Thursday, July 16, 2026

The proposed 2027 Medicare Physician Fee Schedule includes a 2.26% cut to the conversion factor, dropping it to $32.35 from the current $33.09. CMS attributes the reduction to budget neutrality adjustments required by law, as increased spending on new evaluation and management services for primary care and behavioral health must be offset elsewhere. The rule also proposes a 0.54% update to payment rates for clinical psychologists and licensed clinical social workers. Comments on the proposed rule are due by September 5, 2026, with the final rule expected in November. Track CMS-2026-P-#### for the final policy and model the impact on your practice's Medicare revenue now.

CMS's 2027 Physician Fee Schedule proposed rule includes a significant policy shift: banning third-party vendors from furnishing and billing for remote patient monitoring (RPM) services under Medicare. The agency states RPM services must be provided directly by the billing practitioner or their clinical staff, aiming to curb potential fraud and ensure services are integrated into patient care. This would prohibit the common practice where vendors supply devices, collect data, and bill Medicare on behalf of practices for CPT codes 99453, 99454, 99457, and 99458. If finalized, practices using such vendors must bring RPM operations in-house by January 1, 2027, or cease billing. Audit your current RPM contracts and vendor relationships immediately to assess operational and financial risk.

CMS's proposed 2027 Physician Fee Schedule includes new CPT codes for unattended sleep testing, a move advocated by the American Academy of Sleep Medicine. The codes aim to streamline billing for home sleep apnea tests, which have expanded significantly. Inclusion in the proposed rule is the first step toward establishing Medicare payment rates for these services, potentially improving reimbursement clarity and access for patients needing diagnostic testing outside of sleep labs. The final valuation and payment rates will be determined in the final rule this fall. Sleep medicine and pulmonary practices should monitor the final rule for the specific code descriptors and relative value units to prepare for potential 2027 billing changes.

Sens. Richard Blumenthal (D-Conn.) and Josh Hawley (R-Mo.) launched an investigation into AI-powered care denials by Medicare Advantage insurers. The senators sent letters to UnitedHealthcare, Humana, Aetna, and CVS Health's Aetna unit demanding details on algorithms used for prior authorization and payment denials. The probe follows a series of reports showing MA plans deny up to 13% of skilled nursing and home health claims. Monitor the inquiry; any resulting enforcement could shift MA audit patterns and appeal workflows later this year.

Elevance Health will exit its Washington, D.C. Medicaid plan at the end of 2026, affecting about 12,000 members. The company cited high medical costs in its Q2 earnings report and signaled it is evaluating additional Medicaid exits. This follows a pattern of large insurers scaling back in Medicaid markets where reimbursement fails to cover rising expenses. The move shrinks patient choice and could pressure remaining Medicaid managed care plans to tighten networks or prior auth rules to control costs.