Nation’s Physicians Urge Course Correction on Proposed ‘Practice-Killing’ Medicare Payment Cuts
By Amy Lynn Sorrel and Phil West

Vigilant in preserving practice viability, the Texas Medical Association has joined the nation’s physicians in denouncing the significant payment cuts and modifier 25 changes in the proposed 2027 Medicare physician fee schedule – and warning of the damage they could do to practice viability and patient access to care.

As last year’s one-time 2.5% increase expires this coming Dec. 31, the Centers for Medicare & Medicaid Services’ (CMS’) 2027 fee schedule proposal integrates yet another round of repeated cuts to Medicare’s conversion factors, which are used to calculate payment for physician services. This year’s conversion factors for physicians in traditional Medicare face a proposed reduction of 1.68% compared with 2026. Qualifying physicians participating in an alternative payment model are set for a 1.19% conversion factor cut.

The proposal would slash payment for office/outpatient evaluation and management (E/M) services using modifier 25 that are performed on the same day as certain global procedures. CMS calls for Medicare to pay for the most expensive service at 100% and all other E/M visits or surgical procedures at 50%.

Through a pair of letters to CMS Administrator Mehmet Oz, MD, organized medicine – including TMA, American Medical Association, and more than 100 state and national specialty medical organizations and other health professions – urged federal officials to correct course immediately.

Tell CMS to withdraw payment reductions from the 2027 Medicare Physician Fee Schedule proposal. Submit your personal story and comment here by Sept. 14.

“Patients are about to absorb the consequences of a physician workforce CMS has spent more than thirty years underpaying,” per a missive written by the Texas Delegation to the AMA, part of the Big Five Coalition representing more than 400,000 physicians in Texas, California, Florida, New York, and Pennsylvania.

That letter urges CMS to address the continuing diminishment of Medicare physician payment, calling the latest proposed cut “the continuation of a policy failure that has now gone on for over three decades,” and one that has collapsed Medicare physician payment by 53% since 1992.

“Physicians remain the only participant in the Medicare program with no statutory mechanism to keep pace with inflation,” the Big Five wrote, led by Chair Michelle Berger, MD, also chair of the Texas Delegation. Unlike physicians, “hospitals, skilled nursing facilities, and Medicare Advantage plans all receive built-in, predictable updates.” 

The Big Five’s asks include:

• Withdrawing the proposed conversion factor reduction and replacing it with a positive update tied to the Medicare Economic Index (MEI), which measures physician practice inflation;
• Establishing a permanent tie between the conversion factor and the MEI; and
• Eliminating the so-called “site-of-service” differential under which Medicare pays more for a service done in a hospital outpatient department and less for the same service done in a physician’s office. The Congressional Budget Office estimates expanding site-neutral payment across hospital outpatient departments, imaging, and drug administration would save Medicare more than $170 billion over 10 years without impacting patient care.

In a second letter spearheaded by AMA and joined by the nation’s physicians, medicine protests the planned modifier 25 cuts, which medicine says could ripple “across thousands of codes and every affected specialty.”

AMA notes some CPT codes would be paid below the cost of care provided, projecting the impact would fall most heavily on independent physician practices.

“It’s an egregious and disastrous proposed change that will be a practice killer, no question,” TMA President Bradford W. Holland, MD told Texas Medicine Today, warning the cuts could create a problematic incentive under which patients who could have been treated in one visit might end up having two. “That is wholly inefficient. It’s bad for patients, bad for patients in rural areas who travel, and bad for practices.”

CMS proffered a similar change in 2019, but as the AMA letter notes, the agency did not adopt it after receiving a torrent of public comment against it, including from organized medicine.

While CMS says it is trying to address unwarranted overlap in services, medicine faulted the agency for failing to explain any evidence for it. And even if CMS were to demonstrate a problem, “the appropriate response is to identify and address those codes, not to reduce payment uniformly for all,” the AMA letter states.

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