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LUGPA Policy Brief - CMS CY 2027 Medicare Physician Fee Schedule Proposed Rule and the Need to Protect Independent Urology and Patient Access to Office-Based Care

August 2026

Executive Summary

The Centers for Medicare & Medicaid Services (CMS) has proposed several Medicare Physician Fee Schedule (MPFS) payment changes for CY 2027 that disproportionately affect independent, office-based urology. While CMS estimates an approximately 2 percent reduction in RVU-based allowed charges for the specialty, many practices will face significantly larger losses when combined with the proposed conversion factor reduction, continued cuts to cystoscopy practice expense, and a new payment policy for same-day Evaluation and Management (E/M) services.

Together, these proposals threaten independent physician practices, discourage coordinated same-day care, and further incentivize the migration of services to higher-cost hospital settings.

LUGPA is preparing formal comments to CMS on behalf of its member physicians and independent urology practices. We will urge CMS to reconsider these proposals and adopt payment policies that preserve physician-led, office-based care, protect patient access, and support the long-term sustainability of independent urology.

LUGPA's Primary Concerns

Modifier 25 Payment Reduction

CMS proposes reducing payment by 50 percent for the lower-valued service when a physician bills both a separately identifiable E/M visit and a procedure on the same day using Modifier 25.

This policy would affect many routine urology encounters, including office visits combined with cystoscopy, prostate biopsy, bladder treatments, and catheter procedures. Modifier 25 already requires that the E/M service be significant and separately identifiable, and LUGPA does not believe CMS has provided sufficient evidence to justify a blanket payment reduction.

The proposal could discourage coordinated same-day care by requiring additional patient visits, increasing travel and administrative burdens, delaying treatment, and reducing access for Medicare beneficiaries.

Continued Cuts to Cystoscopy Practice Expense

CMS also continues to reduce reimbursement for the SA058 cystoscopy supply pack, decreasing its value from $75.67 in CY 2026 to $56.65 in CY 2027, with an additional reduction to $37.63 in CY 2028. The CY 2027 reduction alone is approximately 25 percent and affects 38 common urologic procedures.

These reductions do not reflect the actual costs of providing office-based cystoscopy, including sterile supplies, scope reprocessing, infection control, staffing, shipping, and equipment maintenance. CMS should pause these reductions until updated market cost data can be incorporated.

Protecting Independent Practice

CMS's specialty-wide estimates understate the impact on independent practices that perform high volumes of office-based procedures. These payment reductions increase pressure on physician practices while hospitals continue to receive separate facility payments, creating incentives to shift care into higher-cost settings.

Independent urology practices deliver coordinated, high-quality care at lower cost than hospital outpatient departments. CMS should evaluate the cumulative impact of these policies on the sustainability of independent practice, patient access, and Medicare spending before finalizing the rule.

CMS should also preserve appropriate practice expense reimbursement, recognize the physician work included in global surgical care, maintain payment for longitudinal specialty management, and update the valuation of prostate biopsy to reflect modern techniques such as MRI fusion and transperineal biopsy.

LUGPA Recommendations

LUGPA urges CMS to:

  • Withdraw the proposed 50 percent Modifier 25 payment reduction.
  • Pause the SA058 cystoscopy supply pack reductions until current cost data are incorporated.
  • Evaluate the cumulative impact of these proposals on independent physician practices and patient access.
  • Preserve practice expense reimbursement and physician work associated with global surgical care.
  • Maintain payment for longitudinal specialty care and modernize prostate biopsy valuation.

Conclusion

The CY 2027 MPFS proposed rule combines multiple payment reductions that disproportionately affect independent, office-based urology. Without modification, these policies risk reducing patient access, accelerating physician practice consolidation, and shifting care to higher-cost hospital settings.

Through its formal comments to CMS, LUGPA will advocate for policies that preserve independent physician practices, support coordinated office-based care, and ensure Medicare beneficiaries continue to receive timely, high-quality urologic care in the lowest-cost appropriate setting.