Doctor pay is set to decline in 2027 under a new Medicare reimbursement rule released on Tuesday.
Conversion factor cuts affect all physicians
The proposed regulation lowers the conversion factor that determines Medicare payment rates by 1.68% for doctors who do not join alternative payment models and by 1.19% for those who do. Both groups receive a modest increase to reflect changes in how the agency evaluates the value of their services, but that is offset by an overall 2.5% reduction once a temporary reimbursement boost, approved by Congress last summer, expires in 2027.
Provider organizations say the cuts will destabilize practices and curb investment in primary care. “The updates fall well short of what it actually costs our members to deliver care,” said Dr. Jerry Penso, president and CEO of the American Medical Group Association.
Push for broader participation in value‑based care
The rule also seeks to expand involvement in accountable care organizations (ACOs) and to revamp quality reporting. Under the Medicare Shared Savings Program (MSSP), ACOs that keep spending below a benchmark share a portion of the savings, while those that exceed it may face penalties.
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CMS proposes to raise the shared‑savings rate for the highest level of the basic MSSP track, Level E, from 50% to 60%. The agency notes that Level E ACOs have generated more savings for Medicare than the enhanced track, despite involving fewer organizations.
Other changes would let ACOs roll more of their previously earned savings into future benchmarks, add a growth adjustment to reward recruitment of new providers and patients, and permit reductions or eliminations of Medicare outpatient cost sharing for certain beneficiaries.
Physicians worry about revenue.
While many physician groups criticize the payment reductions, they generally welcome the shift toward more streamlined value‑based reporting.
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From a broader perspective, the adjustments reflect an ongoing tension between controlling federal health‑care costs and maintaining a viable reimbursement structure for providers. If physicians find the cuts unsustainable, it could accelerate consolidation in the industry, potentially reducing competition and limiting patient choice.
CMS emphasizes that the rule is designed to move the health system from treatment to prevention and to preserve Medicare’s long‑term financial health. One specific proposal would reduce payment for evaluation and management visits performed on the same day as a bundled surgical service at the same practice, aiming to eliminate duplicate reimbursement.
Another element tightens rules around remote monitoring services, reflecting growing scrutiny of telehealth billing practices. The agency also suggests allowing ACOs to lower or remove outpatient cost sharing for certain services, which could improve access for beneficiaries.
“The proposed rule once again cries out for Congressional action to halt these devastating fee cuts at a time when so many physician practices are operating close to the brink,” said Susan Dentzer, president and CEO of America’s Physician Groups, in a statement. The administration has historically intervened with temporary payment increases before cuts take effect, but the current proposal highlights a gap that may require legislative attention.
