The Centers for Medicare & Medicaid Services on Wednesday finalized the calendar year 2027 Medicare Physician Fee Schedule, changing Medicare Part B payment policies to emphasize prevention and coordinated primary care.
The rule covers clinicians paid under Medicare Part B and beneficiaries whose care is tied to those payments. Approved accountable care organizations will also be allowed to lower what some assigned beneficiaries pay out of pocket.
CMS said the rule modernizes physician payment so it rewards health maintenance and coordinated primary care rather than volume-based care. The agency said it is cracking down on duplicate billing and reinforcing fiscal stewardship across Medicare.
“Medicare should reward clinicians for keeping people healthy,” HHS Secretary Robert F. Kennedy, Jr. said. CMS Administrator Dr. Mehmet Oz said fee-for-service payment has “rewarded volume over value” and that the rule ends duplicate billing and closes loopholes.
When an office visit and a minor procedure occur on the same day, CMS will reduce payment by 20% for the lower-cost service. The agency said that reduces duplicate payment by patients and the Medicare program for clinical work already covered in the procedure’s valuation. CMS said the rule also corrects an incentive payment loophole, preventing an estimated $2.38 billion in unintended windfall payments over the next decade.
Starting April 1, 2027, approved accountable care organizations may reduce or eliminate Part B cost-sharing for many items and services for assigned beneficiaries. CMS said it is increasing shared savings rates for eligible organizations, adding incentives for first-time participants, and setting more predictable spending targets. The agency said it is also simplifying electronic health record reporting and patient notice requirements.
In performance year 2024, 75% of the 476 participating accountable care organizations earned shared savings totaling $4.1 billion, according to CMS. Those organizations generated net savings for the Medicare Trust Funds of approximately $2.5 billion compared with projected spending benchmarks. CMS said the Shared Savings Program has generated savings for the Medicare Trust Funds for eight consecutive performance years.
CMS will end the traditional Merit-based Incentive Payment System reporting option beginning with the 2031 performance period. Clinicians will have through 2030 to move to MIPS Value Pathways, which CMS said already cover approximately 98% of clinicians, or to Advanced Alternative Payment Models. That is two additional years of transition time compared with the proposed rule.
The rule finalizes three new pathways focused on diabetes, hypertension, and hospitalists. It requires clinicians to report at least one specialty-specific core measure starting in 2027. It also finalizes two new billing codes for advance care planning and writes into regulation noncitizen Medicare eligibility criteria from the Working Families Tax Cuts legislation.
CMS is establishing national payment pathways for health and well-being coaching under general supervision and dedicated billing for shared medical appointments. The agency said it is increasing valuations for smoking cessation and behavioral health assessments and allowing separate billing for clinical time to diagnose, treat, and counsel patients with vaccine adverse effects.
CMS is also finalizing changes to the Ambulatory Specialty Model, a CMS Innovation Center model launching Jan. 1. The model holds specialists accountable for the quality and cost of care linked to heart failure and low back pain.
The physician fee schedule rule is effective Jan. 1, 2027.