2027 physician fee schedule: what a practice checks now

The 2027 physician fee schedule, as CMS proposed it on July 14, 2026, cuts the conversion factor for most clinicians by 1.68%, to $32.8409, and for qualifying participants in advanced alternative payment models by 1.19%, to $33.1693. That is the headline, and it is not the number a practice will be paid. What a practice receives per visit also depends on changes to how practice expense is calculated, and CMS itself estimates, according to the American Physical Therapy Association, that physical therapy codes could see an overall increase of 1% to 3% despite the lower conversion factor. The comment period closed on September 14. The final rule comes next; last year it arrived on October 31. This post sets out the proposed numbers, the changes a small medical, therapy or chiropractic practice will notice, and what to check before January 1, 2027.

In short

• Proposed CY 2027 conversion factor $32.8409, down 1.68%, for most clinicians; $33.1693, down 1.19%, for qualifying APM participants.
• The 2.50% temporary increase that applied in 2026 does not continue; the statutory update is 0.25% for most clinicians.
• The proposed therapy KX threshold rises to $2,540 from $2,480.
• CMS proposes to limit most services' practice expense changes to plus or minus 5% a year while it phases out the indirect practice cost index over two years.

What CMS proposed for the 2027 physician fee schedule

CMS displayed the proposed rule, CMS-1848-P, on July 14, 2026 and published it in the Federal Register on July 16. The conversion factor arithmetic, from the CMS fact sheet:

For a sense of scale, the conversion factor change alone takes $1,680 off every $100,000 of fee schedule payments before any code-level change. That is arithmetic on CMS's percentage, not an estimate of any practice's revenue, and it is rarely the final answer, because each code's payment is its relative value units multiplied by the conversion factor, and the relative value units are moving too.

Why the practice expense change matters more for some practices

Holland & Knight's summary describes CMS "phasing out the Indirect Practice Cost Index over a two-year transition" and adding a practice expense stabilization adjustment that would limit annual increases or decreases in practice expense relative value units to plus or minus 5% for most existing services. Practice expense is the part of a code's value that pays for staff, space and equipment. When its method changes, specialties can move in a different direction from the headline.

That is why the American Physical Therapy Association, reading CMS's own impact estimate, reports that physical therapy codes could rise 1% to 3% overall even though therapists take the full 1.68% cut to the conversion factor. Some other specialties may move the other way. CMS publishes a specialty impact file with the rule, and it is the document to read before deciding what 2027 looks like for a particular practice.

The changes a small practice will notice

Therapy threshold. The KX modifier threshold for physical therapy and speech-language pathology combined, and separately for occupational therapy, rises to $2,540 from $2,480 under the proposal.

Remote monitoring. The CMS fact sheet says the agency proposes to limit remote therapeutic monitoring services to established patients, and to require that practitioners reporting remote physiologic or therapeutic monitoring furnish "a separately reportable initiating visit." Practices that bill either should read the proposal with whoever does their coding before the final rule.

Telehealth originating site. Holland & Knight lists a proposed originating site facility fee of $32.65.

Quality reporting. The same summary reports a proposal to "sunset traditional MIPS reporting beginning with the 2029 performance year." Nothing changes for 2027 reporting on that account, but the direction is set.

What to check before January 1, 2027

1. List your ten most-billed Medicare codes. Take them from last year's claims. Those ten will carry most of the change.
2. Read the specialty impact file and the proposed values for those codes. Both are among the supporting files on CMS's CMS-1848-P page. Note the proposed total for each code in your setting, office or facility, against 2026.
3. Multiply by your volume. Code by code, 2027 proposed payment times last year's count. The total is your practice's proposed change, which may be smaller or larger than 1.68%.
4. Mark anything that depends on remote monitoring or therapy caps. Those are the two areas where the proposal changes rules as well as rates.
5. Wait for the final rule, then redo steps 2 and 3. Final numbers can differ from proposed ones. Last year CMS released the final rule on October 31, 2025, for policies effective January 1, 2026.
6. Update the schedule and the budget in December, not March. A practice that knows its per-visit number before the year starts can decide how many visits it needs.

The mistake most practices make at step 3

They apply the headline percentage to total Medicare revenue and stop. The conversion factor is one input. A therapy practice may see a small increase, a practice with a different mix of services may see more than the headline cut, and neither will know until the code-level numbers are multiplied out. This post explains the proposal; it is not billing or coding advice, and the practice's billing company or coder should confirm anything that changes how a claim is submitted.

For practices working on the front-desk side of the same problem, the healthcare industry page describes the reminder, recall and after-hours systems we build, under a business associate agreement signed before any patient information is handled; the HIPAA Security Rule update explains why that agreement comes first. The rule itself is a CMS matter. What a practice controls is how many of its scheduled visits happen.