As summarized in the blog post "2027 CMS Proposed Physician Fee Schedule: A Roadmap for Wound Clinicians", in July 2026, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2027 Proposed Physician Fee Schedule (PFS) Rule, outlining updates to Medicare Part B payment systems. The proposal includes modifications across physician services including the reintroduction of modifier-25 payment reductions which may directly affect wound debridement or other procedure encounters. 

Before diving into these proposed changes, let’s review the correct application of modifier 25 to evaluation and management (E/M) codes. 

Modifier 25: Definition and Correct Use in Wound Care

What is "Modifier 25"?

Modifier 25 identifies a significant, separately identifiable Evaluation and Management (E/M) service provided by the same physician or other qualified healthcare professional on the same day as a procedure or other service. [1]

• Providers of the same specialty in the same group practice are considered the same provider; therefore, they must bill and be paid as though they were a single provider.[2]

Why Should Wound Care Programs Care About Modifier 25?

The U.S. Department of Health and Human Services Office of Inspector General (OIG) features modifier 25 prominently on its active audit and work plan watch lists. The agency targets evaluation and management (E/M) services billed on the same day as minor procedures due to high rates of improper payments and unsupported separate documentation. [1]

How Can Wound Care Programs Correctly Apply Modifier 25?

Correct use requires more than documenting that a patient’s vital signs were obtained, consent was signed, or a procedure was performed. The medical record must demonstrate that the patient required a clinically meaningful E/M service above and beyond the work ordinarily included in the procedure or its preoperative and postoperative care. [1]

Modifier 25 should be appended to the qualifying E/M or hospital outpatient clinic visit code - not to the procedure code. Depending on the setting, payer, and type of claim, applicable codes may include:

• 99202–99205 and 99211–99215: Office or other outpatient E/M services reported on the professional claim
• 99281–99285: Emergency department E/M services
• 99291–99292: Critical care services
• G0463: Hospital outpatient clinic visit reported on the facility claim

The Central Rule: “You Must Earn It”

 Modifier 25 should be appended only when the documentation supports a significant, separately identifiable E/M or clinic visit provided on the same day as another procedure or service. 

Modifier 25 is appropriate only when the E/M service is:

1. Significant
2. Separately identifiable
3. Clearly documented
4. Above and beyond the usual work included in the procedure

The record should support a separately performed history or assessment, examination as applicable, and medical decision-making consistent with the reported E/M level.

Documentation should identify the additional clinical problem, symptom, sign, chief complaint, or medical decision-making that required evaluation and management separate from the procedure.

Which Services Are Not Separately Billable From an E/M Code? 

The following activities are generally included in payment for the diagnostic or therapeutic procedure and do not, by themselves, support an additional E/M code:

• Taking the patient’s blood pressure
• Measuring temperature
• Asking how the patient feels
• Obtaining written consent
• Routine pre-procedure assessment
• Intra-procedure services
• Routine post-procedure care
• Dressing changes and other care included in the procedure
• Evaluation performed solely to determine whether the scheduled procedure can proceed

A separate E/M code should not be reported when the sole reason for the scheduled encounter is to undergo a diagnostic or therapeutic procedure.

What Are Some Examples of Correct Use of Modifier 25 In Wound Care?

Example 1. Modifier 25 With Wound Debridement - New Wound

A wound care visit and debridement may be reported on the same date when the record supports a separate E/M service.

For example, a patient presents for a wound care follow-up. The provider performs debridement of an established ulcer. During the same encounter, the provider also evaluates a new wound at another anatomical site, determines that it does not require debridement, and develops a separate management plan.

In this circumstance, the claim may include:

• Appropriate E/M code with modifier 25
• Appropriate debridement code

An example from the provided guidance is:

• 99212-25
• 97597

The documentation must clearly distinguish the separately identifiable E/M service from the debridement.

Example 2. Modifier 25 with Wound Debridement - Same Wound, New Signs and Symptoms

An E/M service reported with modifier 25 can be prompted by the same symptom or condition that necessitated the procedure; therefore, different diagnosis codes are not necessarily required as long as the documentation supports that the E/M service was separately identifiable.

For example, a patient may present for a scheduled chronic wound debridement but also reports new, localized redness and increased pain at the wound site. If the provider performs a distinct evaluation to assess for a potential spreading infection and adjusts the overall management plan before proceeding with the debridement, both the E/M (with modifier 25) and the procedure are reportable.

What Are Some Examples of Inappropriate Use of E/M Codes And Modifier 25? 

Example 1: Reporting a Separate E/M Service for Work That Is Part of a Procedure

If a patient presents for a scheduled debridement and the provider performs only the assessment and other work routinely required to complete the procedure, a separate E/M service is generally not reportable. Modifier 25 does not make the routine pre-procedure or post-procedure work separately payable.

Example 2: Reporting an E/M Code Instead of the Procedure Because It Pays More

An E/M code should not be reported in place of the procedure actually performed simply because the E/M service has a higher reimbursement rate. The procedure must be accurately reported. A separate E/M code with modifier 25 may be reported only when the provider also performs and documents a significant, separately identifiable E/M service beyond the work inherent in the procedure.

In wound care and HBOT, accurate use depends on clear documentation that demonstrates the additional clinical problem, evaluation, and medical decision-making.

The modifier should reflect the work actually performed—not the reimbursement value of the service.

Examining the Proposed 2027 Physician Fee Schedule Payment Reduction for Services Reported with Modifier 25

For CY 2027, CMS is proposing a payment reduction when modifier –25 is reported for a significant, separately identifiable office or outpatient E/M visit performed by the same physician or qualified practitioner on the same day as a 0-, 10-, or 90-day global procedure. [1]

Here is where the change occurs:

The higher-valued service—the E/M visit or procedure—would be paid at 100%.

Any additional surgical procedure(s) or E/M service(s) performed that day would be paid at 50%.

The proposal would particularly affect wound-care encounters involving debridement or other procedures with a separately reported E/M visit.

Who Would be Affected by the Proposed Change? 

The proposed 50% cut applies to every specialty that bills an E/M visit and a global-period procedure on the same day . Some specialties use modifier 25 more frequently such as podiatry and dermatology. These practices are likely to experience a significantly greater impact on their revenue. [3]

What Would Stay the Same? 

Modifier –25 would still require documentation of a significant, separately identifiable E/M service beyond the usual preoperative, intraoperative, and postoperative work associated with the procedure. A new problem, symptom, sign, chief complaint, or separate medical decision-making should be documented when applicable.

Would the Proposed Modifier 25 Payment Reduction Apply Only to Medicare, or Could Commercial Payers Adopt It?

At this time, the proposal applies only to CMS.  However, private insurance companies watch Medicare very closely. When Medicare changes its payment rules, private plans usually make the same changes within one to two years.

How Could This Proposed Change Affect Your Institution’s Financial Performance?

Consider a wound care encounter in which a practitioner reports a Level 3 established-patient office or outpatient E/M service (99213) with modifier 25 and selective debridement of the first 20 sq cm or less (97597). Under current Medicare Physician Fee Schedule rules, both professional services may be paid at their applicable rates when the documentation supports a significant, separately identifiable E/M service. [3]

Using geographically unadjusted 2026 national PFS amounts for a practitioner who is not a qualifying APM participant:

• In a non-facility office setting, the estimated payment is $95.19 for 99213 and $101.54 for 97597. Under the proposal, 97597 would be paid in full and 99213 would be reduced by 50%, resulting in an estimated reduction of $47.60 per encounter. For 10 such encounters per week, the reduction would be approximately $476 per week, or $24,750 annually.
• For professional services furnished in a hospital outpatient department, the estimated payment is $57.45 for 99213 and $31.06 for 97597. Because 99213 is the higher-paid professional service in this setting, it would be paid in full and 97597 would be reduced by 50%. The estimated reduction would be $15.53 per encounter, approximately $155 per week for 10 encounters, or $8,076 annually.

These examples use 2026 rates only to illustrate the proposed methodology. Actual effects would depend on the final 2027 policy and payment rates, the practitioner’s qualifying APM status, geographic adjustments, payer mix, service volume, and site of service.

Hospital facility payments made under OPPS, including G0463 and facility-reported 97597, are governed by a separate payment system and are not addressed by this proposal. Institutions should estimate the potential impact using their actual Medicare professional-claim volume and applicable locality-adjusted payment rates.

So Why this Change is being Proposed?

CMS believes that paying for both an E/M service and a procedure with or without a global period on the same day pays twice for overlapping steps like the patient intake, medical history review, and room setup. They have consistently held this position for years.

How Should Wound Care Programs Prepare for the Proposed 2027 Change?

• 1. Continue following current modifier 25 requirements. The payment reduction is part of the proposed CY 2027 Medicare Physician Fee Schedule and has not been finalized. During 2026, continue reporting modifier 25 when appropriate and ensure the documentation supports a significant, separately identifiable E/M service performed on the same day as a procedure.
• 2. Strengthen clinical documentation.
• The medical record should clearly establish:
• The medically necessary E/M work performed;
• Why the E/M service was significant and separately identifiable from the procedure (e.g. new problem, symptom, sign, chief complaint, or separately evaluated condition); and
• The evaluation and medical decision-making performed beyond the work ordinarily included in the procedure.
• A new problem or different diagnosis is not required, although either may help demonstrate that a separately identifiable service occurred.
• 3. Estimate potential financial exposure. Review frequently reported office/outpatient E/M and procedure combinations involving modifier 25. Focus on claims in which the same physician—or a physician in the same practice—reported the E/M service with a procedure having a 0-, 10-, or 90-day global period. Apply the proposed 50% reduction to the lower-paid professional service and multiply the reduction by annual Medicare volume. Use the applicable PFS allowed amounts, geographic locality, and site of service.
• 4. Educate clinicians and coding staff. Provide specialty-specific training using wound care examples. For instance, a follow-up encounter may support a separate E/M service when one wound is debrided and another wound requires a medically necessary evaluation and management beyond the work associated with the debridement.
• 5. Update compliance and billing workflows. Consider prebilling review of higher-risk E/M-plus-procedure claims, retain documentation supporting the separately identifiable E/M work, and monitor denials, underpayments, and payer edits if the policy is finalized.
• 6. Submit comments to CMS. Interested parties may submit comments through Regulations.gov by September 14, 2026, referencing CMS-1848-P. Comments supported by wound care–specific clinical, operational, access, and financial data are likely to be most useful. 

References

1. Evaluation and Management Services on Same Day as Minor Surgery With No Modifier 25 Announced on 03/16/2026 | Last Modified on 03/16/2026 | Project Number: OAS-26-04-028
2. Department of Health and Human Services 43842 Federal Register / Vol. 91, No. 135 / Thursday, July 16, 2026 / Proposed Rules
3. Modifier 25 Payment Reduction for 2027: What CMS Proposed and What It Costs Your Practice July 31, 2026 

Resources

Related Resources from the WoundReference Knowledge Base

• Coding and Billing Essentials in Wound Care
• The Modifier Dilemma - Navigating Through Wound Care and HBOT
• 2027 CMS Proposed Physician Fee Schedule: A Roadmap for Wound Clinicians
• HCPCS/CPT Codes and Physician Fee Schedule Commonly Utilized in Wound Care and HBOT