Notes on payer behavior

Medicare's 2027 fee schedule: what changes for your practice on January 1

Clearia · November 2026 · Medicare payment · checked against the CMS final rule fact sheet on November 11, 2026

The 2027 Medicare physician fee schedule takes effect January 1, 2027. CMS cut the main conversion factor 2.31%, to $32.63, and finalized a new rule: when an office visit and a minor procedure with no follow-up days built in (a 0-day global period) happen on the same day, the less expensive of the two is paid at 80%. Commercial and Medicare Advantage rates tied to Medicare can move with it.

Three changes matter most for an independent practice. Each one also opens a new way for a January payment to come in wrong. That part usually costs more than the cut itself, because nobody sees it.

What changes on January 1, 2027?

Source: CMS, CY 2027 Medicare Physician Fee Schedule final rule fact sheet (November 4, 2026), and the rule itself, CMS-1848-F.

The same-day change, in dollars

An illustrative example, not real rates. A Medicare patient comes in. The office visit is allowed at $130 and a joint injection at $70. In 2026 both pay in full: $200. Under the 2027 rule, the more expensive service pays 100% and the other 80%. That's $130 plus $56, or $186.

$14 less, on one encounter, before the conversion factor cut. Now count how many visit-plus-procedure encounters you bill Medicare in a month. Orthopedic and pain practices that inject at visits feel this. So do dermatology practices that biopsy at visits.

Which procedures count? Each code's global period is listed in Medicare's Physician Fee Schedule look-up tool. Many in-office injections and skin biopsies are 0-day. Most surgeries carry 10 or 90 days, and CMS took those out of the final rule.

Where January payments will come in wrong

Every January, payers load new rates and new rules. Some get loaded late. Some get loaded wrong. With this rule, three errors are worth watching for:

• The cut applied to the wrong visits. CMS proposed reducing visits on the same day as 10- and 90-day procedures too, then left them out of the final rule. A visit on the same day as a surgery decision shouldn't be cut under this policy.
• The wrong percentage. The proposal paid the second service at 50%. The final rule says 80%.
• The wrong year's rates. Rates follow the date of service. A December visit paid in January should get the 2026 amount.

None of these shows up as a denial. The line looks paid, the balance goes to zero, and the shortfall sits there. That's the zero-balance problem, and it's why underpaid claims rarely get worked.

What it means for your commercial and Medicare Advantage contracts

Many commercial contracts pay a percentage of Medicare, say 120% of the Medicare fee schedule. Read that line closely. If it points to the current year's fee schedule, your commercial rates likely drop with Medicare on January 1. If it names a fixed year, they shouldn't move at all, and a payer that lowers them is underpaying you.

Medicare Advantage depends on whether you're contracted. Out of network, a plan generally owes what original Medicare would pay. In network, your contract sets the rate. The details are in Medicare Advantage paid below Medicare rates.

A step-by-step way to check your own contracts is in new contract rates on January 1: is the insurer paying them?

What to do before January 1

1. Ask your billing team how they'll bill the visit complexity add-on from January 1 (modifier B1 in place of G2211).
2. Count last quarter's same-day visit-plus-procedure encounters with Medicare patients. That's your exposure to the 80% rule.
3. Pull your top three commercial contracts and find the Medicare reference year in each.
4. In February, compare the first January payments against the 2027 rates for your ten highest-volume codes. Questions to put to your team are in questions to ask your billing company about underpayments.