Medicare Finalizes 20% Pay Cut For Same-Day Office Visit And Minor Procedure Billing

The Centers for Medicare & Medicaid Services (CMS), which runs Medicare, finalized its 2027 physician fee schedule, cutting payment by 20% for the lower-cost service when an office visit and a minor procedure happen on the same day. The final rule, effective Jan. 1, 2027, also targets what the agency calls a payment loophole worth an estimated $2.38 billion over the next decade.

Curbing duplicate billing

CMS said the 20% reduction addresses duplicated payment for clinical work already counted in the procedure's valuation. The agency also said the rule corrects an incentive payment loophole, preventing an estimated $2.38 billion in unintended windfall payments over the next decade.

CMS is also trimming outdated steps from its rate-setting formula, which it said will add simplicity and transparency.

CMS Administrator Dr. Mehmet Oz said fee-for-service payment has "rewarded volume over value" and that the rule protects taxpayers by "ending duplicate billing and closing costly loopholes." HHS Secretary Robert F. Kennedy, Jr. said the rule puts prevention and primary care at the center of Medicare.

ACOs can waive patient cost-sharing

Starting April 1, 2027, approved accountable care organizations in the Medicare Shared Savings Program may reduce or eliminate Part B cost-sharing for many items and services for assigned beneficiaries, CMS said.

The agency said that in performance year 2024, 75% of the 476 participating ACOs earned shared savings totaling $4.1 billion. It said they also generated net Trust Fund savings of approximately $2.5 billion against projected spending benchmarks, and that the program has produced savings for eight consecutive performance years.

The final rule raises shared savings rates for eligible ACOs, adds incentives for first-time participants and sets more predictable spending targets. It also simplifies electronic health record reporting and streamlines patient notice requirements.

Quality reporting and prevention codes

CMS will sunset the traditional Merit-based Incentive Payment System reporting option beginning with the CY 2031 performance period. Clinicians have through CY 2030 to move to MIPS Value Pathways, which CMS said already cover approximately 98% of clinicians, or to Advanced Alternative Payment Models. That is two more years of transition than the proposed rule allowed.

The rule adds three Value Pathways for diabetes, hypertension and hospitalists, and requires clinicians to report at least one specialty-specific Core Measure from CY 2027. It also creates two Advance Care Planning billing codes and codifies noncitizen Medicare eligibility criteria set by the Working Families Tax Cuts legislation.

On prevention, CMS is creating payment pathways for health and well-being coaching, dedicated billing for shared medical appointments, higher valuations for smoking cessation and behavioral health assessments, and separate billing for clinical time spent on vaccine adverse effects.

The Ambulatory Specialty Model, which holds specialists accountable for the quality and cost of care for heart failure and low back pain, launches Jan. 1, the same day the fee schedule takes effect.

Sources

• CMS Finalizes CY 2027 Physician Fee Schedule to Shift from Sick Care to Healthcare and Curb Waste — Centers for Medicare & Medicaid Services
• Medicare spends more on hospices owned by private equity firms, study finds | Healthcare Dive — healthcaredive.com
• Medicare Fraud: Has Your Doctor Been Flagged? | Kiplinger — kiplinger.com
• The 2026 election wins could allow Democrats to tackle healthcare costs. What can they do? | Vox — vox.com
• CMS Administrator Dr. Mehmet Oz on healthcare costs, fraud — CNBC
• Health Plan Unlocks More Than $10M in Savings in Six Months Using Cohere Health's AI-Powered Pre-Payment Review — prnewswire.com