On November 4, 2026, the Centers for Medicare & Medicaid Services (CMS) released the 2027 Medicare Physician Fee Schedule (MPFS) final rule, which takes effect January 1, 2027. On September 14, your Academy submitted extensive comments on the 2027 MPFS proposed rule. For physical medicine, CMS has projected that the finalized policies in the rule will have a -2% impact on non-facility charges and a +3% impact on facility charges for PM&R physicians specifically. Below are details regarding the policies CMS has finalized for 2027, highlighting areas of previous and ongoing Academy advocacy. Included below are also details on the new Ambulatory Specialty Model on low back pain as well as changes to the Quality Payment program.
Conversion Factor
For 2027, an overall cut to the conversion factor is expected unless Congress takes action. Decreases to the conversion factor are attributed to the expiration of the one-year 2.5% increase approved by Congress at the end of 2025 as well as a budget neutrality decrease. The 2027 conversion factor for clinicians who do not qualify as alternative payment model (APM) participants is $32.63, a decrease of $0.77 (-2.31%). The qualifying APM participant conversion factor for 2027 is $32.95, a decrease of $0.62 (-1.83%). Stabilization of physician payment remains a top advocacy priority for AAPM&R. Visit our Action Center to urge Congress to support legislation that would ensure consistent positive updates to the conversion factor.
Same Day Care Payment Reduction
In the proposed rule released earlier this year, CMS proposed reducing payment when a separately identifiable office/outpatient evaluation and management (E/M) visit is billed by the same physician on the same day as a 0-, 10- or 90-day global procedure, paying the higher-valued service at 100% and all other services at 50%. Your Academy and many partnering organizations including the American Medical Association (AMA) urged CMS not to finalize this policy, noting there is no evidence that these services are duplicative.
In response to the broad advocacy opposing this policy, CMS finalized two significant changes to its proposal: the reduction will only apply to 0-day global procedures (not 10- or 90-day), and the lower-valued service will be paid at 80% (a 20% reduction) rather than the proposed 50%. For PM&R physicians billing 0-day global services, this means that when a separately billed office/outpatient E/M visit is furnished on the same day as an injection, for example, the more expensive of the two services will be paid at 100% and the other at 80%.
While AAPM&R is pleased that CMS has heard stakeholder feedback and has finalized a policy with a reduced negative impact, we still assert that there is no duplication in work, and both the services should be paid at 100%. This position is outlined in our September comment letter and reinforced through efforts with the AMA and the Same Day Care Coalition.
Visit Complexity Add-on Code – G2211
Beginning in 2025, Medicare has paid separately for the office/outpatient E/M visit complexity add-on code HCPCS G2211. Academy members use this code for patients they manage with ongoing and complex care. Effective January 1, G2211 will transition to a modifier, B1, that is appended to the associated E/M base code and increases its payment by 16% rather than adding a flat amount. The intention of this change, according to CMS, is to maintain an equal percentage increase across all E/M levels and to streamline billing. CMS has also created a second modifier, B2, which is limited to practitioners participating in a Shared Savings Program ACO or Participant Providers in a Long-term Enhanced ACO Design (LEAD) Model ACO, and it increases payment of the associated E/M visit by 32%.
AAPM&R expects PM&R physicians to use the B1 modifier. The associated 16% increase, when compared to the value assigned to G2211, should result in a comparably higher total payment for level 4 and 5 E/M services. However, in our September comments to CMS, your Academy voiced reservations about this policy, highlighting concerns that the proposal would benefit employers while penalizing physicians who are subject to RVU-based reimbursement.
Updates to Payment for PM&R Services
The majority of PM&R services will be maintained at the same relative value as compared to 2026. Following a January 2025 AMA Relative Value Update Committee (RUC) review, code 62287 for percutaneous lumbar decompression has been decreased to 6.23 wRVU. This is considerably lower than the AAPM&R and AMA RUC recommended value of 7.06 wRVU and is a substantial decrease from the current value of 9.03.
Your Academy is working to analyze the impacts of the finalized conversion factor and other policies on January payment for all PM&R services. We will make available an updated table of RVUs and payment rates for PM&R services in the coming weeks.
Updates to Practice Expense
CMS is continuing a multi-year effort to move the practice expense (PE) methodology away from reliance on AMA survey data. CMS’s stated goal is to rely instead on more objective, routinely updated and auditable cost data, which it believes will make MPFS payments more responsive to market pressures, support right-sizing payments across outpatient care settings, and increase transparency.
As part of this reform, CMS is finalizing the phase-out of the indirect practice cost index (IPCI), which anchors specialty-level PE RVUs to practice expense per hour (PE/HR) data from 2007 or earlier. The IPCI will be phased out over two years and replaced with a PE stabilizer that limits short-term volatility without tying overall values to a specific point in time. In our September comments to CMS, your Academy raised concerns that CMS had not provided detailed information about how this specific policy change would impact payment. Accordingly, we requested a delay in implementation of this policy to allow time for further analysis.
Remote Monitoring and Remote Therapeutic Monitoring
For 2027, in response to Office of the Inspector General recommendations on oversight of remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM), CMS is finalizing several proposals. Effective January 1, RTM services may be furnished only to established patients. Additionally, practitioners reporting RPM or RTM must furnish a separately reportable initiating face-to-face visit in association with the onset of services to determine clinical appropriateness. The initiating visit does not have to be solely for discussing remote monitoring, though RPM or RTM must be discussed with the patient, and CMS will not limit the time between the visit and the start of services. And finally, CMS has determined that RTM and RPM services will be revalued, reducing reimbursement for several codes. PE for these services will be reviewed at the January 2027 RUC meeting.
CMS also finalized, but delayed for two years, the requirement that RPM and RTM be furnished by clinical staff who are direct employees of the billing practitioner or practice, following all other “incident to” billing requirements and not fully contracted out to third parties (use of a third-party technology platform does not change this requirement). Contracting with third-party remote monitoring companies remains permitted through December 31, 2028, provided existing “incident to” rules are met, and the employment requirement takes effect January 1, 2029.
Ambulatory Specialty Model
CMS finalized several technical refinements and adjustments to the Ambulatory Specialty Model (ASM), which is scheduled to begin January 1, 2027, and will include five performance years. ASM is a mandatory payment model, impacting physicians treating heart failure and low back pain. Your Academy has repeatedly called for a delay to the financial impacts of ASM, which are scheduled to begin in 2029 based on 2027 reporting. More than 800 PM&R physicians are included as mandatory participants in the low back pain cohort of ASM. As a reminder from previous Academy communications, to determine if you are a mandatory participant, view the ASM Participants dataset and learn more about the model by visiting the CMS Innovation Center. AAPM&R will alert members about planned new educational resources on ASM ahead of the program launch on January 1.
Quality Payment Program (QPP)
CMS finalized a two-year extension of traditional Merit-based Incentive Payment System (MIPS) reporting, delaying its sunset until after the CY 2030 performance period. Beginning in 2031, clinicians will report through the MIPS Value Pathways (MVPs) or Advanced Alternative Payment Model (APM). The rule also establishes three new MVPs and requires reporting of at least one specialty-specific Core Measure beginning in CY 2027.
Additional Policies Potentially Impacting PM&R
CMS finalized payment for an add-on code to describe activities above and beyond those captured in an E/M visit for the diagnosis and treatment of vaccine adverse effects. These services entail listening to patient concerns, answering questions and building trust; selecting diagnosis strategies and conveying information in a manner specific to each patient's concerns, cultural and religious beliefs, and literacy level; providing patients with appropriate resources; and planning with patients the treatment of symptoms of suspected vaccine adverse effects. Your Academy voiced concerns in our September comments to CMS that this add-on code will be duplicative of existing E/M coding.
CMS finalized payment for two new G-codes to describe advance care planning services provided by clinical staff under direct supervision of the billing physician or other practitioner.
The MPFS proposed rule included several comment solicitations on issues including improving global surgery payment accuracy and redesigning primary care. CMS is considering comments submitted as it explores proposals for future rulemaking.