The Centers for Medicare & Medicaid Services (CMS) in Washington issued its final 2027 physician fee schedule on Monday. The rule cuts Medicare's payment rates to doctors because the one-year 2.5% increase Congress approved in 2025 is set to lapse. CMS also published a companion hospital outpatient rule that expands site-neutral payment cuts.

The annual rule sets what Medicare pays for more than 10,000 services delivered by physicians and other clinicians. Congress added the 2.5% boost for 2026 only in the tax and spending law signed by President Donald Trump in July 2025. It lapses on January 1, and lawmakers did not extend it before the midterm elections on Tuesday.

The agency confirmed it would keep the "efficiency adjustment" it introduced last year. That adjustment trims payments for many procedures on the assumption that clinicians perform them faster over time. The separate outpatient rule continues the three-year phase-out of Medicare's inpatient-only procedures list. It also extends lower, clinic-level rates to more services delivered in hospital-owned outpatient departments.

The American Medical Association said the cut would push more physician practices to consolidate or close. It noted that Medicare physician pay, adjusted for inflation, has fallen by roughly a third since 2001. The American Hospital Association said the site-neutral expansion would strip funding from hospitals already absorbing Medicaid reductions under the 2025 law.

The rules arrived as millions of older Americans weighed higher Medicare drug plan premiums during the open enrolment period, which runs until December 7. Physician groups said they would press the new Congress to pass an inflation-linked update to doctors' pay before the cuts take effect.