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CMS has proposed a major change to Medicare payment rules that could affect how certain E/M services are reimbursed when reported with Modifier 25.

If your practice regularly bills an evaluation and management (E/M) service on the same day as a procedure, this proposed change deserves attention.

Under the 2027 Medicare Physician Fee Schedule proposed rule, CMS is considering a payment policy that could reduce payment for certain same-day E/M and procedure combinations. The proposal is not final, but practices can begin reviewing their claims and estimating the potential financial impact now.

≡What Is CMS Proposing?

CMS has proposed changing payment for certain E/M services reported with Modifier 25 when the E/M service is performed on the same day as a procedure with a 0-day, 10-day, or 90-day global period.

If the proposal is finalized, the highest-paid service would be paid at 100%, while the other applicable surgical procedure(s) or E/M service(s) would be paid at 50%.

This means the proposal is not simply a blanket 50% cut to every E/M service billed with Modifier 25.

The actual impact would depend on the services billed, their Medicare payment amounts, and whether the claim meets the requirements of the proposed policy.

≡What Does Modifier 25 Mean?

Modifier 25 is used when a physician or other qualified healthcare professional provides a significant, separately identifiable E/M service on the same day as another procedure or service.

For example, a patient may come to the office with a new or worsening problem that requires evaluation and medical decision-making, and the physician may also perform a procedure during the same visit.

When the E/M service is separately identifiable and properly documented, Modifier 25 may be reported with the E/M code.

Modifier 25 does not automatically make an E/M service payable. The documentation must support the separate E/M service.

≡Why Is This Important for Medical Practices?

For practices that frequently perform procedures during office visits, same-day E/M and procedure claims can represent a meaningful portion of Medicare revenue.

A change in payment methodology could therefore affect:

• • Medicare reimbursement
• • Monthly collections
• • A/R projections
• • Expected revenue per encounter
• • Procedure-based specialties
• • Coding and documentation workflows
• • Revenue forecasting

The impact will not be the same for every practice.

A practice that rarely bills Modifier 25 may see little effect, while a practice with a high volume of same-day E/M and procedure claims may need a much closer review.

≡Which Practices Should Pay Attention?

Practices that frequently perform office-based procedures should review their Medicare billing patterns.

This may include specialties such as:

• • Dermatology
• • Orthopedics
• • Cardiology
• • Ophthalmology
• • Pain management
• • Podiatry
• • Neurology
• • Primary care
• • Other procedure-based specialties

The important question is not simply:

“Do we use Modifier 25?”

The better question is:

“How much Medicare revenue comes from E/M services reported with Modifier 25 alongside procedures that could fall under this proposed policy?”

That distinction matters when estimating the real financial impact.

≡What Could the Payment Change Look Like?

Consider a simplified example.

A physician performs an E/M service and a procedure on the same day.

Assume, for illustration:

• • E/M service: $150
• • Procedure: $100

Under the proposed methodology, the higher-valued service would receive 100% payment, while the lower-valued service could receive 50%.

The resulting payment would be:

• • E/M: $150
• • Procedure: $50
• • Total: $200

This is only an example. Actual Medicare reimbursement depends on the specific CPT/HCPCS codes, geographic payment rates, applicable Medicare policies, and other factors.

The key point is that the proposed methodology could reduce payment for the lower-valued service rather than simply cutting every Modifier 25 E/M service by 50%.

≡Is the 50% Reduction Final?

No.

This is one of the most important points for practices to understand.

The 50% payment policy is currently part of the CY 2027 Medicare Physician Fee Schedule proposed rule. It has not become a finalized Medicare payment rule.

The proposed rule is going through the federal rulemaking process, and

 can modify, withdraw, or finalize the policy before implementation.

The AMA and numerous medical specialty organizations have already raised concerns about the proposal and urged CMS not to finalize the 50% reduction.

Therefore, practices should monitor the final 2027 Medicare Physician Fee Schedule rather than changing their billing process based solely on the proposal.

≡What Should Practices Do Now?

Even though the rule is not final, waiting until 2027 to understand the potential impact may not be the best approach.

A proactive revenue cycle review can start with five steps.

1. Identify Modifier 25 Claims

Run a Medicare claims report for the last 12 months and identify E/M services reported with Modifier 25.

Look at both claim volume and allowed amounts.

2. Identify the Related Procedures

Determine which procedures were billed on the same date as the E/M service.

Then separate the procedures based on their global-period status.

3. Estimate Potential Revenue Impact

Model what reimbursement could look like if the proposed payment methodology becomes final.

This can help management estimate potential changes in Medicare collections.

4. Review Documentation

Make sure the medical record supports the use of Modifier 25.

The E/M service should be significant and separately identifiable from the work included in the procedure.

This is important regardless of whether CMS ultimately adopts the proposed payment change.

5. Monitor the Final Rule

Do not treat the proposed policy as a finalized billing rule.

Continue monitoring CMS updates and the final 2027 Medicare Physician Fee Schedule before changing established billing workflows.

≡Don’t Stop Using Modifier 25 Simply Because of the Proposal

A proposed payment change should not be interpreted as a reason to stop reporting Modifier 25 when the modifier is appropriate.

If a physician performs a significant, separately identifiable E/M service and the documentation supports the service, proper coding and modifier use remain important.

The goal should be accurate coding and complete reimbursement, not avoiding Modifier 25 simply because CMS has proposed a payment change.

≡The RCM Impact Goes Beyond Coding

This proposal is a good example of why medical practices should look beyond individual claim denials.

A change in Medicare payment policy can affect the entire revenue cycle.

The right analysis connects:

Coding → Claims → Adjudication → Payment → A/R → Revenue Forecasting

A practice may have clean claims today and still experience lower reimbursement tomorrow if Medicare changes the payment methodology.

That is why proactive RCM monitoring matters.

≡A Smart Step for 2026

Before the 2027 Medicare payment year begins, practices can perform a Modifier 25 revenue impact analysis.

The analysis can answer questions such as:

• • How many Medicare claims used Modifier 25?
• • Which CPT codes were most frequently paired with Modifier 25?
• • Which procedures had 0-, 10-, or 90-day global periods?
• • What was the average allowed amount?
• • How much revenue could potentially be affected?
• • Which providers and specialties have the highest exposure?
• • Are documentation and coding patterns consistent?
• • What would the potential annual impact be under the proposed methodology?

This gives practice leadership a much clearer picture than simply knowing that CMS has proposed a “50% cut.”

≡Final Takeaway

CMS has proposed a significant change to Medicare payment for certain same-day E/M and procedure services reported with Modifier 25.

However, the proposed 50% reduction is not yet a finalized Medicare rule.

For medical practices, the best response right now is preparation—not panic.

Review your Modifier 25 utilization, identify potentially affected procedures, analyze your Medicare revenue exposure, and continue monitoring the final CMS rule.

A proactive review can help practices understand where reimbursement risk may exist and prepare their revenue cycle before any finalized policy takes effect.

Evocare Billings & IT Solutions LLC helps medical practices strengthen their revenue cycle through claims management, A/R analysis, billing optimization, credentialing, and proactive reimbursement monitoring.

Contact us today at info@evocarebillings.com or call (323) 412-5399 to explore how we can help your practice grow with smarter, more efficient billing solutions