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Last updated July 17, 2026. This covers a proposed rule. Numbers can move before anything takes effect on January 1, 2027, and we will update this as the final rule lands.
If you run or manage an independent dermatology practice, the "about 9%" alert is probably already in your inbox, forwarded from a colleague or straight from the AADA. On July 14, CMS released the proposed CY2027 Medicare Physician Fee Schedule (CMS-1848-P), and dermatology sits among the specialties facing the largest proposed reductions.
This is a real cut, and it is built differently than the cuts of the last several years, which matters for how you plan. It is also a proposed rule, with a comment window still open and a final rule still to come. Below is what CMS actually put on the table, what the 9% figure is measuring, why the usual "it always shrinks by the end of the year" instinct is the wrong model this time, and the handful of things worth doing now.
We are only covering the provisions that touch dermatology. There is a lot more in the 1,500-page rule that does not.
The conversion factor is the dollar multiplier applied to every code's relative value units. For 2027, CMS proposes two, both down from this year:
Most independent dermatology practices bill under the non-QP factor, so $32.84 is the number that applies to you unless your providers are in a qualifying advanced payment model. Part of this drop is simply the one-year 2.5% bump from 2026 expiring on schedule.
This is the big one, and it is the piece most people forwarding the 9% alert have not read. CMS is in a multi-year effort to move practice-expense calculations away from older AMA survey inputs toward what it calls more objective, auditable cost data, and it is introducing a "PE stabilizer" to smooth the transition. Because this redistribution runs under budget neutrality, some specialties gain and others give, and dermatology is on the giving side. This is the single largest driver of derm's proposed reduction, larger than the conversion factor and larger than any coding change.
When a separately identifiable office E/M is furnished on the same day as a minor procedure by the same practice, CMS proposes paying the highest-valued service at 100% and every additional same-day service at 50%, even when modifier 25 is documented correctly. This is a payment reduction, not a bundling denial. Dermatology is a same-day-E/M-plus-procedure specialty by nature, so the exposure is real and it varies a lot from one practice to the next. One important detail: CMS explicitly asked for comment on whether a 25% reduction would be more appropriate than 50%. That is a lever, and we will come back to it.
This is not the Multiple Procedure Payment Reduction you already work around. Under MPPR, a claim like 99213 + 11102 + 17000 pays the E/M and the first procedure at 100% and cuts the additional procedure to 50%. The proposal reaches further: even a claim with a single E/M and one procedure, such as 99213-25 + 11102, would take the 50% cut on the lower-valued service. Finalizing it would put Medicare alongside commercial payers that already reduce same-day E/M this way. Horizon BCBS is the one most of our clients have run into; Anthem attempted a version in 2017 and Cigna put a policy in place in 2023.
The longitudinal-care add-on you currently bill as its own line, G2211, would convert to a modifier appended to the base E/M code, worth an added 16% of that E/M's payment. The eligibility concept stays the same; the billing mechanics change. Any claim still billing G2211 as a standalone line after the cutover will reject, so this is a charge-master task to line up before January 1.
CMS wants to revalue some 10- and 90-day global procedures, citing data that many bundled post-op visits are not happening. Worth noting for dermatology: Mohs (17311-17315) already carries a 0-day global period, so it has no bundled post-op window to lose.
CMS proposes sunsetting traditional MIPS after the 2028 performance year, with MIPS Value Pathways becoming the only route for non-APM clinicians starting in 2029. A Dermatological Care MVP remains available, and small practices keep their existing accommodations. This is a "plan ahead" item, not a January 1 change.
The roughly 9% figure circulating in the AADA alert comes from CMS's specialty-impact estimate, which captures changes to work, practice-expense, and malpractice RVUs. That is the practice-expense overhaul doing most of the work.
Here is our read of the rule, and to be clear, this next part is Clarity's analysis, not a number CMS published. CMS calculates and publishes the specialty-impact estimate and the conversion-factor change as two separate figures. Layer the conversion-factor cut on top of the 9%, and the all-in proposed hit for a non-QP practice comes out around 10.7%, or roughly 10.2% for a QP practice. The 9% and the CF cut are additive because CMS scores them separately.
That 9% is the specialty-impact ceiling the AADA is quoting; the true all-in proposed number is a little higher once the conversion factor is included, and the largest chunk of it is the practice-expense redistribution, not modifier 25 and not the conversion factor.
Most dermatologists have watched this movie before. A scary proposed cut comes out in July, everyone panics, and by the following spring Congress has patched it down to something manageable. That memory is real. It is also specific to a mechanism that does not apply here.
In the years you are remembering, the proposed cut was almost entirely a conversion-factor cut. Dermatology's own RVU component was close to neutral, so the whole story was the CF, and a year-end Congressional patch to the CF fixed most of it. The patch worked because the CF was the cut.
This year inverts that. Of the roughly 10.7% all-in proposed reduction, only about 1.7 points is the conversion factor. Even a full Congressional restoration of the CF would move dermatology from about -10.7% to about -9%. It cannot reach the roughly 9 points of budget-neutral RVU and practice-expense redistribution, because a CF patch does not touch RVUs.
Only about 1.7 of the roughly 10.7 proposed percentage points is the conversion factor; a full Congressional patch cannot reach the other 9 points of budget-neutral RVU and practice-expense redistribution.
Two more things worth holding onto. First, a patch is a pattern, not a promise: the 2025 conversion-factor cut of 2.83% went unpatched and stood. Second, there are really only two ways this number shrinks, and they are different bets. Congress can patch the conversion factor, which only reaches that 1.7-point slice and typically arrives late, sometimes after the year has already started. Or CMS can soften its own rule in the November final rule, which is the only channel that can move the 9%. There is precedent for CMS backing off: it proposed a nearly identical same-day payment reduction in 2019 and did not finalize it. But the practice-expense overhaul, the biggest single driver, is the piece CMS has framed as a multi-year commitment, and it is the least likely to give.
We are not going to tell you this lands at 3-4%. The mechanics do not support that this year, and we would rather you plan against the real structure of the rule than a comforting pattern that no longer fits.
Four dates are worth putting on the calendar:
The sequencing point for planning: the RVU and modifier 25 numbers are knowable at the final rule in November. Any conversion-factor relief comes later and separately. Budget against the final rule, not the July headline.
None of this is a fire drill. Here is the short list, in the order worth working it.
If you only send one comment. A dermatologist can adapt something like this: "I urge CMS to adopt a 25% reduction rather than 50% for a same-day E/M billed with modifier 25 alongside a minor procedure. Furnishing the evaluation and the procedure in one visit is efficient, patient-centered care that spares the patient a second trip and a second copay. I ask that CMS not finalize the proposed 50% reduction." The AAD is publishing fuller comment templates if you want a more developed version to build on.
CMS's proposed CY2027 fee schedule puts dermatology among the hardest-hit specialties, with a specialty-impact estimate of roughly 9%. Layer the conversion-factor cut on top and the all-in proposed reduction lands around 10.7% for a non-QP practice, which is Clarity's analysis, not a CMS-published figure. The largest single driver is the practice-expense methodology change, not the conversion factor and not modifier 25.
There are two channels, and they are different bets. Congress can patch the conversion factor, but that reaches only about 1.7 of the roughly 10.7 proposed points and often arrives late; CMS can soften its own rule in the November final rule, which is the only channel that can move the 9% specialty-impact number. We are not projecting that this shrinks to 3-4% the way past cuts did, because the mechanics do not support it this year.
CMS proposes paying the highest-valued same-day service at 100% and every additional same-day service at 50%, even when modifier 25 is documented correctly. It is a payment reduction rather than a bundling denial, and it reaches further than the Multiple Procedure Payment Reduction because it can hit a claim with a single E/M and one procedure. CMS also asked for comment on whether a 25% reduction would be more appropriate than 50%.
CMS is expected to publish the final rule around November 2026, though the date is not fixed. That is when the RVU, practice-expense, and modifier 25 numbers become real, ahead of the proposed January 1, 2027 effective date.
CMS-1848-P is the proposed CY2027 Medicare Physician Fee Schedule, released July 14, 2026. It is a proposal, with a comment window open through September 14, 2026 and a final rule still to come.
We are Clarity, and revenue cycle management for independent dermatology is the only thing we do, because dermatology's billing is specific enough to deserve its own approach. We are modeling this rule from our clients' actual claims data rather than industry averages, tracking both the Congressional and the CMS channels on a dated calendar, and building for a final rule that will read differently than the proposal.
The fee schedule is not something any practice controls. Your net collection rate is. A year like this one is exactly when disciplined billing earns its keep, and it is the part of the equation that is still entirely in your hands. When the final rule lands in November, we will update this with the numbers that stick.
