Medicare 2027 Fee Rule Lifts Behavioral Health Pay, Cuts Rates

The Centers for Medicare & Medicaid Services on Wednesday finalized its calendar year 2027 physician fee schedule, a rule that raises what Medicare pays for screening, brief intervention and referral to treatment — the primary-care protocol known as SBIRT — and for smoking cessation counseling, while cutting the per-service conversion factor that sets most clinician payments by 1.8 to 2.3 percent.

The behavioral health provisions sit in the middle of a rule the agency is selling as a shift away from volume: new payment for shared medical appointments, higher work values for psychiatric collaborative care, an extension of the telehealth exception for mental health visits through the end of 2027, and a 20 percent cut to the lower-cost service when an office visit and a procedure are billed on the same day.

What the rule does for addiction screening

CMS said it will bring smoking and tobacco use cessation services and SBIRT into the final year of a four-year upward adjustment to the work relative value units that price timed behavioral health codes. The adjustment began with the 2024 fee schedule, which raised the work valuation for psychotherapy, and was scheduled to phase in through 2027.

The practical effect is that a set of codes that pay for brief substance-use screening and counseling in primary care finishes the transition at a higher value than it started. The agency's press release described the same cluster of changes more broadly as "boosting valuations for smoking cessation and behavioral health assessments."

Also finalized: increases to the work RVUs for psychiatric collaborative care management and an update to the clinical labor rates used to price the behavioral health care manager, the staff member who coordinates that model. The rule creates separate coding for shared medical appointments, with a time-based add-on code, which CMS framed as a way to pay for group visits that combine clinical guidance with peer contact.

The cut underneath the increases

None of those increases changes the direction of the fee schedule's headline number. Because the one-year 2.5 percent conversion factor bump in the Working Families Tax Cut legislation expires at the end of 2026, the rule sets the 2027 qualifying alternative payment model conversion factor at $32.95, down $0.62 or 1.83 percent, and the nonqualifying conversion factor at $32.63, down $0.77 or 2.31 percent. A statutory 0.75 percent update for qualifying participants and 0.25 percent for everyone else, minus a 0.12 percent adjustment for work RVU changes, does not cover the difference.

For addiction treatment providers, the tension is familiar: the same rule that pays more per behavioral health encounter pays less per encounter of almost everything else, in a year when practices are already absorbing higher overhead. Community behavioral health centers and medication-assisted treatment programs bill a mix of both, and the fee schedule's conversion factor applies to the medical services around the counseling.

Telehealth stays open for another year

The rule implements section 6209(c) of the Consolidated Appropriations Act, 2026, which bars in-person visit requirements for mental health services furnished through December 31, 2027. That keeps in place the pandemic-era arrangement under which a patient can receive telehealth services for a behavioral health condition from home without a prior in-person visit, a rule that matters most in counties with no psychiatrist and no addiction specialist.

The same law extended Medicare payment to rural health clinics and federally qualified health centers for non-behavioral health visits delivered by telecommunication through the same date, which CMS also codified.

Duplicate billing, ACO bonuses and the end of MIPS

CMS finalized its proposal to reduce payment for the lower-cost of two services billed on the same day, cutting it by 20 percent, a narrower version of the 50 percent reduction it had floated. The agency estimates the change, along with a correction to an incentive payment formula, will prevent about $2.38 billion in what it calls unintended windfall payments over a decade.

The complexity add-on code G2211 becomes modifier B1 and raises payment on the associated evaluation and management visit by 16 percent rather than a flat amount; a new modifier B2 raises it 32 percent for clinicians in Shared Savings Program and LEAD model accountable care organizations. CMS also set the traditional MIPS reporting option to sunset after the 2030 performance period, moving clinicians to MIPS Value Pathways or advanced alternative payment models.

"Medicare should reward clinicians for keeping people healthy," HHS Secretary Robert F. Kennedy Jr. said in the announcement. CMS Administrator Mehmet Oz framed the duplicate-billing provisions as closing "costly loopholes" that let volume drive revenue.

Whether the behavioral health increases offset the conversion factor cut depends on a practice's case mix. A clinic that mostly delivers psychotherapy, SBIRT and collaborative care comes out ahead on the counseling codes; a clinic whose revenue is dominated by evaluation and management visits does not. For patients with opioid use disorder, the relevant question is whether the higher valuations for screening and counseling translate into more primary care practices offering medication-assisted treatment alongside it — a link the rule encourages through payment but does not require.

The final rule takes effect January 1, 2027.