PAI Letter to CMS on the Proposed 2027 MPFS Urging Physician Payment Reforms

PAI submitted formal comments on the CY 2027 Medicare Physician Fee Schedule Proposed Rule urging CMS to address structural issues that negatively impact independent physician practices. 

For CY 2027, physicians face a net Medicare payment cut despite a nominally positive statutory update. The conversion factor will fall to $33.1693 for qualifying Alternative Payment Model participants and $32.8409 for non-qualifying participants, reductions of 1.19% and 1.68% respectively, because the small Centers for Medicare and Medicaid Services (CMS) increases are more than offset by the expiration of a temporary 2.50% conversion factor increase Congress provided for CY 2026.

PAI's Five Top-Line Recommendations

1. Enact a permanent, inflation-indexed payment update. PAI urged CMS to work with Congress to tie the Physician Fee Schedule to the Medicare Economic Index (MEI) through a statutorily guaranteed annual update, rather than relying on temporary, expiring patches like the one that lapsed this year.
2. Pursue comprehensive site-neutral payment reform. PAI asked CMS to treat the Request for Information on the facility and non-facility practice expense differential as a starting point for redirecting Medicare dollars away from higher-cost hospital settings and toward office-based, independent practice care.
3. Withdraw the proposed 50% Modifier-25 payment reduction. CMS proposed cutting payment in half when a separately identifiable E/M visit and a minor procedure are billed on the same day. PAI argues CMS sufficiently justified the proposal and warned the reduced payment would fall below the cost of clinical supplies alone, before accounting for any physician work at all.
4. Calibrate new modifiers, RVU methodologies, and program-integrity reforms so they don't disproportionately burden small, independent, and rural practices that lack the administrative infrastructure of larger corporate systems.
5. Preserve the physician-led CPT coding and RUC valuation process. CMS solicited comment on alternatives such as shifting toward a diagnosis-based (ICD-10-PCS) coding and grouping system. PAI opposes this shift, arguing CPT and ICD-10 systems serve fundamentally different functions, and that practicing physicians and organized medicine should retain a meaningful role in how their own services are defined and valued.

See full letter here