Modifier 25 Didn't Change. Medicare's Payment Did

By Jennifer McNamara | Healthcare Inspired

CMS finalized a payment reduction for certain same-day E/M services and procedures in the 2027 Medicare Physician Fee Schedule. I have a few concerns about how practices may interpret the change, particularly when it comes to modifier 25.

The original proposal would have reduced payment to 50% for the lower-valued services when a separately identifiable office or outpatient E/M was performed on the same day as a procedure with a 0-, 10-, or 90-day global period.

CMS received considerable feedback and modified the policy.

Beginning January 1, 2027, the reduction will apply only to procedures with a 0-day global period. The highest-valued applicable service will be paid at 100%, while the other applicable service or services will be paid at 80%.

I am glad CMS reconsidered the original proposal, although I still have concerns about reducing reimbursement for separately identifiable services that meet Medicare's reporting requirements.

My bigger concern involves what happens when practices begin reviewing their payments.

Payment policy does not change coding requirements.

Modifier 25 identifies a significant, separately identifiable E/M service performed on the same day as another procedure or service.

The documentation must support work beyond the usual evaluation associated with performing the procedure.

CMS has not eliminated that requirement or changed the purpose of modifier 25.

Consider a physician who evaluates a patient's worsening knee pain and performs a joint injection during the same encounter.

The physician may have performed a separately reportable E/M service, depending on the extent of the evaluation and management documented. Or the evaluation may have been limited to the usual work associated with the injection.

We need to review the record before making that determination.

If the documentation supports a significant, separately identifiable E/M service, the appropriate E/M code should be reported with modifier 25 when billed with the procedure.

If the documentation does not support a separate E/M, it should not be reported.

The new payment reduction does not change either conclusion.

The E/M will not always be the service receiving the reduction.

Another detail deserves attention.

CMS finalized payment of 100% for the highest-valued applicable service and 80% for the other applicable services.

Depending on the relative payment amounts, the procedure may receive the reduction rather than the E/M.

When reviewing claims, practices will need to look at the services reported and how Medicare calculated the payment.

I would not want a coding team removing an appropriate E/M service or questioning a modifier because the allowed amount came back lower than expected.

A lower payment is not evidence of a coding error.

What I would review now

I would start with current claims data and identify encounters involving office or outpatient E/M services and 0-day global procedures.

Look at utilization by physician and specialty. Review a sample of the documentation supporting modifier 25. Then compare current reimbursement with projected 2027 payments.

I would also make sure the billing department understands how the reduction will be applied.

There should be no need to change coding decisions solely because Medicare changes what it pays.

I also have concerns about practices attempting to schedule services on separate dates for reimbursement purposes when the care can appropriately be provided during the same encounter.

Clinical decisions should remain clinical decisions.

We can disagree with a payment policy while still following the applicable coding requirements.

I've spent years reviewing claims where the question was whether the documentation supported the service. I don't want payment reductions introducing another reason for practices to second-guess otherwise accurate coding.

Report the services supported by the documentation, apply the appropriate modifiers, and evaluate the reimbursement separately.

That's the approach I would expect from any coding or revenue integrity team.

Next in the series: G2211 is becoming modifier B1. What practices need to change before January.

SOURCE CMS: CY 2027 Medicare Physician Fee Schedule Final Rule (November 4, 2026)