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 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, MD, said in the agency's announcement.

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 percent to 60 percent, increase the prior savings adjustment's scaling factor from 50 percent to 75 percent 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.

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 Shared Savings Program has generated savings for the Medicare Trust Funds for eight consecutive performance years, according to CMS. In performance year 2024, 75 percent 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.

The accountable care proposals arrive inside 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 percent to $33.17 for qualifying alternative payment model participants and 1.68 percent to $32.84 for everyone else, driven largely by the expiration of a one-year 2.5 percent 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 percent of specialties.

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.

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 Jan. 1, 2027.