2027 Medicare physician fee schedule: what it means for your clinic's revenue
CMS released the proposed rule. Here is what actually changes for outpatient clinics and what to do about it before January.
What changed in the proposed rule
Every July, CMS publishes the proposed Medicare Physician Fee Schedule (PFS) for the following year. The CY2027 PFS rulemaking process builds on the CY2026 PFS Final Rule (CMS-1832-F) and proposes updates to the conversion factor, relative value units (RVUs), and geographic practice cost indices (GPCIs) that determine how much Medicare pays for every service you bill.
The conversion factor is the single dollar amount that gets multiplied by each service's total RVUs. Even a small percentage change here ripples across every Medicare claim your practice submits. If the conversion factor drops by 2%, a clinic billing $1.2M in Medicare services loses roughly $24,000 annually before adjusting for volume changes.
This year's proposal also includes RVU redistributions across several specialties. Some procedure codes see increases while others get cut. The net effect depends entirely on your service mix.
How to calculate your revenue impact
Pull your top 20 CPT codes by Medicare volume from the last 12 months. These typically account for 70-80% of your Medicare revenue. For each code, compare the current RVUs and proposed 2027 RVUs to calculate the per-service change.
Multiply the per-service change by your annual volume for that code. Sum the results across all 20 codes and you have a reasonable estimate of your total revenue impact. This takes about 90 minutes with a billing report and a spreadsheet.
- Export your Medicare claims by CPT code for the trailing 12 months
- Look up current and proposed RVUs in the CMS fee schedule files
- Calculate per-code revenue change: (new RVU - old RVU) x conversion factor x volume
- Sum all codes for your total estimated impact
- Factor in any volume growth or decline trends
CPT codes with the biggest changes
E/M codes (office visits) continue to be the largest revenue driver for most outpatient practices. Any RVU changes to 99213, 99214, and 99215 deserve your immediate attention because they likely represent 30-50% of your total Medicare billings.
Procedure-heavy specialties should watch for changes to their high-volume surgical and diagnostic codes. Physical therapy practices should check therapeutic exercise (97110) and manual therapy (97140) specifically. Dermatology should review destruction codes and Mohs surgery RVUs.
The comment period and what to expect
The proposed rule is not final. CMS accepts public comments for 60 days, and the final rule typically publishes in November. Historically, 10-15% of proposed changes get modified in the final version based on stakeholder feedback.
Your specialty societies will submit comments. Read their summaries. They often flag the specific code changes most relevant to your practice type and advocate for adjustments that benefit your specialty.
Do not wait for the final rule to start planning. If the proposed conversion factor drop sticks, you need budget adjustments ready by December. If it gets softened, you adjust upward. Planning for the worst case costs nothing.
Adjusting your 2027 budget
Build two budget scenarios: one based on the proposed rule as-is, and one assuming a partial correction in the final rule. Use the worse scenario for cash flow planning and the better one for growth decisions.
If your practice relies on Medicare for more than 40% of revenue, a conversion factor cut hits hard. Consider whether you can offset the impact by increasing commercial payer volume, renegotiating commercial contracts, or reducing overhead. These are not quick fixes, which is exactly why you need to start now.
What to do now
Pull your top 20 Medicare CPT codes by volume and revenue from the last 12 months.
Download the proposed 2027 fee schedule from <a href="https://www.cms.gov/medicare/payment/fee-schedules/physician" target="_blank" rel="noopener noreferrer">CMS.gov</a> and compare RVUs for your high-volume codes.
Calculate your estimated revenue impact using the per-code method described above.
Build two 2027 budget scenarios: proposed rule as-is and partial correction.
Review your payer mix. If Medicare exceeds 40% of revenue, evaluate strategies to diversify.
Set a calendar reminder for November to review the final rule and update your projections.
Who this affects
Founder of Sorso. 18 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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