Modifier 25 in 2027: what Medicare’s proposed 50% cut looks like in dollars

If your practice sees Medicare patients, you bill this combination all the time. A patient comes in for knee pain, you evaluate them and inject the knee. A child has warts, you examine and freeze them. Today Medicare pays the visit and the procedure in full, as long as the visit is separately identifiable and carries modifier 25.

The CY 2027 Physician Fee Schedule proposed rule would change the payment for that day. The billing rule stays the same. The check gets smaller.

What CMS actually proposed

The wording in the rule is short. When a separately identifiable office or outpatient E/M visit is billed on the same day as a procedure with a 0-day, 10-day or 90-day global period, by the same physician or another physician in the same group practice:

• the highest-paid service that day is paid at 100%
• every other procedure or E/M visit that day is paid at 50%

Two details get lost in most summaries.

The cut does not always land on the visit. It lands on whatever pays less. If the procedure is worth more than the visit, the visit is halved. If the visit is worth more, the procedure is halved.

The 50% applies to the whole payment for that line. In CMS’s own example, a shave removal (11301) stays at full value, while a second shave removal (11300) and a 99212 visit both drop to half of their total RVUs.

CMS’s reasoning is that the two services share work: check-in, history, the exam room, staff time. It says Medicare is "likely duplicating payment" today. CMS floated the same idea for 2019 and dropped it after pushback.

Three everyday examples, in dollars

These use 2026 national Medicare amounts for services in the office (conversion factor $33.4009). Your locality will be a little higher or lower, and 2027 rates will shift again, but the proportions hold.

That is 17% to 23% off the day’s payment, for the same work and the same documentation. One claim does not hurt much. The volume does. A practice with 40 of these Medicare visits a month, losing about $34 on each, is down roughly $16,500 over a year.

Open this calculator on its own page →

Who feels it most

CMS names otolaryngology, dermatology and podiatry as the specialties with the biggest hit, followed by hand surgery, physician assistants and colon and rectal surgery. An outside analysis by Milliman, using 2024 claims, puts the total at about $969 million a year, with dermatology carrying roughly $291 million of it.

Primary care is not on CMS’s list, and there is a reason. The money taken out is spread back across the rest of the fee schedule, so specialties that mostly bill visits come out slightly ahead on paper. That is an average. A family medicine, pediatric or urgent care office that does a lot of injections, lesion work, earwax removals and laceration repairs will not look like the average.

What does not change

• Modifier 25 still goes on the claim. The proposal does not touch the billing or documentation rules. The visit still has to be significant and separately identifiable from the procedure.
• Only global-period procedures are named. The rule text covers procedures with 0-, 10- and 90-day globals. It does not mention services without a global period, such as an EKG, an X-ray or an injection administration code. CMS does not list exclusions either, so treat that as a reading of the text until the final rule confirms it.
• This is Medicare Part B. Commercial plans and Medicare Advantage plans set their own policies. Contracts written as a percentage of Medicare deserve a careful read.

Five things to do before January 1

1. Count your exposure. Pull 12 months of Medicare claims where an office visit with modifier 25 shares a date of service with a 0-, 10- or 90-day global procedure. Group them by code pair.
2. Price your top five pairs both ways. For each pair, find which line pays less and take half of it. Five pairs usually cover most of the money.
3. Tighten modifier 25 documentation now. When payment for a code changes, audits tend to follow. The note should show a problem that was evaluated beyond the usual pre-procedure work.
4. Do not reschedule procedures just to protect payment. Bringing a patient back on another day only to bill both services in full is a compliance risk and a burden on the patient. Let the clinical need decide the schedule.
5. Read your payer contracts. Look for any language that ties rates or payment policy to Medicare, and ask your larger payers whether they plan to follow CMS.

What could still change

CMS asked for comments on a smaller reduction, "such as 25 percent", and on whether to extend the policy to other visits, such as inpatient E/M. The AMA and most specialty societies asked CMS to drop the proposal entirely, arguing there is no evidence for a cut this size. So the final rule could be 50%, 25%, a narrower version, or nothing.

That uncertainty is the reason to run your numbers now. If it is finalized, you will have about two months between the final rule and the first affected claim.

Common questions

Is the modifier 25 cut final?

No. It is a proposal in the CY 2027 Medicare Physician Fee Schedule proposed rule (CMS-1848-P), published July 16, 2026. The comment period closed September 14, 2026. The AMA expects the final rule by November 1. CMS can finalize it, change it or drop it.

Does the 50% always come off the office visit?

No. Medicare would pay the highest-paid service at 100% and the others at 50%. If the procedure pays more than the visit, the visit is the one that gets halved.

Which procedures are included?

Procedures with a 0-day, 10-day or 90-day global period, when the same physician or another physician in the same group practice also bills a separately identifiable office or outpatient E/M visit that day.

Do I still need modifier 25 and the same documentation?

Yes. The proposal changes the payment, not the billing rule. The visit still has to be significant and separately identifiable, and it is still reported with modifier 25.

Does this apply to commercial insurance?

The proposal is for Medicare Part B. Commercial plans and Medicare Advantage plans set their own payment policies, and some contracts are tied to Medicare rates, so check your contract language.

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Sources: CMS, CY 2027 Physician Fee Schedule proposed rule (CMS-1848-P), Federal Register, July 16, 2026 · CMS fact sheet, July 14, 2026 · AMA summary · Milliman impact analysis, September 14, 2026. Dollar examples use CY 2026 national non-facility amounts; check your own rates in the CMS fee schedule look-up tool. This article is general information, not coding or legal advice.