2027 physician fee schedule final rule: Re-price Each Entity's Medicare Revenue Budget by Code, Modifier, and Same-Day Pair Before January 1

The 2027 physician fee schedule final rule cuts the Medicare conversion factor 2.31% for most clinicians, turns the G2211 add-on into a 16% or 32% modifier, and pays the lower-priced same-day service at 80%. Don't budget the headline. Re-price each entity's 2026 Medicare volume by code, then add the modifier and same-day lines separately.

Why this matters now

The Centers for Medicare & Medicaid Services published its CY 2027 Physician Fee Schedule final rule fact sheet on 2026-11-04, effective for dates of service on or after January 1, 2027. The conversion factor for clinicians who are not qualifying APM participants falls to $32.63 from $33.40, a 2.31% cut. The factor for qualifying participants falls to $32.95 from $33.57, a 1.83% cut. Both are deeper than the July proposal, which Medical Economics reported on November 4 as 1.68% and 1.19%. The fact sheet attributes the result to small statutory updates of 0.25% and 0.75%, an estimated 0.12% efficiency adjustment, and the expiry of the one-time 2.50% increase that Public Law 119-21 provided for 2026 only.

Two more policies change the shape of the revenue line, not just its level. The G2211 visit complexity add-on, a flat dollar amount in 2026, becomes modifier B1 in 2027 and pays 16% of the associated E/M visit. Clinicians in a Shared Savings Program ACO or a LEAD Model ACO may append modifier B2 instead and receive 32%, and the fact sheet says B2 is voluntary and available for all beneficiaries. And when a separately identifiable office visit is furnished on the same day as a 0-day global procedure, the higher-priced service is paid in full and the other at 80%. The July proposal had been 50%, across 0-, 10-, and 90-day globals, for any physician in the practice. The CMS press release of the same date estimates $2.38 billion in savings over the decade from that policy.

Coverage from medical associations and practice consultancies explains each policy and offers revenue-protection lists: audit E/M coding, use the modifier, review payer contracts. What it doesn't do is show a finance team with three billing entities how to turn those policies into a budget a reviewer can reproduce. That is this article.

The three lines that move your 2027 Medicare revenue

A fee schedule change is a transaction-price change. Under ASC 606, Medicare revenue is recognized per encounter at the amount the practice expects to collect, so the 2027 rule changes the price of every encounter with a date of service from January 1 onward. The budget should carry it as three separate lines, each built from the practice's own 2026 encounter data, because each line responds to a different fact about the practice.

The add-on line deserves a closer look because it is the one most practices will get wrong. A flat add-on worth roughly $17 nationally in 2026, before geographic adjustment, becomes 16% of whatever the visit pays. The break-even is a visit paying about $106 after the cut. A 99214 priced above that gains a few dollars; a 99213 priced below it loses a few. An entity that bills mostly level 3 visits with G2211 on most of them will see its add-on revenue fall under B1 even though nothing about its patients changed. An entity in an ACO that elects B2 will see it roughly double. Use your locality's 2026 G2211 amount and your own E/M fee schedule when you run this, not the national figure.

One group worked through, entity by entity

Call the group Ridgeline Medical Partners: three billing entities, one finance team, a calendar year-end, and $9.6 million of 2026 Medicare Part B allowed charges. The figures are illustrative. Ridgeline Primary Care participates in an ENHANCED-track Shared Savings Program ACO and its clinicians are qualifying participants, so its conversion factor is $32.95. Ridgeline Orthopedics and Ridgeline Behavioral Health are outside the ACO and use $32.63.

Step one: pull 2026 Medicare volume by code, entity, and modifier

The budget starts from the practice's own encounter data, not from a specialty impact table. The query is every 2026 Medicare Part B claim line by entity, CPT or HCPCS code, modifier, date of service, and allowed amount, with a flag for G2211 lines and a flag for office E/M lines carrying modifier 25 on the same date as a 0-day global procedure by the same specialty. Ridgeline's query returned $4,200,000 for Primary Care, $3,600,000 for Orthopedics, and $1,800,000 for Behavioral Health. The sum tied to the 2026 Medicare revenue in the general ledger, net of the contractual adjustment, which is the first tie-out and the one most groups skip.

Step two: the conversion factor line

Primary Care billed G2211 on 14,400 of its 24,000 office visits, worth $244,800 at $17. That line disappears in 2027, so the conversion factor applies to the remaining $3,955,200. At 1.83% the line is a reduction of $72,400. Orthopedics billed no G2211, so 2.31% of $3,600,000 is a reduction of $83,160. Behavioral Health billed G2211 on 6,000 of 12,000 visits, worth $102,000, so 2.31% of $1,698,000 is a reduction of $39,200.

Step three: the modifier restructure line

Primary Care's 24,000 office visits averaged $108 in 2026, for an E/M base of $2,592,000. After the 1.83% cut the base is $2,544,600, and the 60% of visits that carried G2211 are worth $1,526,700. Under B1 at 16% the add-on is $244,300, against $244,800 of G2211 in 2026, a reduction of about $500. At an average visit price near the break-even, B1 is a wash. Under B2 at 32% on the same visits the add-on is $488,600, an increase of $243,800 over 2026. That single election is worth more than the entity's entire conversion factor cut, and Ridgeline's finance lead wrote it into the budget as a separate, flagged line because the ACO's clinical leadership, not finance, owns whether the practice uses it and on which visits.

Behavioral Health's 12,000 visits averaged $95, for a base of $1,140,000, or $1,113,700 after the cut. The 50% of visits that carried G2211 are worth $556,800, and 16% of that is $89,100 against $102,000 in 2026, a reduction of $12,900. Behavioral Health is below the break-even, so the modifier design costs it money, and it is not in the ACO, so B2 is not available to it for 2027. The participant list for a performance year is set in advance under the program's own timetable, so for an entity not already in, the B2 question is a 2028 question and belongs in the planning calendar, not the 2027 budget.

Step four: the same-day line

This is where the exposure register built against the July proposal gets re-run with the final parameters: 0-day globals only, same specialty in the same group, 80% rather than 50%. Orthopedics had 3,000 qualifying pairs in 2026, mostly injections and aspirations with a modifier 25 visit, with the lower-priced service averaging $75. At 20% the line is a reduction of $45,000; under the proposal it would have been $112,500. Primary Care had 1,200 pairs averaging $60, a reduction of $14,400. Behavioral Health had none. Groups that counted 10- and 90-day globals or cross-specialty pairs in their register in August should take them out, and keep the query so the register can be re-run when the rule text clarifies edge cases.

Step five: the bridge

With B1 everywhere, Primary Care's 2027 Medicare revenue is $87,300 lower, a 2.1% decline. Orthopedics is $128,160 lower, 3.6%. Behavioral Health is $52,100 lower, 2.9%. The group is $267,600 lower, a 2.8% decline against a headline of 2.31%. With B2 elected at Primary Care, the group is $23,300 lower, roughly flat. The RVU and practice expense line sits at zero with a note until the final RVU file is loaded, because the fact sheet describes an estimated 0.12% efficiency adjustment and a two-year phase-out of the indirect practice cost index, and the code-level effect is unknowable from a summary. The board sees five lines and two scenarios, not one percentage.

The cost side is a separate exercise, and the department labor budget built from rate, hours, and mix is where it belongs. Commercial and Medicare Advantage contracts keyed to a percentage of the Medicare fee schedule pick up the cut automatically, so the payer mix review should carry the same three lines by contract.

Accounting controls for the 2027 physician fee schedule final rule

Source data: the 2026 Medicare Part B claim lines by entity, code, modifier, date of service, and allowed amount; the general ledger Medicare revenue and contractual adjustment accounts by entity; the ACO participant list and each entity's qualifying participant status; the locality fee schedule for 2026 and, when published, 2027; the final rule fact sheet and the rule text; and the final RVU file when CMS releases it.

Calculation: a fixed sequence anyone can rerun. Tie the claim-line total to ledger revenue net of contractual adjustments. Remove G2211 lines and apply the entity's conversion factor change to the remainder. Compute the 2027 E/M base, apply 16% to the visits that carried G2211, and show the B2 alternative for ACO entities as a separate scenario. Count same-day pairs under the final definition and apply 20% to the lower-priced service. Hold the RVU line at zero until the file is loaded. Revenue here is a flow: it changes for dates of service from January 1, 2027. The patient and payer receivable at December 31, 2026 is a point-in-time balance priced at 2026 rates, and the 2027 change does not touch it. The contractual adjustment is a debit against revenue; the modifier uplift is a credit to revenue; neither is netted into the other.

Review: a second person reruns the claim-line query and lands on the same entity totals; the conversion factor line equals the stated percentage of the base after G2211 is removed; the add-on line reconciles to visit counts times the 2027 E/M price times 16% or 32%; the same-day count excludes 10- and 90-day globals and cross-specialty pairs; no December 2026 date of service is re-priced at 2027 rates in January billing; and the board package shows the B1 and B2 scenarios side by side with the election flagged as a decision, not an assumption.

Decision: the practice CFO or finance lead owns the budget method and the five-line bridge. The ACO's clinical and compliance leadership owns whether to use B2 and on which visits, after reading the rule's documentation requirements rather than the fact sheet's one sentence. The controller owns the tie-out and the date-of-service cutover. Whether any entity not in the ACO should join for 2028 is a strategic decision for the partners, informed by the B2 scenario but not made by it.

Limits and common mistakes

The conversion factor is not your number. Specialty impacts vary with the RVU changes, and an entity's actual change is the sum of five lines, two of which depend on visit mix and same-day pairs that no national table knows. Budget the lines.

The $17 add-on figure is national and approximate. Each locality has its own 2026 G2211 amount and E/M prices, and the break-even moves with them. Use the practice's own fee schedule.

B2 availability is not B2 eligibility for every visit. The fact sheet says B2 is voluntary and available for all beneficiaries, and the documentation and relationship requirements sit in the rule text. Treat the 32% scenario as an upper bound until compliance has read it.

The same-day rule narrowed. A register built in August against 50%, three global periods, and any physician in the practice overstates the 2027 effect by more than half for most groups. Re-run it; don't scale it.

Remote monitoring policies were finalized, but the employed-staff requirement moved to January 1, 2029, so a practice using a third-party monitoring vendor budgets that revenue normally for 2027 and starts the transition plan now. And traditional MIPS reporting ends with the 2031 performance period, which is a planning item, not a 2027 revenue line.

Ridgeline is illustrative. The conversion factors, modifier percentages, and same-day policy are from the CMS fact sheet and press release of November 4, 2026, and the rule text and RVU file will add detail the fact sheet does not carry.

Frequently Asked Questions

How much does the 2027 physician fee schedule final rule cut Medicare payment?

The conversion factor for clinicians who are not qualifying APM participants falls to $32.63 from $33.40, a 2.31% cut. The factor for qualifying participants falls to $32.95 from $33.57, a 1.83% cut. Both are deeper than the July proposal. An individual practice's change also depends on code-level RVU updates, its visit mix under the new E/M modifiers, and its count of same-day visit and procedure pairs.

What happens to G2211 in 2027?

The G2211 visit complexity add-on becomes modifier B1 and pays 16% of the associated office or outpatient E/M visit instead of a flat amount. Clinicians in a Shared Savings Program ACO or a LEAD Model ACO may append modifier B2 instead and receive 32%. Because the add-on is now a percentage, entities with mostly lower-level visits receive less than they did from the flat amount, and entities with higher-level visits receive more.

How does the final same-day visit policy differ from the proposal?

CMS proposed paying the lower-priced service at 50% when an office visit was billed the same day as a procedure with a 0-, 10-, or 90-day global period by any physician in the practice. The final rule pays the lower-priced service at 80%, applies only to 0-day global procedures, and is limited to the same specialty in the same group practice. The higher-priced service is still paid in full.

Should an ACO practice use modifier B2 in its 2027 budget?

Show it as a separate scenario, not an assumption. The fact sheet says B2 is voluntary and available for all beneficiaries, but the documentation requirements are in the rule text and the election belongs to the ACO's clinical and compliance leadership. In the worked example, B2 at one primary care entity was worth more than that entity's whole conversion factor cut and moved the group from a 2.8% decline to roughly flat.

Does the 2027 cut affect receivables already on the balance sheet?

No. Medicare revenue is priced by date of service, so the receivable at December 31, 2026 is a point-in-time balance at 2026 rates. The 2027 conversion factor applies to dates of service from January 1, 2027, and a reviewer should confirm that December encounters billed in January are not re-priced at the new rates.

Once the budget is five lines built from the practice's own claim data rather than one percentage copied from a headline, the fee schedule stops being a surprise in February and becomes a dated, entity-level plan the board can question line by line. FinBoard reads every entity's QuickBooks file into one consolidated view, so a practice finance team can see Medicare revenue and contractual adjustments by entity, carry the conversion factor, modifier, and same-day lines as budget versus actual through 2027, and drill from any variance to the postings behind it. See how FinBoard puts every entity's Medicare revenue bridge on one page.