#213 The 2027 Reimbursement Change That Isn't a Fee Cut

2027 is not one reimbursement change. It's multiple changes moving at different speeds, some proposed, some confirmed, and the most expensive mistake is treating all of them like the same fee-schedule cut. 

• Change 1, Medicare rates: CMS has proposed two 2027 conversion factors. The headline percentage is never your practice's percentage. Model your own top codes. 
• Change 2, global procedures: Same-day E/M billed with a global procedure is getting more scrutiny. Documentation, not billing habit, decides whether it survives an audit. 
• Change 3, specialty codes: New 2027 OB/GYN coding replaces the bundled global obstetric payment. The pattern applies to every specialty as codes get more specific. 
• Change 4, digital care: Remote monitoring reimbursement is becoming more conditional on established-patient status, a documented initiating visit, and employed clinical staff. 
• Change 5, rate transparency: Federal transparency files make commercial negotiated rates newly accessible, setting up next episode's data methodology. 

Three actions this week: 

• Pull your top 20 Medicare CPT codes by allowed dollars 
• Check whether your practice bills E/M on the same day as global procedures, and audit the documentation 
• If you run remote monitoring, confirm employed clinical staff and a documented initiating visit 

Episode breakdown 

• 00:00 Hook 
• 00:40 The 2027 reframe 
• 03:00 Change 1: Medicare rate nuance 
• 07:00 Change 2: Global procedure scrutiny 
• 11:00 Change 3: OB/GYN as the specialty example 
• 15:00 Change 4: Digital care conditions 
• 18:00 Change 5: Rate transparency 
• 20:00 The three-question diagnostic 
• 23:00 Close and next episode 

Resources 

• 2027 Revenue Impact Brief: eligibility.natrevmd.com/know-where-2027-will-impact-your-practices-revenue-free-brief-natrevmd 
• Metrics Audit Review (free, physician-led): eligibility.natrevmd.com/metrics-audit-natrevmd 
• Website: natrevmd.com 
• Referenced: EP210, the Modifier 25 framework 
• Coming next: EP214, the one number to know before you negotiate with a payer 

Transcript

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SPEAKER_00 0:04

So I think we've probably all seen that CMS has released their proposed changes for next year, and most of you guys are probably starting to work on 2027 budgets and planning. We want to make sure that you are planning around the number that matters most correctly. Welcome to Nat RevMD, a podcast where we share tips on optimizing medical billing and improving practice efficiency so you can have the business of your dreams. I'm your host, Dr. Heather Signarelli, founder of Nat RevMD. Let's get started. So today we're going to talk about some of the proposed changes. It is going to be released on Friday, the 11th. So if you have not already submitted recommendations or feedback on those proposals, I highly, highly recommend. Deadline is the 14th. So just a few days left to share. So hopefully you guys are paying attention to these. They do matter. They matter from a budget perspective. So today we're going to talk about the rate cuts that are potentially coming and really understanding these split rates that Medicare is suggesting. You know, if you guys have known me for a while, you know that I actually like Medicare for the most part in terms of how quickly they pay. Their rules are simple. So, but it is important to recognize these trends and understand how your practice fits into these rules so that you are prepared and taking the necessary actions, whether that's joining an ACO, whether or not that's using codes differently. So really important to understand that. Today's, you know, information is education only. Of course, please use CMS website and read it yourself. Get used to these memos that come out twice a year so that you are prepared for your practice, or at least somebody in the practices, right? If you are the physician owner, this may not be your jam, but please make sure that somebody in the practice is paying attention to these things. So before we get into actually what is changing, I do want to spend a few minutes covering something that's, you know, important for us to understand. And that's really why there are two different Medicare conversion factors, depending on which practice your or program your practice is in and whether that gap is going to widen or close. So I do think it's important for us to just step back a little bit about these 2027 proposed cuts because it can feel a little random unless you know some of the history around how we got here from a reimbursement perspective. And understanding the trajectory will also give you what to expect for 28, 29, and beyond. And it's really important because the, you know, this has been going on for years, almost 20 years. And the Medicare physician payment was governed by the sustainable growth rate formula. And that was through 1997 through 2014. And this was supposed to automatically cut physician pay whenever Medicare spending grew too fast. Now, it they did a cut back in 20, in 2002, which was five, you know, five and a half percent just below that. And then after that, essentially Congress blocked the cut every single year for 13 consecutive years with these temporary band-aids, which we all love. Now, by 2015, there had accumulated this schedule cut of over 20%. And that is the number that was sitting on the table when Congress finally acted. So essentially, patch after patch after patch for almost 17 years, and every one of them basically bought another year that was added to the next year's required cut recommendations. Now, Macra was signed in April 2015, which basically permanently killed that SGR. So that 20, you know, 1% or whatever was prevented. So Macro replaced it with fixes with fixed updates written directly into the law. So 2015 through 2019, there were these small positive, you know, updates of getting an half percent per year. Now then 20, 2020 through 2025, it was zero. So it was a complete freeze. And in practice, the freeze plus the budget neutrality adjustments basically meant that the conversion factor actually declined. So it went from just over $36 in 2019 to 32, just over $32 by 2025. Now, meanwhile, that Medicare economic index, right? So that's the measure of what it costs to run a practice, is growing 20, 25, 30% over that same exact period. So obviously, in real purchase power terms, Medicare physician payments fell significantly during this era, even though the headline number was we're staying flat. Now, let's now enter into the APM era. So then we got this APM bonus, which was kind of this carrot that ran from 2019 to 2024, and that is now gone. So basically, Macra created two tracks from the beginning. So you've got MIPS for most physicians and a separate track for alternative payment model participants. So from 2019 through 2024, physicians who qualified for these advanced APM participants received a 5% annual bonus on their Part B payments. And that was a lump sum. It was paid separately. Now, a practice who says generating one and a half million dollars in Medicare Part B revenue, that's about, you know, $75,000 per year on that bonus alone. And that was on top of everything else. Now that 5% bonus expired in 2024 at the end of 2024. So it's gone. Now they had a small payment, just under 2%, that was applied in 2026 as a final phase out. But then after, you know, this 2026, there's nothing. Now this matters because the calculation that made APM participation, you know, financially, you know, obvious for many practices basically no longer holds in the same way. So since that bonus is gone, the only advantage left for the APM participants is basically this higher conversion factor, which is what we're going to talk about today. And whatever the ACO earns in terms of shared savings. So that's if you belong to an ACO. Now let's talk about what's happening now. So this two conversion split factor that was new in 2026 and actually is permanent going forward. So Mbacra also announced in 2015 that starting in 2026, which is where we are, physicians would be paid at two different base rates, depending on whether they qualify as advanced APM participants or not. So 2026, this is year one of that split, and 2027 is year two. So basically, if you are a qualifying APM participant, you have a higher conversion factor, a higher update rate permanently going forward. Everyone else, lower conversion factor, lower update rate permanently going forward. Now, not a surprise, it was written into the law in 2015, but like many of us, we're not really paying attention to all that stuff until it's here hitting us. Now, let's talk a little bit about what APM actually is so that this makes sense. So APM stands for alternative pay model, which I said earlier. And that basically is a Medicare payment arrangement, basically where a group of physicians, providers takes accountability for the quality and cost of care for a patient population. So, example of this is independent practices, is this Medicare Shared Savings Program, which basically operates through an accountable care organization or ACO. Now, ACO is essentially, for those who don't know, is a group of physicians and sometimes hospitals or other providers who agree to be measured on the total cost of quality of care for their assigned Medicare patients. So if the ACO spends less than its benchmark while meeting quality standards, it it shares in the savings. But to qualify as an advanced APM participant, you basically need to be qualified. Do you need to be in a qualifying ACO? Now, the most accessible qualifying ACO for independent practices is that shared savings program. So if your practice is in a shared savings program ACO, you are basically, you know, most certainly an APM participant. But if you are a fee-for-service independent practice with no ACO arrangement, you may not be. All right, now let's switch gears for a second and talk about the rate cut for 2027 and why it's important to understand this. So again, for those qualifying advanced APM participants, it's going to be $33.17. So it's down, you know, 1.2% from the 33.57 in 2026. So again, you know, what is a 40 cent cut. Now, other physicians are going to be down from down to $32.84, which is down almost 1.7%, which was $33.40 in 2026. So bottom line is those participating are going to have, you know, a slightly better rate than those not participating. We're not talking a ton of money. Again, that's $33.17 versus $32.84. But still, it's important for everybody to recognize that difference. And again, that does add up over time. Now, now, the important part here is in 2026, those conversion factors included basically a 2.5% temporary increase from Congress, which was passed in that working families tax cut, but it only applied to 2026. So basically that 2.5% expires in at the end of this year. So the macro statutory updates for 2027 are positive, meaning that we're getting a plus 0.75% for those that qualify, and then basically plus 0.25% for those non-qualifying. But positive statutory updates minus that expiring two and a half patch equals decline, right? So we're losing money. So I think that's important to understand just because I think, you know, the headlines say one thing, but the reality is different. So this is not a policy, a new policy cut. It is predictable with something that we knew was coming if you were paying attention to the legislation, because it was that two and a half percent patch. Now, why the headline percentage still does not tell you your practice's actual impact? And this is where we're talking about the conversion factor. So the conversion factor is one of three inputs into your payments. So the others are relative value units and basically a geographic adjustment. So basically, CMS is changing RVUs for many codes at the same time. It changes the conversion factor. Hot mess, right? Very annoying. And I know this is confusing. But basically, a code within an RVU increase partly offsets the conversion factor decline. And a code with an RVU decrease is going to compound that loss. So your actual change per code could be much larger or smaller than that, you know, 1.7%. So what am I asking you to do? All of this is say you need to pull your top 20 Medicare codes by allowed dollars and then check each one against the proposed new 2027 fee schedule as you prepare for your budget for 2027. So this is a way for you to look at your total volume of Medicare, your top 20 CPT codes, what you're getting paid today, and then what the proposed 2027 fee schedule is for your location, so that you can understand is there going to be a decline and how much is that decline across your practice? And then obviously understanding if you are part of the ACO or not, and obviously you would know that. So being able to just understand what that gap is. So obviously the gap compounds permanently from here on. So really important for you to understand where that gap is for your practice and then how that's going to impact revenue moving forward. So, in basically in 10 years with no congressional action, that compounded gap roughly equaled about $2 per RBU. So at 5,000 annual work RBUs, it's going to be $10,000 a year difference per physician. And that's before there were any shared savings payments. All right. So I know in general, not great news. I guess the one good news about Medicare, like I said, is they they do tend to pay quickly. They pay on time. Their rules are clear. I think important for us to be commenting if you haven't already. Again, you just have a couple days. So I'm going to shift gears just a touch because I do want to talk about the complex visit add-on. That is the G2211 code. CMS implemented this code in 2024 as an add-on code for office visits that are basically part of ongoing care. And it pays a flat amount of about $16 on top of the EMM code in 2026. Now, what CMS is proposing for 2027 is that they delete that as a standalone code and replace it with two modifiers. So mod one, which is its placeholder name, is gonna pay 16% of the base ENM code payment. And that's available to any clinician who's really billing that G2211 now. Mod two, again, placeholder name. So just I'm just talking modifier one and two, pays 32% of the base EM code payment. And that's available only to a clinician, again, in that Medicare shared savings program or ACO or the LEED model ACO. Again, you would know if you're in these, and we can talk about those on a different day. I'm actually having another guest come on that is just gonna talk a little bit about all of the Alphabet Soup and the different types of organization. So if you aren't already subscribed, would love for you to subscribe and leave a review for our podcast. It really helps us be able to get in front of more physicians who can get this information. All right, back to our bottom modifiers. So both of these modifiers are voluntary. And so I'm gonna call them mod one and two, just like I just did. But modifier two can be billed for any Medicare patient, not just an ACO-assigned beneficiary. But 16% of a visit that pays $100 is gonna be $16. So that's basically the exact same amount as the current G221 flat rate. So basically $100 is the breakeven point. So if your qualifying visits pay less than $100, the new modifier basically is gonna pay you less than the code it did as of today. Now, if you are billing something that's over $100 and you're adding that code, you're gonna be getting more. So a primary care practice with say a high level three established visits, which are paying, you know, under that $100 limit, we'll see a reduction in that specific code. Now, a practice billing billing level four, level five visits, which are paying over that $100 threshold, are gonna see an increase again, because it's a percentage, right? It's not a flat rate. So basically understanding where you're at from a level three, level four, level five. And again, we did do a code webinar, which was going over some of those details, really just making sure that we really understand how to document for that, which can be found on our website. So it just depends entirely on your visit mix, on how that G2211 code moving over to modifiers is gonna impact your practice. So more ACO layers, which that basically a physician in the shared savings program in an ACO that bills that modifier to and will receive 32% of the base EM. So again, identical visit by a physician outside of an ACO is only gonna get 16%. So they're really pushing this, these ACO organizations. So same documentation, same patient, same service, and a double payment depending on if you're part of those shared saving programs or not. So basically, this is the clearest single illustration of where Medicare physician payment is headed. All right, let's talk about the RVU implication. All right, so modifiers do not carry work RVUs. So G2211 does or it did, right, in 2026. So practices that build physician compensations around RVU production will need to revisit their models if this is a high used code in your practice because revenue will shift for your physicians. Because again, that modifier one or two, again, my names, the revenue will not flow through the RVU-based calculation. Again, it's going to be that percentage of the codes that you're billing. All right, shifting gears one more time. Office visits billed on the same date as a procedure. This is a huge information. And I think it's been all over social media. This is probably the one you're most familiar with. And we certainly recognize with, you know, we have a lot of practices that are ortho, that are allergy, that are OBGYN. So we recognize that you can have procedures and ENMs on the same day. But what we're seeing here is a huge change in those modifier 25 codes, and really important for you to recognize that this could be a huge change. So basically, what CMS is proposing is when a physician or a physician in the same group builds a separate identifiable office visit on the same day as a 10 or 90-day global procedure, the highest priced service is paid at 100%, all others 50%. So the critical distinction most coverage is getting wrong is that this is not a documentation problem. So better documentation does not restore that 50%. Basically, modifier 25 standards still apply in full, right? So if the visit does not meet the standard for a separately, significantly identifiable service, obviously don't bill for it. That hasn't changed. We talked about that before. But what has changed is even if it's perfectly documented, perfectly compliant EM visit still gets paid at 50% under the proposed rule when it falls on a procedure day. So you cannot code your way out of this. And definitely is probably the biggest impact from a revenue perspective. So CMS is also seeking comment on whether to extend this policy to inpatient ENM visits. The current proposal is office and outpatient only, but that could widen in this final rule. So obviously, dermatology, orthopedi, urology, ENT, GI, you know, primary care with in-office procedures. Basically, the more EM visits build alongside procedures, the larger the exposure. So things you can do, you can run a report for EM visits and procedures build the same day and look at that volume because obviously that pair is going to determine again, you're going to look at that higher priced value and then recalculate what the lower priced service pays again at that 50% level. So that is definitely going to be an exposure risk, should this go through. All right, another important thing to recognize is remote monitoring programs. There are four basically connected different types of changes that are coming. The first change is that there's an established patient requirement that is extended to remote therapeutic monitoring. This was already required for remote patient monitoring. And rationale was a CMS, basically cited OIG audits finding billing for patients with no established clinical relationship. A separately reportable initiating visit is required before monitoring begins for either RPM or RTM. So now these can be in-person, they can be telehealth. Clinical staff performing the monitoring must be direct employees of the billing practice. So of the practice itself. So that is a difference change because in the past you could have clinical staff that were unrelated to the office doing a lot of this work. And now they need to be direct employees of the practice. They cannot be a vendor's employees, not contractors. Staff do not necessarily need to be at the practice, but must be on the practice payroll under general supervisions. So practices may still purchase software and technology from outside vendors, but the restriction is on the actual staff who are doing the monitoring. Now, of course, we're also seeing lower proposed payment values and a request for comment on consolidating those 17 existing codes basically into four new G codes. So this direct employment requirement is basically an idea that ends business models that we've seen. So if your remote monitoring revenue depends on a third-party vendor whose employees do not, who are whose employees actually do the monitoring, then you need to plan your 2027 budget to either bring those staff on or just kill the program altogether. Obviously, this is a challenge, especially if you have a low volume and you're trying to staff this with part-time, you know, staff and you've been using a vendor for that, that's going to really impact this. So if the rule is finalized, that arrangement is not going to be payable by Medicare. So obviously call your vendors, ask specifically what is their plan. And hopefully this does not go through, but I think planning for it just in case. So obviously important to touch base with those vendors and hopefully those vendors already have plans in place. Now, we've talked about OB code changes ad nauseum. I think we did five podcasts plus a webinar. So I'm not going to go into those in detail, but you guys know that those are changing. If you're an OB practice, please, please, please go back, listen to those podcasts, reach out. And we're happy to sit with you and go through those changes one-on-one, go through what your numbers look like and what the plan is for 2027. All right. So last thing today, this episode is getting released Friday, September 11th. So comment period closes three full days, September 14th. So please make sure that you are sending in comments and staying on top of these changes. The final rule is expected around November 1st. So let's take and pay attention to when those things come out. We'll probably do another another episode on those changes. Rules take effect in January, January 1st. So we've got, you know, a few months between now and then. So it's important to follow these rules, make comments, and then build a plan so that you are prepared for 2027. All right. So a couple notes. So if your practice is fee for service with no ACO arrangement, you are basically on that non-QP conversion factor permanently under current law. And again, that's that $32.84 with that 2.5% patch that expired. And the your permanent update rate is basically, you know, a quarter of a percent per year going forward. So important to check CMS for shared savings program ACOs that are active within your market. Again, we're gonna have someone on the podcast in a couple of weeks to go over some of this information. So that is one mechanism to look out. If you are looking for some help and support and kind of phasing this out, head on over to info at natrevmd.com. That's our email and shoot, shoot us an email and we can connect you with folks that we know in the space. So just so you know, the phase one application window. So if you were starting a new ACO, has closed, that closed in June. And so basically it's too late to start a new ACO. But if joining an existing ACO participant list is something you're interested in, then you can do that. I think phase two window uh closes at the end of October. So technically still possible, but I would get moving on that immediately. Now, most practices are going to be kind of left to do this in 2028 for that January one. So again, those applications start in June. And then of course, you know, talk to a Medicare advisor or your specialty society ACO program before the end of 26 so that you can get that cooking if that's what your interest is. So if your practice is already in one of those shared saving program ACOs, then you are on that higher $33.17 proposed list for 2027. And again, that modifier, that G2211 modifier two, that the code is going away and that modifier is going to be left, will give you a 32% of the base EM code, which will be available to you versus that 16%. So very important to start looking if you're doing that code. Again, this is all a telltale sign that they're pushing towards those AC. All right. So recommendations in terms of what to take away from this. So first, sit down with your team, look at your top 20 Medicare codes and compare those to the 2027 fee schedules so that you can understand what that potential impact for 2027 may be and really start thinking through whether or not you are doing that G2211 code, looking at that, you know, $16 flat rate down to that 16%. And again, if you're doing a lot of levels, you know, four and five, this may be an actual bonus for you. If you're doing a lot of level threes, that may change your revenue in a negative, in a negative way. So important to recognize some of that information. And then how many days last year did you bill an visit with a global procedure? That's gonna be the other thing you're gonna want to start to plan out. What was that volume? Because again, that second code is gonna have that, that lower price code is gonna be cut by 50%. And so again, these are all what ifs. It's not final rule yet, but important for you to start thinking through this. Now, the other thing is understanding if you're in a qualifying advanced APM program, like I said before, otherwise, you know, if you're interested in that, start looking around because that window is closing. So, as always, if you have enjoyed this podcast, please share it with a friend. We are a full service medical billing company. I'm a physician by background. And if you are looking for a new team, we would love to work with you. Head on over to our website and we have a free metric audit. So we sit down, we look at your metrics, we understand what's going on, we tell you where there is a gap, if it makes sense to make a change or not. I will not tell you to make a change if your metrics look good and you've got a good partner in hand. If you don't have the right partner, if communication is bad, if you don't know what's going on with your metrics, now's the time before we get into 2027 to sit down and go over what those look like. So you are welcome to go to the contact us, schedule a meeting with myself, and I'm happy to sit down with you and understand what's going on with your practice. So look forward to hearing from you guys. And again, thanks so much for listening.