The Centers for Medicare & Medicaid Services (CMS) has finalized its 2027 Medicare Physician Fee Schedule, introducing changes intended to strengthen primary care, expand preventive services, encourage accountable care, and reduce improper or duplicative payments.

The final rule, announced Nov. 4, includes a transition away from the traditional Merit-based Incentive Payment System (MIPS) reporting option. Beginning with the 2031 performance period, clinicians will no longer be able to use traditional MIPS and must transition to MIPS Value Pathways or Advanced Alternative Payment Models. Additionally, CMS is establishing three new MIPS Value Pathways focused on diabetes, hypertension, and hospitalists.

The rule makes several changes to the Medicare Shared Savings Program. Beginning April 1, 2027, approved Accountable Care Organizations (ACOs) may reduce or eliminate Part B cost-sharing for many services for their assigned beneficiaries. CMS is also increasing shared savings rates for eligible ACOs and simplifying certain reporting and administrative requirements.

To address payment integrity, CMS will reduce payment for the lower-cost service by 20 percent when an office visit and a minor procedure are billed on the same day. The agency estimates that changes to an incentive payment policy will prevent $2.38 billion in unintended payments over 10 years.

Other provisions expand Medicare payment pathways for health and well-being coaching and shared medical appointments and increase valuations for smoking cessation and behavioral health assessments. The rule furthermore establishes two new billing codes for advance care planning.

Mara McDermott, CEO of Accountable for Health, an advocacy organization representing more than 60 providers, payers and innovators, said the organization welcomes provisions in the 2027 Medicare Physician Fee Schedule that expand support for accountable care. She highlighted increased payments for qualifying visits, a higher share of savings credited to ACOs, reduced Part B cost-sharing options for beneficiaries, and increased support for the Psychiatric Collaborative Care Model.

However, McDermott expressed disappointment that CMS did not extend the enhanced evaluation and management payment modifier to clinicians in the Comprehensive Kidney Care Contracting Model. She also raised concerns about changes to ACO regional benchmark adjustments and continued pressure on physician payments, emphasizing the need for predictable funding to sustain accountable care.

The policies are intended to shift Medicare payment toward prevention, coordinated care, and health maintenance. The final rule takes effect Jan. 1, 2027.