On Wednesday, CMS released the CY 2027 Medicare Physician Fee Schedule and Quality Payment Program final rule. The rule is available here, along with the press release, Fact Sheet, MSSP Fact Sheet, and QPP Fact Sheet. AAFP’s statement on the final rule is available here.

Below are our high-level, preliminary takeaways. Government Relations staff continue to analyze the rule and will share a more comprehensive summary over the next several business days.

Overall: The final rule is a mixed bag for family medicine, with several meaningful improvements to primary care payment and graduate medical education, but also concerning reductions to Medicare physician payment rates. While CMS made some favorable modifications to its proposals, particularly the modifier 25 policy, the larger-than-anticipated conversion factor reductions raise concerns about whether the rule will ultimately improve Medicare payment for family physicians.

• Conversion factors: The 2027 conversion factors will be $32.9548 for qualifying participants in advanced payment models and $32.6286 for other clinicians. That is 1.83% and 2.31% lower, respectively, than in 2026. The proposed rule had projected smaller reductions of 1.19% and 1.68%, respectively.
• Impact on family physicians: CMS estimates that the final rule will increase total allowed charges for family physicians by 1% due to changes in RVUs, consistent with the estimate in the proposed rule. However, this estimate does not account for the year-over-year conversion factor reductions of 1.83% and 2.31%. When those reductions are considered, the rule likely results in a net decrease in Medicare payment for family physicians, although the actual impact will vary by service mix and participation in advanced payment models.
• Practice expense (PE): CMS is finalizing the two-year phase-out of the indirect practice cost index (IPCI), which ensures the overall number of PE RVUs by specialty is consistent with the old PE/HR data from 2007 or earlier, and will replace it with a PE stabilizer that mitigates short term volatility without anchoring overall values to a specific point in time. CMS is also finalizing its proposal to allocate indirect PE on both the work RVU and clinical labor PE RVU, rather than just the maximum of the two, for all codes except 10- and 90-day global period codes. Lastly, CMS is finalizing its proposal to adjust the indirect PE allocation for visits furnished to beneficiaries in a Part A stay in a skilled nursing facility consistent with its site of service payment differential policy finalized in the CY 2026 PFS final rule.

• Modifier 25: CMS finalized a 20% payment reduction, rather than the proposed 50%, when a separately identifiable office/outpatient E/M visit is furnished on the same day as a 0-day global procedure. CMS also excluded 10- and 90-day global procedures from the final policy. The highest-valued service will be paid in full, while additional applicable services will be paid at 80%.

• G2211: CMS will transition HCPCS code G2211 to a modifier (designated as modifier B1) that can be appended to the associated E/M base code. This modifier will increase the payment of the associated E/M code by 16%, instead of a flat rate. CMS is also establishing modifier B2 to recognize additional resource costs incurred by physicians and others in Accountable Care Organizations (ACOs) when providing longitudinal care, such as maintaining total cost of care accountability and reporting quality measures that can align with providing longitudinal care and care coordination. This modifier will be available only for physicians and others participating in a Shared Savings Program ACO or Participant Providers in a Long-term Enhanced ACO Design Model ACO and would increase payment of the associated E/M visit by 32%.
• Primary Care Exception: CMS is finalizing its proposal that all levels of an O/O E/M service provided in primary care centers, and meeting the requirements in § 415.174 (the primary care exception to the Medicare teaching physician rules), may be provided under direct supervision of the teaching physician in such cases where the teaching physician believes such care is clinically appropriate and without the presence of a teaching physician.
• Teaching physician virtual presence: CMS has finalized the proposed expansion of flexibility for Medicare telehealth services, allowing either the teaching physician or resident to be physically present with the beneficiary while the other participates virtually. This policy applies to services on the Medicare Telehealth Services List and maintains existing telehealth, documentation, and teaching physician oversight requirements.  
• Remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM): For CY 2027, CMS is finalizing its proposals that RTM services be furnished only to established patients and that physicians and others reporting RPM or RTM services must furnish a separately reportable initiating visit in association with the onset of RPM or RTM services. CMS is also finalizing updates to how these services are valued under the physician fee schedule. CMS is delaying for two years, to Jan. 1, 2029, the requirement to only allow payment for RPM or RTM services when performed by clinical staff employed by the practice to provide additional time for practices to adapt to this aspect of the policy.
• Additional coding updates:
  • Maternity care codes: CMS finalized its proposal to adopt the new and revised CPT codes for maternity care services, effective January 1, 2027. CMS also finalized its proposed valuation of those services, including work relative value unit increases to the labor and delivery codes. CMS is not finalizing the creation of HCPCS G-codes for maternity care services, although it may consider the creation of bundled codes describing maternity care services in future rulemaking.
  • Vaccine adverse-effects coding: CMS is finalizing add-on coding and payment (for activities above and beyond those captured in an E/M visit) for the diagnosis and treatment of vaccine adverse effects.
  • Shared medical appointments (SMAs): CMS is finalizing the proposal to establish separate coding and payment for shared medical appointments and creating an add-on code to account for additional time for the service.
  • Advance care planning (ACP): CMS is finalizing use of two new G-codes (HCPCS codes G0572 and G0573) to describe ACP services furnished by clinical staff under the direct supervision of the billing physician or other practitioner. These new codes will more accurately distinguish and value the work furnished by billing physicians and others from time spent by their clinical staff providing ACP services. CMS is further finalizing that the existing CPT codes describing ACP services (codes 99497 and 99498) would only be used to report time personally spent by the billing physician or other qualified healthcare practitioner.
• Medicare Shared Savings Program: CMS finalized changes to the SSP as proposed. The AAFP was generally supportive of their proposals. The sharing rate for Level E of the BASIC track will increase from 50% to 60%. CMS also finalized updates to the benchmarking methodology, including increasing the prior savings adjustment, risk adjusting the cap on upward adjustments to the historical benchmark, and implementing guardrails on the accountable care prospective trend component. ACOs with an approved implementation plan will can reduce or eliminate Part B cost sharing starting April 1, 2027. Instead of reporting the full promoting interoperability category, ACOs will attest to one of three CEHRT activities. They are also establishing a new Medicare eCQM collection type for SSP ACOs.
• Quality Payment Program: CMS modified its timeline to sunset traditional MIPS. Traditional MIPS will sunset after the 2030 performance period instead of the 2028 performance period, as proposed. Beginning in 2031, the reporting options will be MVPs or the APM Performance Pathway. They also finalized three new MVPs (Diabetic Disease, Hospitalist, and Hypertension). They finalized the removal of the outcome/high priority measure requirement and replaced it with a new core measure requirement. For AAPMs, the QP and partial QP determinations will be applied at the TIN/NPI level instead of the NPI level. The AAFP opposed the proposals to sunset traditional MIPS and the creation of the core measure type.
• Limiting Medicare coverage for certain individuals: CMS finalized the proposed change to narrow Medicare eligibility to U.S. citizens and nationals, lawful permanent residents, Cuban/Haitian entrants, and COFA migrants, with beneficiaries who do not meet these requirements subject to termination of Medicare coverage and related Medicare Advantage and Part D enrollment.

Bottom line: The final rule includes several meaningful wins for family medicine, including improvements to maternity care coding and payment, expansion of the Primary Care Exception, new payment for shared medical appointments and advance care planning, and favorable changes to the Medicare Shared Savings Program.

Other policies present a more mixed picture. CMS's decision to delay the RPM/RTM clinical staff requirement provides welcome relief, but the underlying policy remains concerning. Similarly, CMS substantially narrowed the modifier 25 payment reduction, which is welcome but may complicate further advocacy by reducing congressional urgency and narrowing the coalition of affected specialties. The new B1 and B2 modifiers could increase primary care payment, but transitioning away from G2211 introduces significant education and implementation challenges, including potential implications for physicians compensated based on wRVUs.

Finally, significant concerns remain with the modifier 25 payment reduction itself, the rule's vaccine adverse-effects coding policies, and CMS's decision to sunset traditional MIPS in favor of MVPs. The larger-than-proposed conversion factor reductions further underscore the need for congressional action on Medicare physician payment reform. We will continue assessing these policies and identifying opportunities for additional advocacy with CMS and Congress.

The AAFP will continue to analyze the rule and will publish an extensive summary in the coming days. Please let us know if you have any questions.