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Abstract
The conversion factor, or how 2.5 percent became a rounding error again
The practice expense rewrite and the end of the AMA survey monopoly
Modifier 25 and the 50 percent haircut on same day E/M
RPM and RTM get sent to their room
MSSP reforms and the APM incentive gets a TIN check
The quiet stuff: SaMS, telehealth modifiers, CLFS, and 340B reporting
The RFIs are the real tell
Company shapes worth building
Where each thesis breaks
Scorecard
Table of Contents
CMS released the CY2027 PFS proposed rule (CMS-1848-P) on July 14, 2026. Comments close September 14, 2026, which is four days from when this hits inboxes.
Conversion factor drops to 33.17 for qualifying APM participants (down 1.19 percent) and 32.84 for everyone else (down 1.68 percent). The one year 2.5 percent bump from the 2025 reconciliation law expired, and a 0.53 percent budget neutrality adjustment softens the landing a bit.
Practice expense methodology gets a structural overhaul, mostly on the indirect side, with CMS explicitly reducing reliance on the AMA’s specialty specific survey data.
Same day E/M visits billed with global period procedures get paid at 50 percent when they are not the most expensive service on the claim.
RPM and RTM lose the contractor model: only clinical staff employed by the billing practice can furnish the service, patients must be established with an initiating visit, device practice expense inputs get cut, and CMS floats bundling everything into four G codes.
MSSP gets guardrails on the accountable care prospective trend, rebalanced incentives between BASIC Level E and ENHANCED, selection and rebasing fixes, and an easier path to digital quality measures. APM incentive payments get tied to the APM participating TIN, which CMS scores at 2.38 billion dollars in savings over ten years.
Algorithm only lab tests move from the CLFS to the PFS. CLFS private payer rate cuts phase in at up to 15 percent per year 2027 through 2029. New telehealth platform modifiers. Mandatory 340B repository reporting.
RFIs on primary care payment, diagnostic interoperability, and CPT valuation signal where 2028 and beyond are headed.
Company shapes: specialty margin modeling and site of service arbitrage, independent practice cost benchmarking, RPM rebuilt as an employed staff enablement layer, MSSP two sided risk enablement, and a very short window of comment period consulting.
The conversion factor, or how 2.5 percent became a rounding error again
Every July the physician community reads the PFS proposed rule the way a golden retriever watches you pick up the leash: pure hope, followed by whatever actually happens. This year what actually happened is a cut, which everyone knew was coming, dressed up as a smaller cut than the statute technically required. The 2025 reconciliation law, which CMS now insists on calling the Working Families Tax Cut, handed physicians a one year 2.5 percent conversion factor increase for CY2026. That increase had a hard expiration date. It expired. So the baseline for 2027 starts from a 2.5 percent hole.
CMS proposes a 0.53 percent positive budget neutrality adjustment to offset work RVU changes for a handful of services, plus the statutory updates, and lands at 33.17 for qualifying APM participants versus 33.5675 today, and 32.84 for non qualifying participants versus 33.4009 today. In dollar terms that is forty cents and fifty six cents off the conversion factor respectively. The split conversion factor is now in its second year, and the gap between the two is starting to matter: 0.75 percent versus 0.25 percent annual updates compound, and the QP side is 33 cents richer per RVU already. Give it five years and the non QP discount becomes the kind of number a CFO notices.
The politics here are boring and predictable. The AMA and every specialty society are backing the Efficiency Adjustment Delay Act and pushing for another patch, and Congress may well deliver one in December or January, because Congress always delivers one. But the pattern of a temporary bump followed by an expiration followed by a cut followed by a scramble is the whole PFS experience, and anyone building financial tooling for physician practices should model the cut as base case and the patch as upside. The rule is also candid that the conversion factor is not where CMS is spending its creative energy. The energy is in practice expense, which is where the real money moves.
