Medicare finalises 2027 physician pay as both conversion factors are set to fall

The Centers for Medicare & Medicaid Services has finalised how it will pay physicians and other clinicians under Medicare Part B in 2027. The final rule, published in the Federal Register on 9 November 2026 under docket CMS-1848-F, updates the Physician Fee Schedule (PFS) and a set of related Part B payment and coverage policies [s1]. The regulations take effect on 1 January 2027 [s1].

Two conversion factors, both projected to fall

Since the Inflation Reduction Act of 2022, the PFS has run on two conversion factors rather than one: a qualifying APM conversion factor for clinicians who are qualifying participants in advanced alternative payment models, and a nonqualifying APM conversion factor for everyone else [s1]. For 2027, the statute sets the update to the qualifying factor at 0.75 percent and the update to the nonqualifying factor at 0.25 percent [s1].

Those positive updates do not translate into higher pay per service. CMS states that the 2027 qualifying APM conversion factor represents a projected decrease of $0.62, or -1.83 percent, from the current conversion factor of $33.5675 [s1]. The 2027 nonqualifying APM conversion factor represents a projected decrease of $0.77, or -2.31 percent, from the current conversion factor of $33.4009 [s1].

The reason the direction reverses is arithmetic rather than policy reversal. To calculate the 2027 factors, CMS took the 2026 conversion factors without the one-year payment increase of 2.50 percent that statute provided for services furnished from 1 January through 31 December 2026, then applied the required budget-neutrality adjustment and the statutory updates [s1]. The 2.50 percent bump was temporary and expired at the end of 2026, so its removal pulls the starting point down before the smaller 2027 updates are applied.

Why "projected"

CMS describes the 2027 factors as projected, not fixed, because budget neutrality is estimated against forecasts. The agency's own figures in the final rule are the $0.62 and $0.77 decreases against the two named current factors [s1]. The budget-neutrality mechanism requires that changes to relative value units for individual services not raise or lower total spending beyond statutory limits, so a revaluation of one set of services is offset elsewhere in the schedule.

What else the rule carries

The CY 2027 PFS rule is a vehicle for a long list of Part B policies beyond the fee schedule itself. It codifies new policies for the Medicare Prescription Drug Inflation Rebate Program created under the Inflation Reduction Act, establishes the Ambulatory Specialty Model, and updates payment for drugs and biological products paid under Part B [s1]. It also sets Medicare Shared Savings Program requirements, updates the Quality Payment Program and the Promoting Interoperability Program, and updates policies for Rural Health Clinics and Federally Qualified Health Centers [s1]. Further provisions update the Ambulance Fee Schedule and Clinical Laboratory Fee Schedule regulations and codify certain Inflation Reduction Act and Consolidated Appropriations Act, 2026 provisions [s1].

The rule also continues the stepwise method CMS set out beginning with the 2026 Medicare Telehealth Services List for deciding whether to add or remove services, a defined sequence that first asks whether a service is separately payable under the PFS and whether it is subject to the statute's telehealth provisions [s1].

From proposal to final

The final rule follows the proposed version CMS published on 16 July 2026 under the same regulation identifier, RIN 0938-AV82 [s2]. A final rule carries the force of regulation once effective, where a proposed rule only sets out what an agency intends and invites comment; CMS says it reviewed and responded to public comments received on the proposal before finalising [s1].

What is settled

What this rule fixes is concrete. A dated final rule now exists, the 2027 statutory updates are 0.75 percent for the qualifying APM factor and 0.25 percent for the nonqualifying factor, CMS projects decreases of $0.62 and $0.77 against the current factors of $33.5675 and $33.4009, and the regulations take effect on 1 January 2027 [s1]. These are not proposals.

What the rule does not do is change the architecture of physician payment. The PFS remains a resource-based schedule in which a conversion factor turns relative value units into dollar payments, and the 2027 rule adjusts that factor and a set of surrounding policies rather than replacing the model [s1]. Because the conversion-factor figures are projections tied to budget neutrality and forecasts, the final realised amounts depend on inputs CMS estimates rather than on a single fixed number stated in advance [s1].