PhysEmp Insights

The final 2027 Medicare Physician Fee Schedule cuts the conversion factor by 2.31%, from $33.40 to $32.63, for clinicians outside qualifying alternative payment models. Most employed physicians on productivity contracts won’t see that number in their pay formula. What they will see is code-level changes that alter how many work RVUs the same work earns. PYA’s modeling shows an uncomplicated vaginal delivery earning about 33 work RVUs under the new unbundled maternity codes, down from 37 under the global code. A total hip or knee replacement drops from 19.11 work RVUs to 16.70.

Physicians and employers will settle 2027 in that gap between the dollar rate and the unit count, and that makes it the main Physician Compensation & Demand question of the year. PhysEmp’s October analysis of the July proposal named two risks to watch: the modifier 25 haircut and the joint replacement revaluation. CMS backed off part of both, but it also turned G2211 into a percentage add-on and abolished global maternity billing outright. Those code-level adjustments will move take-home pay far more than a 2.31% headline trim ever could.

A standard wRVU contract multiplies credited units by an internal rate set by the hospital or medical group. Medicare’s conversion factor does not appear in that formula, and employer rates already vary far more than CMS moved the needle this cycle. Marit’s analysis of 4,456 physician salary reports puts median pay per wRVU at $41.28 in ophthalmology and $90 in hematology-oncology, with most specialties hovering between $48 and $65. Within any given specialty, the spread between the 25th and 75th percentiles translates to roughly $94,000 a year at median volume. Passing Medicare’s full 2.31% cut directly through to a doctor earning $480,000 on 8,000 wRVUs at $60 would trim about $11,000.

CMS’s specialty impact tables are similarly deceptive for productivity pay because they blend work, practice expense, and malpractice values into a single projection. The bulk of 2027’s specialty reshuffling actually stems from overhead calculations: half of the indirect practice cost index phases out in 2027 and the rest in 2028, tempered by a stabilizer capping code-level swings at 5%. IDSA attributes infectious disease’s projected 1% decline squarely to that methodology adjustment. CMS projects cardiology flat, diagnostic radiology up 1%, and interventional radiology up 3%. Those shifts move facility collections and hospital overhead margins, not the clinical work units counted on a physician’s dashboard. Independent practices paid on collections absorb them immediately; employed physicians are insulated, at least on paper.

The cut will still land, but at the bargaining table rather than on biweekly stubs. Employers absorbing lower Medicare reimbursements per unit have an immediate justification to resist raising conversion rates during 2027 renewals. Multi-year commitments signed before January suddenly look much more valuable than they did twelve months ago.