Daily Briefing for November 5, 2026

Show Notes

Medicare cuts physician pay 2.31% for 2027, deeper than it proposed

The voices on this episode are generated, and so is the script, from the day's post at Physician in the Loop. Every fact in the post links to its source.

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The Centers for Medicare & Medicaid Services cut the physician fee schedule conversion factor 2.31% for 2027 on Wednesday, to $32.63, a deeper reduction than the 1.68% it proposed in July.

Clinicians in qualifying alternative payment models take a 1.83% cut. Most of the decline reflects the expiration of a one-year 2.5% increase for 2026, partly offset by statutory updates of 0.25% and 0.75%, Medical Economics reported. The same rule pays 20% less for a visit billed the same day as a minor procedure, replaces the G2211 add-on with modifiers worth 16% or 32% of a visit, and tightens remote monitoring billing. A companion outpatient rule raises hospital rates 2.3% and creates Medicare's first payment category for AI and other software services.

"Physicians will once again begin the year with lower rates as practice costs continue to rise," the American Academy of Family Physicians said, according to Chief Healthcare Executive. CMS Administrator Dr. Mehmet Oz said fee-for-service payment "has rewarded volume over value."

In this episode

• Medicare cuts the physician conversion factor 2.31% for 2027 and pays 20% less for visits billed the same day as minor procedures
• Medicare creates its first payment category for AI and other software services and moves 14 algorithm-only lab tests out of the lab fee schedule
• Medicare limits remote monitoring to established patients and delays its ban on outside monitoring vendors to 2029
• Federal regulators push out two surprise-billing arbitrators, one of which sided with clinicians in 89% of 2023 cases
• A South Dakota health system blocks OpenEvidence after finding a physician storing more than 100 patient records in it
• Patients of athenahealth practices can now send their records into Claude, and the company says HIPAA does not apply
• Philips sets aside $322 million to settle Justice Department criminal and civil probes of its 15 million-device CPAP recall
• Pennsylvania confirms a sixth measles death as its outbreak reaches 1,467 cases and 283 hospitalizations

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Voice 1: This is Physician in the Loop, the daily briefing on AI in medicine. It's Thursday, November 5th, 2026.

Voice 1: Medicare just set next year’s physician payment rate at $32.63, down from $33.40. That’s more than a 2% cut, deeper than the nearly 2% cut CMS had floated back in July.

Voice 2: What about clinicians in qualifying alternative payment models? Do they get spared any of that?

Voice 1: Not really. They take a cut too, just under 2%, landing at a slightly higher rate than everyone else, but it’s still a reduction from this year.

Voice 2: The rule also changes what happens when a visit and a minor procedure get billed the same day. What did CMS actually land on there?

Voice 1: When an office visit is billed with modifier 25 on the same day as a 0-day global procedure by the same physician or someone in the same specialty in the group, the lower-paid service now gets paid 20% less. CMS had proposed cutting it 50%, and including 10- and 90-day procedures too, so this is narrower than the draft. Dermatology, otolaryngology and podiatry still take the biggest hits.

Voice 2: And the complexity add-on everyone was watching, G2211, that’s gone now too?

Voice 1: Gone as a standalone code. It becomes modifier B1, worth 16% of a visit, or B2, worth 32%, for clinicians in Shared Savings Program accountable care organizations and the LEAD model. CMS also said traditional MIPS reporting now ends after the 2031 performance period.

Voice 2: The American Academy of Family Physicians put it bluntly: “Physicians will once again begin the year with lower rates as practice costs continue to rise.”

Voice 1: CMS Administrator Dr. Mehmet Oz framed it as the point, not the problem. He said fee-for-service payment “has rewarded volume over value.”

Voice 2: A companion rule from the same day did something totally different. It created Medicare’s first payment category for AI itself.

Voice 1: What does that actually look like?

Voice 2: CMS renamed software as a service to Software as a Medical Service and slotted those services into New Technology payment groups. The agency called it “an interim step toward a broader payment policy,” not the finished version.

Voice 1: And there’s a lab piece to this too, isn’t there?

Voice 2: Fourteen codes for stand-alone algorithmic analysis of existing lab data move out of the Clinical Laboratory Fee Schedule starting in January. They land under the physician fee schedule instead, priced nationally from about $350 to about $2,250, rather than left to Medicare contractors to set.

Voice 1: Same rules for getting paid either way?

Voice 2: No. General software services need FDA marketing authorization before Medicare pays for them. The lab codes don’t need that authorization, and now regular coinsurance applies to them too.

Voice 1: A measles outbreak in Pennsylvania just claimed its sixth life this year. An unvaccinated Jefferson County resident died, and a reported October death in Franklin County is still under review.

Voice 2: Is the outbreak still growing, or finally slowing down?

Voice 1: Still growing. Cases are at 1,467 across 45 counties, with 283 hospitalizations, and 34 of those cases were confirmed in just the few days since November 2nd. Fewer than 1% of cases happened in vaccinated people.

Voice 2: Any new guidance for clinicians out of this?

Voice 1: The state is advising an early dose for infants 6 to 11 months old who live in or travel to counties with sustained spread. That does not replace the two routine doses later.

Voice 2: Six deaths and still climbing is a hard number to read next to a vaccine that’s already working for almost everyone who gets it.

Voice 1: A South Dakota health system just cut physicians off from a free AI tool over how one doctor was using it.

Voice 2: What actually triggered that?

Voice 1: Monument Health’s chief information officer, Patrick Woodard, found a “super user” storing more than 100 patient records inside OpenEvidence and using it to help make medical decisions. He told that physician the practice had to stop, and the system then cut off access entirely.

Voice 2: Is this an OpenEvidence problem specifically, or is it bigger than that?

Voice 1: Bigger. Free clinician chatbots like OpenEvidence, Doximity Ask and ChatGPT for Clinicians are used by hundreds of thousands of doctors. They all say they’re HIPAA compliant and let users share protected health information once they sign an agreement.

Voice 2: Signing an agreement and actually understanding what you’re storing in it are two different things.

Voice 1: Before we go, something to watch. Senator Bill Cassidy’s PATIENT AI Act discussion draft, which would create a payment pathway for AI tools, is taking comments through December 1st.

Voice 2: Any other coverage fights happening on a similar timeline?

Voice 1: Yes. Palmetto GBA and Noridian have proposals to stop covering AI brain MRI quantification, and those are taking comments through November 14th.

Voice 2: A payment pathway opening up on one track while coverage gets pulled on another is exactly the kind of mixed signal this field keeps sending.

Voice 1: Sources and corrections are at physicianintheloop.org, where you can sign up for the free email briefing. This briefing was read by AI voices.