CMS finalized the 2027 Medicare Physician Fee Schedule on November 4, and the rule reaches your provider relationships even though the policy applies to Original Medicare. The payment rates, quality reporting programs, and accountable care organization (ACO) incentives in the final rule shape what your contracted physicians earn, how they report quality, and which value-based arrangements draw their attention in 2027. The rule takes effect January 1, 2027, which gives your network, quality, finance, and marketing teams about eight weeks to read the details.
Payment rates fall for 2027
The 2027 conversion factor drops to $32.95 for clinicians in qualifying alternative payment models (APMs), down from $33.57, and to $32.63 for all other clinicians, down from $33.40. CMS ties most of the decline to the expiration of the one-year 2.5% increase in place for 2026, with statutory updates of 0.75% and 0.25% for the two groups applied to the 2027 rates. If your provider contracts pay a percentage of Medicare rates, the lower conversion factor flows into your 2027 medical costs through your contract language, so your network and finance teams will want to confirm which fee schedule year each contract references and how each one updates.
CMS also finalized a 20% payment reduction when a separately identifiable office visit and a 0-day global procedure happen on the same day. The highest-paid service pays at 100% and the other service pays at 80%. CMS dropped the proposed extension to 10-day and 90-day global procedures, which narrows the policy to minor procedures. Contracts tied to Medicare payment policy carry the reduction into your claims, so contract language again decides how much of the change reaches you, and plans with their own same-day visit and procedure edits now have a Medicare reference point to compare against.
Visit add-on payments change as well. CMS replaces the G2211 complexity add-on with modifier B1, which raises the associated visit payment by 16%, and adds modifier B2, which raises the associated visit payment by 32% for practitioners in Shared Savings Program ACOs or the LEAD Model. Billing B2 is voluntary and applies to any beneficiary the practitioner treats, and B2 claims count toward assignment and benchmark calculations for both programs. A physician in an ACO now earns a larger add-on on visits, which adds a payment reason for the physicians in your network to join or stay in an ACO.
ACOs gain richer incentives and a new cost-sharing tool
The Shared Savings Program receives the most attention in the rule. CMS reports that in performance year 2024, 75% of the 476 participating ACOs earned shared savings totaling $4.1 billion, and the program has generated savings for the Medicare trust funds for eight consecutive performance years. The final rule builds on that record in four ways. Starting April 1, 2027, approved ACOs reduce or eliminate Part B cost-sharing for assigned beneficiaries on most services, excluding durable medical equipment and prescription drugs, and each ACO chooses the service categories and beneficiaries the waiver covers. ACOs apply to CMS, with applications opening in early 2027 and a goal of starting by the second quarter. The sharing rate for BASIC Level E rises from 50% to 60% while ENHANCED stays at 75%, first-time participants receive a new growth adjustment, and the 5% cap on upward benchmark adjustments will be risk-adjusted for the severity and case mix of assigned beneficiaries. CMS projects up to 1 million additional beneficiaries assigned to ACOs in an average year and $5.5 billion in net federal savings over ten years.
Lower cost-sharing has long been a selling point for MA plans, and the waiver gives ACOs in Original Medicare a version of that tool. Beginning with performance year 2028, ACO assignment excludes people enrolled in a Medicare group health plan, including Medicare Advantage, so the waiver does not reach your members directly. In markets where ACOs apply and use the waiver, beneficiaries comparing Original Medicare with an MA plan will see lower out-of-pocket costs on the traditional side, and your marketing and sales teams will want to know where those ACOs operate before the fall 2027 annual enrollment period.
The incentives also pull on your network. Primary care groups weighing an ACO now have higher sharing rates, a first-time participant adjustment, and, starting with performance year 2028, advance investment payments of $45 per quarter for each beneficiary who is dually eligible, enrolled in Part D low-income subsidy, or living in a rural county, and $25 per quarter for other beneficiaries, capped at 10,000 beneficiaries. Many of those groups also hold MA contracts with plans like yours, so the ACO option gives them more to compare against your value-based offers.
Traditional MIPS reporting sunsets
The Merit-based Incentive Payment System (MIPS) is Medicare's main quality reporting and payment adjustment program for clinicians, and CMS will sunset the traditional MIPS reporting option beginning with the 2031 performance period. Clinicians have through 2030 to move to MIPS Value Pathways (MVPs), which already cover about 98% of clinicians, or to Advanced APMs, and CMS added two years of transition time compared with the proposed rule. The final rule adds three new MVPs for diabetes, hypertension, and hospitalists, and requires clinicians to report at least one specialty-specific Core Measure starting in 2027.
Diabetes and hypertension are clinical areas your quality team already tracks for Star Ratings, so your provider groups will report through condition-focused pathways with a familiar shape, which gives you common ground on measure definitions and data exchange in your next provider quality conversation. For ACOs, the rule creates a Medicare eCQM collection type scored against flat benchmarks and offers three options for meeting certified electronic health record technology requirements, including one pairing electronic reporting with an attestation of FHIR-based API use. Those options point in the same digital direction as plan-side quality measurement, and provider groups with strong electronic data will make easier partners for data exchange.
The Ambulatory Specialty Model starts January 1
The Ambulatory Specialty Model, a CMS Innovation Center model launching January 1, holds specialists accountable for the quality and cost of longitudinal care for two chronic conditions, heart failure and low back pain, with the aim of slowing disease progression and reducing avoidable hospitalizations and low-value procedures. CMS finalized refinements to the model in this rule. If your care management and utilization programs address heart failure and low back pain, the model gives you a Medicare reference point for how specialists in your network are measured, and your specialty contracting teams gain a shared language for conversations about both conditions.
Preventive and behavioral health coding expands
CMS finalized national payment pathways for health and well-being coaching under general supervision, separate billing for shared medical appointments with time-based add-on codes, higher valuations for smoking cessation and behavioral health assessments, new advance care planning codes G0572 and G0573 for clinical staff services, and higher work relative value units for the Collaborative Care Model. Medicare codes frequently set the reference for MA coverage policy and provider billing, so your benefit, claims, and care management teams get new codes to map and new service types to watch in 2027 utilization.
Timing and runway
The payment changes begin with claims on January 1, 2027, and most of the rest phases in over several years, which leaves your teams room to sequence the work. Contract language and fee schedule references come first because they carry the 2027 cost effect. ACO cost-sharing waiver applications open in early 2027 with the first waivers starting April 1, advance investment payments begin in performance year 2028, and traditional MIPS reporting runs through 2030, so quality alignment with your provider groups has years rather than months. The Ambulatory Specialty Model starts January 1, which gives your specialty teams a first look at how the model shapes referral and utilization patterns in your markets.
Provider partnerships and value-based care is one of six tracks at RISE National 2027, March 16-18 at Caesars Forum in Las Vegas, where you compare notes with Medicare Advantage peers on how provider payment and ACO changes show up in contracts and member decisions.