Modifier 25 in 2027: What Medicare's Proposed Change Actually Does
The conversion-factor reduction everyone is watching is not the biggest revenue threat in the CY 2027 Medicare Physician Fee Schedule proposed rule. The more immediate concern is CMS’s proposal to pay the second same-day service at 50 percent when a separately billable office/outpatient E/M visit is furnished with a 0-, 10-, or 90-day global procedure.
That is my contrarian position, and it rests on how the proposed policy would interact with the way procedure-based specialties actually schedule and bill.
In dermatology, gastroenterology, orthopedics, pain management, ophthalmology, and other specialties, the combination of an E/M service and a procedure on the same date is not unusual. It is often the natural result of a patient arriving with a new concern, requiring evaluation, and then receiving a procedure during the same encounter.
CMS released the proposed rule on July 14, 2026. It is not final Medicare policy. The CMS public comment period closed on September 14, 2026. The final rule is expected around November 1, 2026, with proposed changes generally intended to take effect January 1, 2027, if finalized.
Still, practices should not wait until the final rule to understand the possible exposure.
What CMS Is Proposing for Modifier -25
CMS proposes changing payment when:
- A separately identifiable office/outpatient E/M visit is reported with Modifier -25;
- The same physician, or another physician in the same group practice, furnishes a 0-, 10-, or 90-day global procedure;
- Both services occur for the same patient on the same date of service.
Under the proposal, Medicare would pay the highest-value service, whether the procedure or the E/M visit, at 100 percent. Every other surgical procedure or E/M service furnished that day would be paid at 50 percent.
If multiple procedures are reported, only the single highest-value service would receive full payment. The remaining qualifying services would be reduced.
CMS is not proposing to eliminate Modifier -25 or redefine when it may be reported. The modifier would still identify a significant, separately identifiable E/M service. The proposed change is in payment methodology.
The AMA has stated that it will vigorously oppose the policy, arguing that many procedure values already account for the work and resources that are above and beyond the E/M service. The AMA’s 2027 Medicare Physician Fee Schedule proposed rule summary provides additional detail.
A practical example
Imagine an illustrative dermatology encounter:
- Office/outpatient E/M service: $120 allowed amount
- Minor procedure with a global period: $300 allowed amount
- Modifier -25 appropriately reported on the E/M
Under the proposal, the $300 procedure would remain at 100 percent, while the $120 E/M service would be reduced to $60. That is a $60 reduction for one encounter.
At 100 similar encounters, the difference would be $6,000. At higher volume, the impact can become material very quickly.
The opposite can also occur. If the E/M service is the higher-value service, the procedure could become the service paid at 50 percent.
The point is not to alter medically appropriate care or discourage legitimate reporting. The point is to identify how frequently this claim pattern occurs in your practice and model the possible financial effect.
A Common Specialty-Practice Scenario
A common scenario in procedure-based specialties looks like this:
A patient is scheduled for a procedure. During the encounter, the patient raises a new symptom or an unrelated problem. The physician performs additional assessment and medical decision-making. The clinical note contains both the procedure documentation and a separate evaluation of the new issue. The claim then includes the procedure and an E/M service with Modifier -25.
That pattern can be entirely appropriate under current rules when the documentation supports a significant, separately identifiable E/M service.
The risk arises when the claim is managed line by line instead of analyzing the entire encounter. Teams ask, “Was Modifier -25 attached?” They do not always ask:
- What prompted the additional evaluation?
- What work was separate from the usual pre-procedure assessment?
- Is the medical decision-making clearly documented?
- Does the diagnosis support the E/M service?
- Which service would be paid at 100 percent under the proposed methodology?
- How many similar claims are submitted each month?
This is where revenue integrity becomes more than a billing function. It requires connecting clinical documentation, coding logic, payer policy, charge capture, and financial forecasting.
The E/M principles behind Modifier 25 have not changed: the visit must be significant and separately identifiable. What is proposed to change is how that second service gets paid — which is why the documentation quality matters more, not less.
Where Practices Can Get Caught Off Guard
Where practices can get caught off guard: treating a proposed rule as though nothing needs attention until January.
That is not how revenue-cycle preparation works.
By the time a final rule is published, your practice may need to update fee schedules, claim edits, charge capture instructions, EHR templates, coder education, physician education, and reporting dashboards. Waiting until the effective date compresses all of that work into the most difficult part of the year.
A proposed rule gives you an opportunity to do two things early:
- Understand the potential policy.
- Build a measured implementation plan without overreacting.
You do not need to change current billing before a proposal becomes final. You do need to know which claims, specialties, and workflows could be affected.
The Other CY 2027 Proposals That Matter
Modifier -25 is the centerpiece, but the rule contains several additional provisions that belong in your payment and operations planning.
Conversion factors
CMS proposes reducing the conversion factor by 1.19 percent for qualifying APM participants, to $33.1693, and by 1.68 percent for non-qualifying APM participants, to $32.8409.
The proposed figures reflect the expiration of the temporary 2.5 percent CY 2026 update and a 0.53 percent budget-neutrality adjustment, and these are proposed amounts subject to change in the final rule.
That reduction matters, but it generally affects payment across services. The Modifier -25 proposal may target a concentrated, recurring claim pattern in your highest-volume procedure days.
CMS Proposes Replacing G2211 With MOD1 and MOD2
CMS proposes replacing the E/M visit-complexity add-on code G2211 with a modifier structure. MOD1 and MOD2 are placeholder modifier names used in the proposed rule and may be renamed if finalized.
- MOD1 would increase the associated E/M base code by 16 percent;
- MOD2 would be available to qualifying practitioners in Medicare Shared Savings Program ACOs or the LEAD Model ACO, and would increase the E/M base code by 32 percent.
Practices should review current G2211 usage, identify which specialties and visit types rely on it, and determine whether future EHR and billing workflows can support the proposed modifier structure if finalized.
Remote monitoring changes
CMS proposes several changes to remote physiologic monitoring and remote therapy monitoring, including:
- Requiring RTM services for established patients;
- Requiring a separately reportable initiating visit;
- Limiting payment to services performed by clinical staff employed by the practice rather than contractors;
- Reducing payment for several RPM and RTM services;
- Considering consolidation of current RPM and RTM CPT codes into four HCPCS G-codes. CMS is seeking comment on this consolidation rather than presenting it as a settled proposal, so treat it as an open question in the rule.
Any practice using remote monitoring should review vendor arrangements, employment structures, initiating-visit workflows, device documentation, and monthly charge capture.
Practice expense methodology
CMS proposes to allocate indirect practice expense using both work RVUs and clinical labor, except for 10- and 90-day global codes. CMS also proposes phasing out the indirect practice cost index over two years and adding a practice-expense stabilizer that would limit annual change to 5 percent for applicable services.
This may create specialty-level redistribution. Do not assume that a 5 percent stabilizer means every service, specialty, or setting will experience only a 5 percent total payment change. The conversion factor, RVUs, site of service, and other policies interact.
New services
CMS also proposes new services involving shared medical visits, advance care planning by clinical staff through GACP1 and GACP2, vaccine adverse-effects management, and health coaches.
These proposals may create new opportunities, but new billable services require more than a code in the system. They require defined clinical workflows, supervision rules, documentation standards, eligibility checks, and charge-capture ownership.
My Action Plan for Physician Practices
Here is what I recommend now as part of disciplined revenue integrity work:
1. Model your exposure
Pull at least 12 months of data and identify:
- Same-day E/M plus procedure volume;
- Procedures with 0-, 10-, and 90-day global periods;
- Modifier -25 frequency by provider and specialty;
- Average allowed amounts for both service categories;
- The higher-value service in each encounter;
- Potential revenue exposure if the lower-value service were paid at 50 percent.
This is a modeling exercise: not a prediction of final payment.
2. Review G2211 usage
Determine where G2211 is currently reported, how often it is denied, and which providers or specialties use it most frequently. Then identify the operational changes that would be needed if MOD1 and MOD2 are finalized.
3. Monitor the final rule expected around November 1, 2026
Do not implement a proposed payment policy as though it were final. Monitor the final rule, CMS transmittals, Medicare Administrative Contractor guidance, and payer-specific instructions.
4. Prepare your updates once the final rule lands
If the proposal is finalized, update fee schedules, claim edits, charge instructions, and education. Your charge capture and EHR workflows may also need updates before January 1. Build a cross-functional workgroup involving physician leaders, coders, billers, compliance staff, finance, and EHR representatives.
A focused review can help identify where documentation, coding, payment policy, and reporting are misaligned before the new year begins.
The Bottom Line
The CY 2027 proposed rule is not just a conversion-factor story. It is a payment-design story.
The proposed 50 percent payment for additional same-day services could affect practices that have built their workflows around appropriate evaluation and procedure encounters. At the same time, G2211, remote monitoring, practice expense methodology, and new service codes create additional implementation questions.
My goal is not to create fear or sell unnecessary work. My focus is on helping doctors and healthcare organizations protect the revenue they have legitimately earned while maintaining accurate, defensible billing practices.
That is the foundation of physician-led revenue integrity: understand the rule, measure the pattern, document the work, and prepare before the policy becomes operational.
If you want help assessing how this proposal could affect your practice, schedule a consultation.
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Dr. Dreama Sloan-Kelly, MD, CCS, CPC / CEO/President, Dr. Sloan-Kelly Consulting LLC
Sources
- AMA 2027 Medicare Physician Fee Schedule proposed rule summary
- CMS CY 2027 Physician Fee Schedule proposed rule fact sheet
Rule: Never wait for a final rule to begin measuring your exposure.