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CMS released the proposed 2027 Medicare physician fee schedule on July 14, 2026, and it cuts the conversion factor that turns RVUs into dollars. The proposed factor for most clinicians is $32.8409, down 1.68 percent from 2026; qualifying participants in advanced alternative payment models get a separate factor of $33.1693, down 1.19 percent. If you run a cash-pay practice and have opted out of Medicare, the schedule reaches you anyway, through your patients: many commercial plans calculate out-of-network reimbursement as a percentage of the Medicare rate, so when the conversion factor drops, the checks your patients collect on their superbills drop with it.
This is practice-operations guidance rather than legal or billing advice. Decisions with real dollar consequences belong with your accountant or healthcare attorney.
What does the proposed 2027 fee schedule say?
Two conversion factors, both lower than 2026's. Starting in 2026, federal law splits the annual update: clinicians who are qualifying participants (QPs) in advanced alternative payment models get a 0.75 percent statutory update, and everyone else gets 0.25 percent. Both groups then lose the temporary 2.5 percent increase Congress funded for 2026 only, which is why each factor falls despite a positive update. The proposed rule sets the non-QP factor at $32.8409, down from $33.4009, and the QP factor at $33.1693, down from $33.5675. A solo opted-out prescriber sits outside any APM by definition, so the non-QP figure is the one to watch.
For behavioral health specifically, the CMS fact sheet proposes higher payment for behavioral health collaborative care management and tobacco cessation counseling, five new G-codes on the Medicare telehealth list, and a practice-expense overhaul that caps most codes' year-over-year RVU swings at plus or minus 5 percent. Code-level changes relevant to psychiatry get their own rundown in our 2027 CPT changes guide.
Why does a fee schedule you never bill under still matter?
Because many commercial insurers use Medicare's rates as the ruler for out-of-network claims. Opting out means your Medicare patients sign private contracts and submit nothing to Medicare at all; that math lives in our Medicare opt-out guide. Most cash-pay psychiatry patients carry commercial insurance instead. They pay your full fee and file superbills for out-of-network reimbursement, and their plan decides what each visit "should" cost in one of two main ways, per FAIR Health: a usual, customary, and reasonable (UCR) charge database, or a percentage of the Medicare rate for that CPT code, with Medicare-based formulas commonly running 110 to 140 percent of the Medicare fee. For every patient on a Medicare-benchmarked plan, the conversion factor is an input to their reimbursement even though you never file a claim.
"You opted out of billing Medicare. Your patients' insurers never did," says David Cohen, CPA, JD, who reviewed this guide. "When the conversion factor moves, the allowed amount on a Medicare-benchmarked out-of-network claim moves with it, and your patient's net cost of seeing you moves in the opposite direction."
How much will a 1.68 percent cut change a reimbursement check?
A few dollars per visit if a code's RVUs hold still, and more when they move too. A worked example: suppose a follow-up code carries a Medicare allowed amount of about $130, and your patient's plan pays out-of-network claims at 140 percent of Medicare with 30 percent coinsurance. The plan's allowed amount is roughly $182, and the patient gets back about $127 per visit. Trim the conversion factor by 1.68 percent with RVUs unchanged and the check shrinks by roughly $2 per visit, or about $25 across a year of monthly medication management.
Two caveats can push that number in either direction. Per-code RVU revisions routinely swamp the conversion-factor change, which is the reason to know which CPT codes sit on your superbills before the final numbers land. And patients on UCR-benchmarked plans may see no change at all. The direction is what matters for your practice: your fee stays put, the patient's reimbursement drifts down, and patients feel the gap between those two numbers.
What happens between now and January 1, 2027?
The rule is still proposed. The comment period runs through September 14, 2026, the final rule is expected around November 1, and the new factors take effect January 1, 2027. Final conversion factors usually land within cents of the proposal, but they do move, so treat $32.8409 as the best current estimate rather than a settled number. We'll publish the final figures when the rule lands.
None of this requires changing your fees; once you're opted out, your market sets those with no Medicare cap. Two small preparations are worth the time. First, know which codes appear on your superbills so you can sanity-check questions in January. Second, expect the occasional patient email asking why this year's checks are smaller, and give the real answer: Medicare cut its conversion factor, and their plan benchmarks out-of-network payments to it. That's a one-line reply if you see it coming and a confusing billing dispute if you don't.