Two conversion factors, both proposed to fall

The fee schedule now carries two conversion factors, one for qualifying APM participants and one for everyone else, and for the first time they are moving on different tracks while both head down. If your group treats "the Medicare CF" as a single number in the budget model, CY 2027 is the year that assumption breaks.

Why both numbers drop: the 2026 patch was a loan, not a raise

Congress gave physicians a one year, 2.5% statutory bump for CY 2026. That patch was never baked into the baseline, so when CMS assembled the CY 2027 proposed conversion factors it fell away, and the statutory update mechanics that remain are not large enough to offset the loss. The result is the pattern the numbers show: the QP factor falls 1.19% and the non-QP factor falls 1.68%, a gap of roughly 33 cents per conversion factor dollar between the two tracks.

That divergence matters operationally. QP status is no longer just a MIPS exemption question, it is now a direct pricing question on every Medicare allowable your group models. Two otherwise identical practices billing identical RVUs will be paid at different rates in 2027 depending on whether their clinicians met QP thresholds.

The four dates that run your 2027 Medicare revenue

The budgeting trap: groups priced on the patched 2026 rate

Most FY 2027 budgets were built in spring and summer 2026, when the patched CY 2026 rate was the number on every remittance. If your pro forma carried that rate forward, every Medicare dollar in your January 2027 plan is overstated before the year begins. The exposure compounds through commercial contracts too: any payer agreement priced as a percentage of "the current Medicare Physician Fee Schedule" will reprice automatically on January 1, 2027, so the cut flows through book of business you may think of as insulated from CMS.

The proposed rule is not the final word, CMS can and does move conversion factors between proposal and final. But the direction of the statutory math is fixed: the 2.5% patch dies on December 31, 2026 unless Congress acts again. Prudent groups model the proposed numbers now and treat any improvement in the final rule as upside, not the plan.

Operator checklist: what to do before September 14

1. Reprice January 2027 now. Run your top Medicare volume through both proposed conversion factors, $33.1693 and $32.8409, and quantify the gap against the budget you locked on 2026 rates.
2. Flag QP status by TIN and NPI. The QP factor pays roughly 33 cents more per conversion factor dollar. Confirm which clinicians qualify, and which sit close enough to a threshold that participation strategy changes the rate they are paid at.
3. File comments before September 14, 2026. Specialty specific utilization data and practice cost evidence carry more weight than form letters. If a proposal harms your service mix, say so on the record with numbers.
4. Sweep payer contracts for Medicare pegged rates. Inventory every agreement priced off the current year MPFS and model the pass-through effect of the lower CFs on commercial and MA revenue.
5. Re-baseline cash forecasts for Q1 2027. Groups that wait for the final rule to update forecasts will discover the shortfall in February remits, after staffing and capital decisions are already made.
6. Set a final rule trigger. Assign an owner to re-run the model the week the final CY 2027 rule publishes, and to load the final conversion factors into your billing system before January 1, 2027 dates of service.