CMS proposes ACO overhaul, MIPS sunset and pay cuts in 2027 fee schedule

CMS wants to make Medicare’s largest value-based payment program easier to join and more rewarding to stay in, even as physicians face another round of pay cuts under the proposed 2027 Medicare Physician Fee Schedule.

The agency issued the proposed rule on July 14, pitching it as one of the most significant Medicare modernization efforts in recent years. “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,” CMS Administrator Mehmet Oz, M.D., said in the agency’s announcement.

How the 2027 proposed rule would change the Medicare Shared Savings Program

The rule proposes a broad overhaul of the Medicare Shared Savings Program. According to CMS’ fact sheet on the proposals, the agency would raise the shared savings rate for Level E of the BASIC track from 50% to 60%, increase the prior savings adjustment’s scaling factor from 50% to 75% to blunt the benchmark “ratchet” that penalizes ACOs for past success, and add a growth adjustment rewarding ACOs that recruit clinicians inexperienced with risk or serve beneficiaries new to accountable care.

To rebalance incentives across risk tracks, CMS would also cut the maximum weight of the positive regional adjustment for ENHANCED track ACOs from 50% to 35%, arguing the current structure lets low-spending ACOs collect both a higher sharing rate and a larger benchmark boost. The agency would risk-adjust the 5% cap on upward benchmark adjustments as well, so ACOs serving higher-risk, higher-cost populations could qualify for larger adjustments.

CMS also proposes guardrails on the Accountable Care Prospective Trend, limiting the projection to no more than 1 percentage point below or 1.5 percentage points above actual national spending growth, and would apply the lower guardrail retroactively for ACOs that started agreement periods in 2024, 2025 and 2026. Performance year 2025 financial reconciliation would be delayed until November 2026 to accommodate the change.

Beginning April 1, 2027, approved ACOs could also reduce or eliminate Part B cost sharing for beneficiaries on most items and services, an approach CMS says builds on experience in the ACO REACH Model. Other proposals would simplify certified EHR technology requirements, extend quality reporting flexibilities and streamline beneficiary notices.

The rule would also retool the Advance Investment Payments program that helps smaller organizations build care management infrastructure. Starting in performance year 2028, CMS would drop the risk score-based formula in favor of flat quarterly payments: $45 for each beneficiary who is dually eligible, enrolled in the Part D low-income subsidy or living in a rural county, and $25 for each other beneficiary, capped at 10,000 beneficiaries.

ACO performance: $4.1 billion in shared savings for 2024

The Shared Savings Program has generated savings for the Medicare Trust Funds for eight consecutive performance years, according to CMS. In performance year 2024, 75% of the program’s 476 ACOs earned shared savings payments totaling $4.1 billion, with roughly $2.5 billion in net savings after those payouts.

New E/M modifier would pay ACO clinicians 32% more

The fee schedule side of the rule carries its own accountable care sweetener. CMS proposes converting the G2211 office visit complexity add-on into a modifier that would raise payment for the associated evaluation and management code by 16%, and creating a second, voluntary modifier available only to clinicians in Shared Savings Program or LEAD Model ACOs that would boost the E/M payment by 32% to recognize the costs of longitudinal care and total cost of care accountability.

Other payment proposals would sting. When a separately identifiable E/M visit is billed on the same day as a procedure with a 0-, 10- or 90-day global period by the same physician or a physician in the same practice, CMS would pay the most expensive service in full and cut all others by 50%. Remote physiologic and therapeutic monitoring would face new limits too, including requirements that the services be furnished by clinical staff employed by the practice rather than contractors and that billing begin with a separately reportable initiating visit.

2027 Medicare conversion factor cuts and the MIPS sunset

The accountable care proposals arrive within a rule that otherwise brings pay cuts for physicians. As detailed in the CMS fact sheet on the broader rule, the proposed 2027 conversion factor falls 1.19% to $33.17 for qualifying alternative payment model participants and 1.68% to $32.84 for everyone else, driven largely by the expiration of a one-year 2.5% boost Congress provided for 2026. The rule also proposes sunsetting traditional MIPS reporting beginning with the 2029 performance year in favor of specialty-focused MIPS Value Pathways, which CMS says would cover roughly 98% of specialties.

Three new MVPs covering diabetes, hypertension and hospital-based care would join the inventory, and beginning in 2027, every MIPS clinician would report at least one Core Measure considered fundamental to their specialty and patient population. CMS also proposes closing a loophole in how it pays the alternative payment model incentive, which the agency estimates would otherwise deliver $2.38 billion in windfall payments over the next decade to clinicians who do not participate in APMs.

NAACOS backs the accountable care proposals

The accountable care community welcomed the proposals. Emily Brower, president and chief executive officer of the National Association of Accountable Care Organizations, applauded the rule in a July 14 statement, calling its provisions “a positive step” toward CMS’ goal of having every Medicare beneficiary in an accountable care relationship.

NAACOS, which has pressed CMS to modernize ACOs by fixing benchmark methodology and reducing administrative burden, said the proposals address several of its priorities, including cash flow improvements to the Advance Investment Payments program and a request for input on a permanent prospective primary care payment. The group noted CMS projects the proposals would reduce trust fund spending by $5.5 billion through 2036.

Comment deadline and effective date

Comments on the proposed rule are due 60 days after publication and can be submitted at regulations.gov under file code CMS-1848-P. A final rule is expected this fall, with most provisions taking effect January 1, 2027.