are considered established patients and are exempt from the initial 6-month in-person requirement — they will instead need at least one in-person visit every 12 months.
Two new mandatory modifiers create important billing workflow updates:
- Modifier BB: Required when telehealth services are furnished through a virtual platform where the practitioner has a payment arrangement or contract with the platform owner.
- Modifier BC: Required when telehealth services are furnished "incident to" another professional service.
These modifiers do not change payment amounts but are required for data transparency, and missing them will create claim issues beginning January 1, 2027. Five new HCPCS codes are also proposed, including GACP1 and GACP2 for advance care planning, GSMAS for shared medical appointments, and GSLPP for pediatric speech-language services. For the full digital health impact analysis, see Nixon Law Group and Applied Policy.
Telehealth Billing Updates for January 1, 2027
Our August 27 webinar includes a telehealth modifier implementation checklist — covering Modifier BB, BC, the new HCPCS codes, and the behavioral health in-person visit rules — ready to hand directly to your billing team.
Quality Payment Program: The MIPS Sunset and MVP Transition
CY 2027 marks a pivotal inflection point for the Quality Payment Program (QPP): CMS formally proposes sunsetting traditional MIPS reporting after the 2028 performance period. Beginning with the 2029 performance period, MIPS Value Pathways (MVPs) become the primary reporting pathway for MIPS-eligible clinicians who do not participate in a MIPS APM.
For the 2027 performance period, three new MVPs are proposed — covering Diabetic Disease, Hospitalists, and Hypertension — along with modifications to 27 existing MVPs. A new core measure requirement would mandate reporting of an applicable MIPS core measure beginning in 2027 for all practices except small practices (fewer than 15 clinicians). CMS also proposes removing the Security Risk Analysis measure from Promoting Interoperability and replacing it with an electronic prior authorization for prescription drugs measure.
For full QPP detail, see Applied Policy's QPP deep-dive and AAPC's coding and payment guide.
Medicare Shared Savings Program: Incentives to Join and Stay
For practices participating in or evaluating the Medicare Shared Savings Program, the CY 2027 proposed rule offers meaningful new financial incentives designed to accelerate ACO participation and reward high-performing organizations.
- BASIC Track Level E: Proposed shared savings rate increases from 50% to 60%, narrowing the gap with the ENHANCED track and making two-sided risk more attractive for growing ACOs.
- Cost-sharing support: Eligible ACOs could apply to reduce or waive Part B cost-sharing for assigned beneficiaries beginning April 1, 2027 — a tool for improving care access and patient satisfaction.
- Growth adjustment: A new incentive would reward ACOs for recruiting clinicians with no prior value-based care experience and for serving beneficiaries new to value-based arrangements.
- Benchmark guardrails: ACPT guardrails (limiting projections to ±1–1.5 percentage points of national expenditure growth) would apply to all new agreement periods starting January 1, 2027.
For ACO-specific analysis, see Applied Policy's MSSP provisions overview and McDermott+'s full analysis.
APCM: Position Your Practice for Value-Based Success
Advanced Primary Care Management (APCM) provides the proactive, whole-person care infrastructure that positions practices for the value-based future CMS is actively incentivizing. FPE handles the outreach, coordination, and documentation — you get the outcomes and the reimbursement.
Discover APCM Support →340B Drug Pricing Program: Mandatory Reporting Takes Effect
For covered entities in the 340B Drug Pricing Program, the proposed rule introduces a significant new compliance obligation: mandatory submission of Part D claims data to the 340B Repository, effective January 1, 2027. Currently a voluntary program, this reporting would require covered entities to submit specific quarterly data — including date of service, dispensing pharmacy NPI, NDC-11, and 340B identification information.
CMS intends to use this repository to evaluate whether 340B-purchased drug units can be reliably identified for potential exclusion from Medicare Part D inflation rebate calculations under the Inflation Reduction Act. Industry analysts at Essential Hospitals and Holland & Knight have identified this as one of the most operationally significant proposals for covered entities — particularly given that historically only 4–5% of eligible Part D claims have carried the 340B modifier voluntarily.
What Your Practice Should Do Right Now
The CY 2027 PFS Proposed Rule is not a future concern — it is a live regulatory document with real deadlines and a projected January 1, 2027 effective date. With fewer than five months between now and implementation, the practices that act now will be best positioned to protect revenue, maintain compliance, and capitalize on new incentives.
- Audit your RPM/RTM vendor contracts — determine whether your current model requires restructuring under the proposed direct-employee rule
- Model the financial impact of the conversion factor reduction on your 2027 revenue projections by specialty and payer mix
- Assess G2211 billing volume and begin preparing your billing team for the modifier transition
- Review telehealth billing workflows and identify services requiring the new BB or BC modifiers
- Evaluate QPP participation status and determine your MVP pathway for the 2027 performance period
- If you are a 340B covered entity, audit your Part D claims submission readiness before January 1
- Submit public comments to CMS before September 14, 2026
Principal Care Management for High-Risk Patient Populations
As CMS continues to prioritize longitudinal, condition-specific care coordination, PCM helps practices deliver focused clinical management that drives both outcomes and reimbursement. FPE's PCM program handles monthly touchpoints, care plan support, and escalation workflows for your highest-acuity patients.
Explore PCM Services →How First Patient Engagement Helps You Navigate Change
At FPE, regulatory change is not something we react to — it is something we build around. Our care management programs are designed with CMS's evolving requirements in mind, and our team stays current so yours can stay focused on patient care. Whether you need to restructure your RPM program, expand CCM enrollment before year-end to lock in existing revenue streams, or model the impact of CY 2027 changes on your specific service mix, we are here to help.
We serve as an extension of your practice — not a software platform, not a vendor with conflicting incentives, but a team of trained engagement and care management specialists who become part of your operational infrastructure. Our services are scalable, compliant, and purpose-built for the care management realities that practices face in 2026 and beyond.
Ready to Build a More Resilient Practice?
Explore our full suite of care management and patient engagement services — from 24/7/365 live call answering to CCM, RPM, PCM, and APCM — or schedule a consultation to talk through your specific situation.
Further Reading & Official Sources
The following resources provide additional detail on specific provisions of the CY 2027 PFS Proposed Rule:
- CMS — Official CY 2027 PFS Proposed Rule Fact Sheet
- Federal Register — Full Text of CMS-1848-P
- Holland & Knight — Comprehensive Proposed Rule Analysis
- McDermott+ — Full Rule Breakdown
- AAPC — Key Payment and Coding Updates for CY 2027
- Essential Hospitals — PFS Proposed Rule Summary
- Bipartisan Policy Center — Affordability Implications of the 2027 PFS
- American College of Cardiology — CY 2027 PFS Analysis
- American Hospital Association — CY 2027 PFS News
- Nixon Law Group — Impact for Digital Health Companies
- Applied Policy — Payment Rates, Telehealth & MSSP Overview
- Prevounce — 2027 PFS Proposed Rule Preview
- Nixon Peabody — Proposed Changes to RPM and RTM
- Carematix — CMS Proposed 2027 RPM Changes Explained
- Applied Policy — Quality Payment Program Provisions in the CY 2027 PFS
Navigate the CY 2027 PFS Proposed Rule with FPE
Public comment deadline for the CY 2027 PFS Proposed Rule. Submit your practice's perspective to CMS before the window closes.
Submit Comments to CMS ↗Don't Navigate the CY 2027 PFS Rule Alone
Join FPE's free August 27 webinar and get the clarity, context, and practical action plan your practice needs — before the final rule drops in November 2026.