Medicare’s 2027 fee schedule would hit procedure-heavy specialties the hardest
CMS’ proposed 2027 physician fee schedule would trim the Medicare conversion factor for most clinicians who are not qualifying APM participants by 1.68%, pushing it to $32.8409 from $33.4009. Qualifying APM participants would see a smaller 1.19% reduction, to $33.1693. The broad cut is rooted largely in the expiration of the one-time 2.5% increase Congress approved for 2026, but the specialty-level pain goes well beyond that baseline adjustment.
The proposed rule was released July 14, and it quickly became clear that the damage would not be evenly distributed. Wakely estimated the policy would lower average fee schedule reimbursement by about 2.2% for nonqualifying clinicians, with geography shaping the impact as well: the projected drop ranges from 3.6% in Arkansas and Southern Maine to 0.8% in Atlanta. In other words, the same federal policy lands very differently depending on local practice mix and payment environment.
A single coding policy is doing much of the heavy lifting.
Modifier 25 and same-day visits drive the largest specialty cuts
The biggest gap between specialties comes from CMS’ proposal to reduce payment for same-day evaluation and management visits billed with modifier 25 when they occur alongside a 0-, 10- or 90-day global procedure. Under the proposal, only the highest-paid service on that day would be paid in full, while the others would be reimbursed at 50%. That change directly targets a billing pattern that is common in procedure-oriented specialties, where clinicians often evaluate a patient and perform an intervention in the same encounter.
CMS said otolaryngology, dermatology and podiatry would be hit hardest by the modifier 25 policy. The American Medical Association and more than 150 groups have urged CMS to drop the proposal, and more than 10,000 public comments addressed it, with about 85% opposing the change. The volume of opposition reflects a simple clinical reality: many specialties structure care around a single visit that combines assessment, decision-making and immediate procedure-based treatment. Splitting that work into a lower-paid billing model changes the economics of ambulatory care without changing the clinical workload.
Dermatology and otolaryngology face the steepest projected declines
Dermatology is tied for the steepest estimated cut at 9%. The specialty is particularly exposed because visit-plus-procedure encounters are routine, and the modifier 25 policy alone would reduce dermatology’s allowed amounts by about $291 million, or roughly 7% of total fee schedule allowed amounts, based on 2024 utilization, according to a Milliman analysis commissioned by the American Academy of Dermatology Association. A separate Jiro Health analysis of Medicare claims from October 2024 through September 2025 placed dermatology’s share of modeled modifier 25 reductions at $395.4 million, or 44.5% of the total. Milliman estimated dermatology’s share at about 30%, a difference that reflects the data sources and modeling methods used in each analysis.
Otolaryngology is tied with dermatology at a projected 9% reduction. ENT care often combines focused examination with same-day interventions, particularly in office-based procedural settings, which makes the specialty highly sensitive to any policy that discounts the second service in a same-day encounter. For both specialties, the payment problem is not a marginal accounting exercise; it changes how much of the work of ambulatory procedural care CMS recognizes in the fee schedule.
Orthopedics faces a layered hit from conversion factor and RVU changes
Orthopedic surgery is projected to lose about 7% once RVU and coding changes are layered on top of the conversion factor cut. The proposal would also reduce RVUs for total hip and total knee replacement, CPT 27130 and 27447, by 20%, according to comments from the American Association of Hip and Knee Surgeons. Those operations are central to orthopedic practice, so an RVU reduction on two of the field’s most important procedures lands with unusual force.
Wilford Gibson, MD, president of the American Academy of Orthopaedic Surgeons, called the situation one of the most dangerous and severe he has seen in more than 30 years of practice. His warning reflects the downstream effect of payment compression: when reimbursement falls across high-volume procedures, the pressure extends beyond physician income to staffing, access and the viability of complex surgical service lines. In a specialty built around elective but high-resource interventions, even a few percentage points can alter scheduling, recruitment and investment decisions.
Other specialties are not escaping the squeeze
Hand surgery is projected to fall about 5%, with CMS saying the same-day policy would have a smaller effect there than in dermatology, ENT and podiatry. Ophthalmology faces a 3% combined cut, and payment for cataract surgery, CPT 66984, would fall to $444.34, roughly 4% below 2026 levels. Gastroenterology would see about a 3% decline in physician payments for GI endoscopy in ASCs and hospital outpatient departments, according to the American Society for Gastrointestinal Endoscopy.
The specialties with smaller projected declines still face meaningful tightening. Neurosurgery and interventional pain management are each estimated to fall 2%, although Wakely projected neurosurgery among the specialties with the largest decreases. Separately, ASC facility rates for common spine injection codes would also decline under CMS’ proposed ASC payment rule, including CPT 64483 and 64493, which would drop to $466.96 from $485.51. Urology would fall about 2%, according to the American Urological Association.
The final rule and Congress could still reshape the numbers
CMS is expected to finalize the physician fee schedule in November, and Congress could still alter Medicare provisions before federal funding runs out Dec. 11. That timeline matters because the proposed cuts are not yet locked in, yet physician groups are already modeling operational consequences as though they could take effect. Practices with heavy procedural volume are watching the modifier 25 policy most closely, while larger surgical specialties are focused on how RVU changes might compound the conversion factor cut.
The proposed rule leaves one message unmistakable: Medicare is not imposing a uniform reduction. It is redistributing payment pressure toward the specialties that rely most heavily on same-day evaluation and procedure visits, and in some cases toward the operations that define the specialty itself. The final rule will determine whether those projected losses stay on paper or move directly into physician contracts, ambulatory scheduling and patient access.