The Trump administration is proposing sweeping changes to Medicare payment and value-based care programs it says will expand accountable care, modernize physician payment and help shift the healthcare system toward prevention instead of treatment.
On Tuesday, the Centers for Medicare and Medicaid Services issued Medicare Part B payment policy changes for physicians under the calendar year 2027 Physician Fee Schedule draft rule. CMS said in a press release that the proposals would make Medicare accountable care organizations (ACOs) easier to join, transition clinicians away from traditional Merit-based Incentive Payment System (MIPS) reporting and update physician payment policies to better reflect modern clinical practice,
An unpublished PDF version of the 1,592-page proposal can be found here.
“We’re proposing some of the most significant Medicare reforms in recent years to strengthen primary care, expand accountable care, and modernize physician payment,” said CMS Administrator Mehmet Oz, M.D., in a statement. “These changes would make it easier for clinicians to focus on prevention, improve coordination for patients, and ensure Medicare rewards better outcomes rather than more services.”
“Expanding accountable care is a critical part of making the Medicare program work well for patients,” said John Brooks, CMS Deputy Administrator and Director of the Center for Medicare in a statement. “Our goal is simple: deliver better outcomes for patients by appropriately incentivizing providers, improving quality measurement, and reducing administrative burden.”
For physicians, while the proposed rule includes statutory payment increases, Medicare payment rates face an overall baseline decrease for 2027 due to the expiration of a temporary 2.5% legislative increase from the One Big Beautiful Bill Act (OBBBA) in 2026.
Under the Medicare Access and CHIP Reauthorization Act (MACRA), the CY2027 conversion factors reflect statutory updates of +0.75% for qualifying Alternative Payment Model (APM) participants and +0.25% for non-qualifying participants, plus an estimated 0.53% adjustment for changes in work RVUs (relative value units). The proposed CY 2027 qualifying alternative payment model (APM) conversion factor of $33.17 represents a projected decrease of $0.40 (-1.19%) from the current conversion factor of $33.57. Similarly, the proposed CY 2027 non-qualifying APM conversion factor of $32.84 represents a projected decrease of $0.56 (-1.68%) from the current conversion factor of $33.40.
CMS said updates to the Physician Fee Schedule "better reflect modern medical practice and support the Trump administration’s goal of shifting from sick care to healthcare."
"Over time, the PFS has accumulated layers of outdated payment policies and billing conventions that no longer fully reflect how healthcare services are delivered. CMS is proposing a targeted recalibration of payment rates to improve accuracy, transparency, and consistency," CMS officials said in the press release.
CMS said the proposed changes better align payments with the time, resources and complexity involved in delivering care.
Physician groups immediately pushed back on the proposed pay cuts.
“Once again, CMS has proposed conversion factor updates that fall well short of what it actually costs our members to deliver care,” Jerry Penso, M.D., president and chief executive officer of AMGA, said in a statement. “Last year’s increase was only possible because Congress stepped in with a one-time, one-year fix. That relief has expired, and the proposed rule reflects exactly what we were concerned about: a return to the bare statutory updates required under MACRA, which do not come close to keeping pace with inflation or practice costs.”
"Medicare physician payments have declined 33% from 2001 to 2025 when adjusted for inflation, even as practice expenses have increased. Reforming Medicare payment is critical for serving all patients across the health care system, because Medicare payment policies influence Medicaid, Tricare and commercial insurance," AAFP said.
Both groups are calling on Congress to implement permanent Medicare payment reform with a predictable update tied to the Medicare Economic Index (MEI).
"A single year of congressional intervention was never a substitute for structural reform. The moment the temporary fix expired, the underlying erosion of physician payment reasserted itself. Medical groups and health systems cannot build sustainable, high-value, team-based care on a payment system that swings between modest relief and a renewed decline every 12 months," Penso said.
CMS also is addressing what is sees as overpayment and duplicated reimbursement when multiple services are delivered during the same patient encounter. CMS is proposing to cut Medicare payments when an office/outpatient evaluation and management (E/M) visit is furnished by the same physician, or a physician in the same practice, on the same day as a 0-, 10-, or 90-day global procedure.
The most expensive service, either surgical or E/M visit, would be paid at 100% and any additional E/M visits or procedures provided that day would be reimbursed at 50%.
The changes would account for efficiencies that occur when multiple services are delivered during the same patient encounter, CMS said.
The agency also wants to overhaul the office/outpatient evaluation and management visit complexity add-on code, HCPCS code G2211. CMS proposes transitioning HCPCS code G2211 from a flat add-on payment to a modifier that would increase the payment of the associated E/M code by 16%. That would maintain an equal percentage increase across all levels of E/M codes, CMS said.
CMS also proposes a new modifier that would offset the costs incurred by practitioners in ACOs when providing longitudinal care and care coordination. The modifier would only be available for practitioners participating in a Shared Savings Program ACO or participant providers in a Long-term Enhanced ACO Design (LEAD) Model ACO and would increase payment of the associated E/M visit by 32%, CMS said.
Medicare also proposes tightening rules around remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM). Under the draft 2027 Physician Fee Schedule rule, RTM services can only be furnished to established patients and providers have to provide a separately reportable initiating visit before billing for RPM or RTM services. Remote monitoring services would need to be provided by practice-employed staff, not delivered by contractors.
CMS also wants comments on a potential change to the current coding structure by bundling the RPM and RTM CPT codes and creating four new HCPCS G-Codes to describe remote monitoring services.
Phasing out traditional MIPS and changes to quality reporting
One key change that physicians will likely welcome is CMS' proposal to phase out traditional Merit-based Incentive Payment System (MIPS) reporting in 2029 and transition clinicians toward MIPS Value Pathways (MVPs), what CMS calls more "clinically meaningful specialty-focused" reporting option.
When MIPS was launched in 2017, its goal was to move Medicare away from a fragmented fee-for-service system toward one that rewards quality, outcomes, and value. Over the past decade, CMS has worked with clinicians to refine the program and reduce reporting burden. The proposed rule reflects that evolution by establishing MIPS Value Pathways (MVPs) as the primary reporting option.
MIPS eligible clinicians would have until the end of 2028 to transition to an MVP unless they participate in a MIPS APM and report the APM Performance Pathway (APP), CMS said in a fact sheet (PDF) about the quality payment program.
CMS is proposing three new MVPs focused on diabetes, hypertension and hospital-based care to further expand participation opportunities and promote prevention. If finalized, the MVPs inventory would provide a relevant reporting option for approximately 98% of specialties, CMS said.
The proposal also would introduce new MIPS Core Measures beginning in 2027. Under this approach, every clinician would report at least one measure considered fundamental to their specialty and patient population. "The goal is to improve consistency and generate more meaningful quality data for patients, providers, and policymakers," CMS said.
In addition, CMS aims to change how it pays the APM incentive payment to help ensure incentives are directed to providers actively delivering value-based care and improving patient outcomes. The agency said it wants to close a payment loophole that could otherwise result in an estimated $2.38 billion in windfall payments to clinicians who do not participate in APMs over the next decade.
Changes to value-based care programs
CMS is proposing significant improvements to the Medicare Shared Savings Program, the nation’s largest value-based payment program. The changed, CMS said, would "support continued participation and growth in accountable care, while strengthening incentives for high-quality, coordinated care."
CMs touted MSSP's ongoing strong financial results. In performance year 2024, 75% of the 476 participating ACOs earned shared savings payments totaling $4.1 billion. Even after those payments, net savings of approximately $2.5 billion compared to projected spending benchmarks were generated for the Medicare Trust Funds, the agency said. The Shared Savings Program has now generated savings for the Medicare Trust Funds for eight consecutive performance years.
CMS wants to build on this record by improving benchmark accuracy, supporting continued and expanded participation and reducing unnecessary administrative burden. The agency is proposing changes to the Shared Savings Program’s benchmarking and financial methodology that would balance incentives between Level E of the BASIC track and the ENHANCED track.
The changes also would mitigate selection issues and benchmark rebasing concerns and encourage participation by ACOs with higher risk and higher cost populations. CMS is proposing to increase the shared savings rate for Level E of the BASIC track from 50% to 60% and reduce the maximum weight used in calculating the positive regional adjustment for ACOs participating under the ENHANCED track from 50% to 35%.
The Shared Savings Program revisions would increase opportunities to share savings for certain participating ACOs, create new financial incentives for organizations joining the program for the first time and establish more predictable spending targets to improve planning and participation, CMS said.
The proposals also simplify technology requirements and streamline patient notices.
CMS also propose changes that would allow ACOs with approved applications beginning April 1, 2027, to reduce or eliminate beneficiary out-of-pocket costs for certain items and services, expanding a successful approach already adopted by many participants in the ACO REACH Model.
Editor's Note: This is a developing story and will be updated.