Behind the Headline: What CMS’s Proposed 2027 Fee Schedule Really Pays For

This article is part of the Rubrum Exchange series — conversations with Rubrum’s clinical and policy experts on the issues shaping healthcare today. You can listen to the full audio of this conversation here.

CMS is billing its 2027 proposed Physician Fee Schedule as transformative. Read past the headline, though, and a familiar pattern emerges: payment goes up in some places but the conversion factor still goes down. That arithmetic is the real story of the rule. Everything else in it, from site neutrality to AI, traces back to the same underlying issue of what the current CMS team considers worth paying for. 

For this installment of the Rubrum Exchange, we sat down with Lee Fleisher, M.D., M.L. , Rubrum’s co-founder and CEO and former Chief Medical Officer at CMS, and Laura Findeiss, M.D., M.H.A., Rubrum’s Chief Medical Officer and former division director within CMS’s Coverage and Analysis Group (CAG). Both are practicing clinicians as well as policy veterans, and that dual vantage point shaped nearly everything they had to say about the proposed rule. 

A Familiar Ratchet, in a Changing Landscape 

Findeiss has watched this pattern her whole career.  

“The conversion factor was over $35 when I started practicing, and it continues to ratchet down in spite of inflation,” she said.  

The trend challenges physicians’ ability to sustain independent practice. What’s changed, she noted, is the environment around that number. The proposed rule continues to treat in-facility practice expense as unjustified at its current level, even as more physicians move into employment within integrated health systems—arrangements where practice expense is still applicable, but simply resides with the facility, not the physician. That shift raises a structural question neither the rule nor the RVU system it’s built on has fully answered: as the delivery system consolidates, does this challenge some of the logic behind the RVU components? 

Site Neutrality Adds a Burden of Evidence for Innovators 

The proposed rule’s push toward site neutrality, from payment equivalency to the proposed elimination of the inpatient only list in the IPPS, reflects a clear CMS philosophy, according to Fleisher: let the clinician and patient decide where a procedure is performed or new technology gets deployed, and don’t pay a premium for one site over another. His advice to health innovators is clear: be ready to deploy technology everywhere, not just in the traditional inpatient setting. 

That guidance comes with a caveat from Findeiss. Site neutrality, she argued, puts real pressure on innovators to lead with safety, particularly in lower-acuity settings that lack the same level of rescue capability. It’s not formally a coverage criterion, but it may increasingly determine which products get adopted.  

There’s a revenue question underneath the policy question, too. New technology add-on payments under the proposed IPPS require demonstrating substantial clinical improvement regardless of breakthrough designation, and Fleisher noted there’s real money attached to that pathway in the inpatient setting. His concern is whether the ASC and APC world will offer equivalent support for genuine innovation.  

His recommendation for health innovators is to comment on the proposed rule, and push CMS to build new-technology APCs and appropriate ASC revenue for devices that improve outcomes or lower downstream costs. Findeiss added that the fix likely involves clearer standards for what counts as substantial clinical improvement, paired with a sharper emphasis on safety and quality outcomes as care continues to move outpatient. 

Remote Monitoring: CMS Wants Proof, Not Just Data 

Remote patient monitoring drew some of the sharpest language in the proposed rule, with CMS signaling concern about overutilization and moving to tie RPM more tightly to an accountable clinician relationship. Findeiss framed the core issue as accountability: how does CMS ensure the data generated by these devices is actually changing what happens in a patient encounter, rather than simply accumulating? She pointed to the ACCESS model’s focus on long-term outcomes as one template for how that kind of accountability might extend into general fee-for-service care. 

Fleisher’s advice to clients follows the same thread. The ability to bill a code, he said, is not the same as medical necessity—and CMS can claw back payment if monitoring isn’t demonstrably improving care. Findeiss added a practical anchor point for innovators: CMS has already adjudicated related questions elsewhere, such as the existing National Coverage Determination (NCD) on ambulatory blood pressure monitoring. Aligning new RPM use cases with analyses CMS has already completed, rather than starting from scratch, is likely to be the more persuasive path. 

Software as a Medical Service Meets Budget Neutrality 

The rule also relocates a relevant subset of “software as a medical service” (SaMS) in the proposed OPPS rule from the clinical lab fee schedule to be reimbursed separately in the physician fee schedule, which operates under budget neutrality. Findeiss reads this as CMS still working out how AI-driven tools fit into the patient care relationship, moving cautiously while real debate continues on the front lines of care about the benefit-risk balance of these products. 

Fleisher also connects the move to something larger: the Medicare Hospital Insurance Trust Fund’s projected shortfall around 2033. Folding SaMS into a budget-neutral schedule, he said, fits CMS’s broader thesis that Medicare program inflation needs to be controlled or even reversed. This is also consistent with the agency’s preference for value-based arrangements like the ACO LEAD model and total cost of care, and its parallel push to make ACO formation and enrollment easier. 

For innovators, Findeiss said the implication is direct: in a budget-neutral environment, competitive advantage comes down to demonstrated efficiency and quality outcomes, delivered as a genuine value story not just to CMS, but to the clinicians and provider organizations actually using the technology. 

The Common Thread 

Across conversion factors, site neutrality, remote monitoring, and AI, Fleisher and Findeiss kept arriving at the same point. The proposed rule is CMS saying, in several different registers at once, that payment will keep following demonstrated value rather than volume. And that’s the signal worth planning around. 

Rubrum Advising helps innovators navigate the policy landscape shaping market access and reimbursement. To learn more about working with our team, drop us a line.