Medicare's 2027 rule trims doctors' base rates about 2% and sets February 1 cutoff for some immigrants

The Centers for Medicare & Medicaid Services issued its final 2027 Physician Fee Schedule on November 4. This is the annual rule that sets what Medicare pays doctors and other clinicians, and it applies from January 1. The CMS fact sheet shows the base rate falling about 2%. Deeper in the rule's text is a change that could matter more to some households: how Medicare will end for noncitizens who no longer qualify under the 2025 tax and spending law (Public Law 119-21), with the earliest terminations effective February 1, 2027.

The base rate falls

The conversion factor turns each service's relative value into dollars, so actual pay varies by service and location. The drop follows the end of a one-year 2.5% increase that the 2025 law gave for 2026. Annual updates of 0.75% and 0.25%, which the law requires, do not make up for it, and CMS applied a further 0.12% adjustment tied to changes in work values.

The American Medical Association calls the payment system "unsustainable" and is asking Congress, in the session that opens November 9, to extend the 2.5% update through 2027. CMS Administrator Mehmet Oz said in the agency's release: "By ending duplicate billing and closing costly loopholes, we are protecting taxpayers and directing Medicare dollars to clinicians doing the hard work of keeping patients healthy."

Who could lose Medicare

The 2025 law limits Medicare to citizens and U.S. nationals, lawful permanent residents, Cuban and Haitian entrants, and people living here under a Compact of Free Association. Lawful presence was generally enough before, a test that also covered refugees, people granted asylum and some parolees.

The final rule says Social Security plans about 300,000 preliminary notices this month to people who may not qualify. The notices ask them to send updated evidence if they believe its records are wrong. People who do not establish eligibility would get a formal termination notice in December, and the rule puts the earliest loss of coverage at February 1. CMS plans its own notice in December directing people to 1-800-MEDICARE or Social Security.

How many people will lose coverage is unknown. CMS actuaries project about 32,000, roughly 0.05% of Medicare-aged enrollment. They did not revise that after Social Security's 300,000 estimate, the rule says, citing time constraints and that recipients can still send documents, so "the actual number who lose coverage remains unknown." Commenters cited a Congressional Budget Office estimate of 100,000. CMS replied that little information exists and that "one may turn out to be more accurate than the other."

Commenters also pressed for earlier notice and for help finding other coverage. CMS said the preliminary notices arrive almost 90 days ahead, that the statute sets the timing ("No provision in section 1899C of the Act permits extension of the grace period"), and that individual notices cannot list other coverage options, though it promises broader outreach. People found ineligible can appeal, up to federal court. Anyone who later gains an eligible status gets a 12-month enrollment window, with up to six months of retroactive coverage. Eligibility for Social Security retirement and disability payments is unchanged by this provision, the rule says.

What patients may notice

• Same-day care: when a separately billed office visit and a minor procedure with a 0-day global period fall on one day, the lower-cost service is paid at 80%. CMS had proposed 50% and a wider reach. It says the change cuts duplicate payment by patients and Medicare.
• Cost sharing: from April 1, 2027, approved accountable care organizations may lower or waive Part B cost sharing on many services.
• New billing: Medicare adds payment for health coaching, shared medical appointments and clinician time on vaccine adverse effects.

The AMA, in a November 5 article, warned that the same-day cut would threaten independent practices. That article describes a 50% reduction; CMS's final documents say 20%.

Patients in Original Medicare usually pay 20% of the cost of a covered service after a yearly deductible, $283 in 2026. Our inference: on a service whose relative value does not change, a lower base rate would trim that share by about the same percentage. Real changes depend on the service and the area.

The fact sheet gives no 2027 Part B premium; the premium is $202.90 a month in 2026, or more at higher incomes. The CMS newsroom listed no 2027 premium when we checked on November 6. The rule is scheduled for the Federal Register on November 9.