CY 2027 Physician Fee Schedule Final Rule: What PALTC Clinicians Need to Know

The Centers for Medicare & Medicaid Services (CMS) released the CY 2027 Medicare Physician Fee Schedule (PFS) final rule, which takes effect January 1, 2027. The headline for PALTmed members is a win: CMS finalized equal payment for nursing facility visits, whether or not a resident is in a Part A stay. The rule also brings a lower conversion factor than proposed, keeps nursing facility visits out of the new complexity add-on, and changes how advance care planning is billed.

PALTmed submitted detailed comments on the proposed rule in September. Below is CMS' response to the issues PALTmed raised, along with other changes post-acute and long-term care (PALTC) clinicians need to know.

Nursing facility visits will be paid the same regardless of Part A status

CMS finalized its proposal to set the facility practice expense value equal to the non-facility value for nursing facility visit codes 99304 through 99310, 99315, and 99316. Starting January 1, a visit to a skilled nursing facility resident in a Part A stay (place of service 31) will pay the same as a visit to a nursing facility resident (place of service 32).

This fixes a gap created in the CY 2026 rule. That rule cut the indirect practice expense CMS pays for facility-based services, so the same clinician seeing the same patient in the same bed was paid less when the stay was covered under Part A. PALTmed opposed that change in its CY 2026 comments; worked with members, coalition partners, and congressional champions to make the case for a fix; and urged CMS in its CY 2027 comments to finalize the correction as proposed.

In the final rule, CMS agreed that resource costs "would not be expected to differ based on whether the patient is in a Part A stay" and reported that commenters' support was unanimous.

The conversion factor is lower than CMS proposed

The final CY 2027 conversion factor is $32.6286 for most clinicians, a 2.31 percent cut from 2026. That is deeper than the 1.68 percent cut in the proposed rule.

The main driver is the expiration of the temporary 2.5 percent increase Congress provided for 2026. The final rule also applies a small negative budget neutrality adjustment (-0.12 percent), where the proposed rule had a positive one (+0.53 percent).

PALTmed's comments noted that payments are declining while CMS projects that practice costs, measured by the Medicare Economic Index, will rise 2.5 percent in 2027. PALTmed urged CMS to support a permanent, annual, inflation-based update to physician payment. That fix requires approval by Congress, and it remains one of PALTmed's top legislative priorities.

Nursing facility visits are still left out of the complexity add-on

CMS finalized two new modifiers to replace HCPCS code G2211, the E/M visit complexity add-on. Modifier B1 adds 16 percent to the payment for a qualifying E/M visit. Modifier B2 adds 32 percent but is limited to clinicians in a Shared Savings Program ACO or the LEAD Model. Both apply only to office and outpatient visits and home or residence visits, including assisted living. Nursing facility visit codes 99304 through 99316 are excluded.

PALTmed has pressed CMS to include nursing facility visits since G2211 was first proposed. This year's comments argued that the nursing facility is the site of primary care for its residents, that nursing facility visits are paid under Part B and fall outside consolidated billing, and that the exclusion is the same kind of site-based payment difference CMS just corrected for POS 31 and POS 32.

CMS kept the exclusion. Its reasoning was that E/M visits in other settings and services paid under a prospective payment system already account for this kind of complexity. That does not describe nursing facility visits, which are paid under the PFS. CMS said it "may consider changes to this policy in future rulemaking," and PALTmed will continue to make the case.

Advance care planning billing changes

CMS finalized two new codes for advance care planning (ACP) furnished by clinical staff under the direct supervision of the billing practitioner: G0572 (first 20 minutes) and G0573 (each additional 20 minutes). CPT codes 99497 and 99498 are now limited to time the billing practitioner personally spends. Both sets of codes can be billed on the same day when each meets its own time threshold.

Other details clinicians should know:

• Direct supervision can be met through real-time audio and video.
• No separate initiating visit is required when the billing practitioner performs part of the ACP service.
• G0572 and G0573 were added to the Medicare telehealth list.
• The new codes count as primary care services for Shared Savings Program ACO assignment.

PALTmed's comments stressed that ACP for nursing facility residents is a clinician-led conversation about prognosis and goals of care. PALTmed asked CMS to clarify how the new codes apply in nursing facilities, where the social workers and nurses who support these conversations often work for the facility rather than the billing practitioner. CMS' only response on this point was that "consolidated billing rules apply to services furnished by clinical staff in institutional settings." That leaves open questions for nursing facility practices. CMS says it will update its ACP MLN fact sheet "in the near future," and PALTmed will press for clear guidance there. Until then, members should check with their billing staff before using G0572 or G0573 in a nursing facility beginning in 2027.

New telehealth modifiers

Under the Consolidated Appropriations Act of 2026, two new telehealth modifiers are required starting January 1, 2027. Modifier BB applies to telehealth furnished through a virtual platform owned by an entity with which the clinician contracts or pays to use. Modifier BC applies to telehealth services furnished incident to a physician's or practitioner's professional service. The modifiers do not change payment.

PALTmed asked CMS to issue draft guidance early and take comment before finalizing it. CMS instead said guidance will be posted on its telehealth webpage and updated through sub-regulatory guidance. Members should make sure their billing staff is watching for it.

The broader Medicare telehealth flexibilities, including the waiver of rural location and originating site limits, are extended only through December 31, 2027. Keeping them in place after that requires congressional action, and PALTmed continues to push to make them permanent.

Traditional MIPS gets two more years

CMS proposed ending traditional Merit-based Incentive Payment System (MIPS) reporting starting with the 2029 performance year. In the final rule, it delayed that by two years. Traditional MIPS stays available through the 2030 performance year. Starting with the 2031 performance year, traditional MIPS goes away. Clinicians who report via MIPS will have two options: report through a MIPS Value Pathway (MVP), or, if they are part of an ACO or other qualifying payment model, report through that model.

PALTmed voiced concerns about ending traditional MIPS because neither option works well for most nursing facility clinicians. There is no MVP built for nursing facility practice, and few nursing facility clinicians are part of an ACO or payment model that fits their patients yet. Without a pathway that fits, members would be pushed into MVPs designed for office-based internal or family medicine. CMS finalized three new MVPs for 2027: Diabetic Disease, Hypertension, and Hospitalist, the first based on a setting.

Shared Savings Program updates

CMS finalized adding the new ACP codes to the primary care services used to assign patients to ACOs, a change PALTmed supported. On data exchange, PALTmed asked CMS to recognize the barriers long-term care providers face with certified EHR technology. CMS clarified that ACOs do not need every partner organization to use certified technology, and that long-term and post-acute care settings can connect through health information exchanges.

Requests for information: no action yet

The proposed rule included several requests for information on future policy. PALTmed responded to three of them. CMS took no action on any of them in the final rule, but the responses help shape what CMS proposes next year.

Redesigning primary care: PALTmed urged CMS to treat the nursing facility as a primary care site in any redesign of E/M visits, care management codes, or prospective primary care payment. CMS said it will consider comments for future rulemaking.

Community-based palliative care: PALTmed urged CMS not to base eligibility on a certified life expectancy, which would shut out residents with advanced dementia and frailty. CMS' summary showed commenters broadly shared this view. CMS will consider the comments for future rulemaking.

Duplicate testing: PALTmed cautioned against payment edits or recoupment for repeat tests, since nursing facility clinicians often cannot access hospital results and repeat testing is frequently clinically necessary. CMS thanked commenters and proposed no payment edits.

Questions about the final rule can be sent to Gaby Geise, senior manager, government affairs, at ggeise@paltmed.org.