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CMS finalizes 2027 physician payments

11-09-2026

The American Academy of Dermatology Association (AADA) and Maryland Dermatologic Society appreciate that CMS listened to our concerns and partially addressed the modifier 25 payment policy in the final 2027 Medicare Physician Fee Schedule released today, we are disappointed that CMS chose to move forward with policies that will harm patients.

With all the final payment policies, dermatologists will see a reduction of roughly 6% in 2027, according to our initial estimate.

Thank you to the thousands of members who answered our calls to action on the proposed rule, helping us marshal unprecedented pressure in opposition to CMS’s proposals.

Modifier 25

CMS adjusted its final payment policy for evaluation and management (E/M) services and procedures furnished on the same day. CMS made two major changes:

  • Narrower scope: The payment reduction applies only when a separately identifiable office/outpatient (O/O) E/M visit occurs on the same day as a 0-day global procedure. CMS dropped the proposed inclusion of 10-day and 90-day global procedures.
  • Smaller reduction: When an O/O E/M visit and a procedure are billed on the same day, Medicare will pay 100% for the more expensive service and 80% for the second service. CMS had originally proposed 50% for the second service.

2027 final conversion factors

As mandated by the Medicare Access and CHIP Reauthorization Act (MACRA), there are two different conversion factors to incentivize participation in value-based care. Physicians who are qualifying participants (QPs) in advanced alternative payment models (A-APMs) will receive a higher conversion factor update compared to physicians who are not in A-APMS. The final conversion factors for 2027 are:

Practice expense methodology changes

CMS finalized its proposed changes to the way Medicare calculates practice expense (PE), which covers the costs of running a practice, such as staff, equipment, and supplies. CMS will phase out the Indirect Practice Cost Index (IPCI) over two years and apply a 5% stabilization adjustment intended to limit annual changes to practice expense relative value units (RVUs) for certain codes.

  • Scope: The 5% stabilization adjustment excludes new, revised, newly nationally priced, and revalued codes.
  • Important caveat: Some codes may still see a reduction larger than 5%, because the adjustment applies to only part of the PE RVU calculation.

Next Steps

While we appreciate the adjustments made in the final rule, the final rule does not go far enough. The data we shared during our advocacy are clear: the facts do not support these changes, and these changes will have serious impact on patients’ access to early diagnosis and treatment of skin cancer. Addressing the persistent flaws in the policy will require sustained and unified engagement from all members.

We will continue to speak up to protect our patients. Look for more details from us in the coming days on our next steps and how you can contribute.

Although the political realities of the moment created obstacles to fully achieving our goals, we intend to apply the lessons learned and the relationships we have strengthened. We will also build new, productive relationships with the new Congress as we continue to push for reforms that preserve access to vital skin cancer care.

Advocacy Town Hall – Nov. 9

The AADA is conducting an in-depth analysis of the rule and will communicate further details in the coming days and weeks. Join AADA President Murad Alam on Monday, Nov. 9 at 8 PM ET/ 7 PM CT for an Advocacy Town Hall where he will review the impact of the final rule and review the Academy’s next steps in its advocacy for fair payment. Register today.

For more information, please review the final rule, the CMS press release, the Medicare Physician Fee Schedule fact sheet, and the QPP fact sheet.