California medical practices are watching a proposed rule change that could reshape Medicare payment starting in 2027. On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) released its proposed Physician Fee Schedule for the coming year. The 60-day public comment period closed on September 14. A final version is expected this fall. Any approved changes would take effect January 1, 2027.
What’s on the Table for 2027
The rule covers several distinct changes. Not all of them affect every specialty the same way.
The 50% Same-Day Visit Cut
CMS is proposing a 50% payment cut when a physician bills a separately identifiable office visit on the same day as most procedures. The policy would apply to a wider range of procedures than a similar proposal CMS floated and then withdrew back in 2019. Physicians currently use Modifier -25 to show that an E/M service was genuinely separate from a same-day procedure. The American Medical Association (AMA) has pushed back hard on this one. Their argument is straightforward: CMS hasn’t shown evidence to justify a cut this size when an existing review process already handles overlap concerns.
Pay Rates Are Dropping Again
The conversion factor sets what Medicare actually pays for a given service. It’s set to drop in 2027. CMS is proposing a 1.68% decrease for physicians outside a qualifying alternative payment model, and a smaller 1.19% decrease for those inside one. Part of this comes down to timing. A temporary 2.5% payment bump Congress approved for 2026 expires at year’s end, and it won’t carry into 2027 unless Congress acts again.
Maternity Codes Get a Rework
CMS also wants to revise maternity CPT codes, unbundling the current global structure into more granular, individual codes. The goal is a clearer picture of what’s actually being billed during pregnancy and delivery care. Better data here could also help researchers understand what’s driving maternal health outcomes. This change carries extra weight in California medical practices, since the state has one of the largest populations of OB/GYN and maternal-fetal providers in the country, many of which still rely on the existing global billing structure.
Two Quieter Changes Worth Watching
CMS is proposing to remove the indirect practice cost index from how it calculates practice expense payments, phased in over two years. That shift would redistribute payment differently across specialties, depending on how much each currently benefits from that index. Separately, CMS wants to limit remote physiologic and therapeutic monitoring services to established patients only. The agency also wants clinical staff performing that monitoring to be direct employees of the practice, not contractors, which would affect any practice currently using outsourced monitoring staff.
Even where CMS is cutting the underlying payment rates for these monitoring codes, federal rules cap how fast any single cut can phase in, limiting reductions to 19% per year. That means California medical practices relying heavily on remote monitoring revenue would feel this change gradually rather than all at once. This leaves a real window to adjust staffing and billing workflows before the full cut takes hold.
Why California Medical Practices Feel This More
Independent practices absorb payment cuts differently than large hospital-affiliated systems. They don’t have the same scale to spread fixed costs across. California’s overhead, from rent to staffing, already runs higher than the national average in most metro areas. Because of that, a same-day E/M cut or a lower conversion factor lands harder here than it might in a cheaper market.
Additionally, some specialties carry more exposure than others. Dermatology, orthopedics, and primary care practices that perform minor procedures alongside visits face the most direct impact from the proposed E/M cut. Practices with a heavier Medi-Cal patient mix have less room to absorb a rate cut too, since reimbursement on that side is already lower than commercial payer rates. Meanwhile, practices using contracted remote monitoring staff, a common cost-saving arrangement, would need to rethink that setup if the employee-only requirement survives into the final rule.
Nothing’s Locked In Yet
None of the above changes have finalized yet. The comment period only just closed, and CMS often adjusts proposed rules based on public and industry feedback before publishing a final version. It’s worth remembering that CMS scrapped a nearly identical same-day E/M cut back in 2019 after similar pushback, so history suggests this provision isn’t guaranteed to survive in its current form.
And the pushback this time has been significant. The AMA and a coalition of nearly every state and national medical specialty society sent CMS a joint letter urging it to withdraw the same-day E/M cut specifically. The American Hospital Association separately opposed that same provision, along with the practice expense and remote monitoring changes. With that much organized opposition, those provisions in particular will likely look different by the time a final ruling is in place.
Your Move Before the Final Rule Lands
Waiting for the final rule before reacting isn’t much of a strategy. That leaves less than two months to adjust once it’s published. Here are four things that California medical practices can do in the meantime.
1 – Review same-day billing patterns. Practices that regularly bill E/M visits alongside procedures should know exactly how much revenue currently comes from that combination, so any impact isn’t a surprise later.
2 – Build the cut into your 2027 budget. Even a cut under 2% adds up across a full year of claims. Factoring it into early projections now avoids a scramble come January.
3 – Flag contracted remote monitoring arrangements. Practices relying on outside staff for remote monitoring should start evaluating what an employee-only requirement would mean operationally, just in case that provision holds.
4 – Track the final rule directly. CMS is expected to publish it this fall. Practices following it through CMS.gov, or through independent summaries from the American Medical Association and the Healthcare Financial Management Association, will have more lead time than those who wait to see it show up in a remittance.
Where a Billing Partner Earns Their Keep
Regulatory shifts like these are exactly why revenue cycle management works better as an ongoing partnership than a one-time setup. A team actively tracking CMS policy changes can flag how a new modifier rule or conversion factor shift actually affects a specific practice’s claims, instead of leaving that discovery to a denial months down the line.
For California medical practices reassessing their billing and revenue cycle setup heading into 2027, this is a reasonable moment to have that conversation. Our RCM 365 Solutions are built around this kind of ongoing monitoring, not a one-time fix.
The Takeaway for 2027 Planning
The 2027 Medicare Fee Schedule proposal is still just that—a proposal. Even so, the direction it signals is worth planning around now. Tighter scrutiny on same-day billing. A shrinking conversion factor. Continued pressure on independent practices. California medical practices that get ahead of these changes, rather than reacting to them in January, will be in a stronger position no matter what CMS finalizes this fall.
