The calendar year 2027 Medicare Physician Fee Schedule proposed rule signals continued efforts at the Centers for Medicare & Medicaid Services to modernize physician payment, recalibrate reimbursement, strengthen accountable care incentives, and prepare Medicare for evolving care delivery models. 

The Centers for Medicare & Medicaid Services (CMS), on July 14, 2026, released the Calendar Year (CY) 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; and Medicare Prescription Drug Inflation Rebate Program (PFS) proposed rule (CMS-1848-P). The proposal outlines policies that, if finalized, would take effect January 1, 2027, including annual payment updates and offers signals about the agency’s broader Medicare payment reform agenda. 

This article summarizes the scope of the proposed rule and highlights five provisions and policy signals that may have significant financial, operational, and strategic implications across the healthcare system. In future weeks, Health Management Associates (HMA), experts will examine the proposed changes specific to the Medicare Shared Savings Program (MSSP). 

HMA’s Take on the Proposed Rule 

CMS continues to advance several long-term priorities, including strengthening accountable care models, rethinking primary care payment, recalibrating payment rates and methodologies, modernizing quality reporting, expanding access to preventive and lifestyle-based interventions, and aligning Medicare payment policy with technology-enabled care delivery. The rule also includes several Requests for Information (RFI) that point to potential future reforms of physician payment, valuation, coding, and care delivery infrastructure. 

The CY 2027 PFS proposed rule is notable for the signals CMS is sending about the future direction of Medicare physician payment with policy proposals and RFIs designed for transformational reform over the long term and reduced dependency on the legacy physician payment infrastructure. Targeted payment proposals and methodology changes will begin to peel back what CMS perceives as layers of outdated payment policies and billing conventions that no longer fully reflect how healthcare services are delivered. Policies in this proposed rule create opportunities for stakeholder engagement with CMS on new ideas, alternative approaches and scaling value within Original Medicare. 

CMS will accept comments on the proposed rule through September 14, 2026. Organizations that may be affected by these proposals should use the comment period to provide data, operational examples, and policy recommendations that will inform the final rule and influence the next phase of Medicare physician payment reform. 

Key Changes in the PFS Proposed Rule 

1. Reimagining Primary Care Reimbursement and Care Management Within Traditional Medicare 

CMS seeks feedback on how to “reimagine” primary care payment in Original Medicare, including alternatives to existing coding and fee-for-service (FFS) reimbursement. The agency is considering prospective primary care payment and outcomes-based approaches, including potential permanent implementation of prospective primary care payment within the MSSP. 

CMS also is asking for input on how care management coding and payment could be redesigned to better reflect technology-enabled, team-based, and longitudinal care while maintaining program integrity. These questions build on concerns that documentation requirements, cost sharing, and fragmented coding may limit broader adoption of care management services. 

HMA Analysis: CMS is signaling that primary care reform remains central to its long-term Medicare strategy. Although the rule does not immediately replace the foundational FFS architecture, the call for public input creates an important opportunity for stakeholders to shape how CMS defines comprehensive primary care, how it measures outcomes, and how payment could better support sustained patient engagement, team-based care, and digital healthcare models. 

2. CMS Proposes Stronger Incentives for Accountable Care and Value-Based Models 

CMS continues to promote ongoing, whole person care and clinician participation in accountable care organizations (ACOs). The agency proposes higher reimbursement for qualifying office visits furnished to beneficiaries in the MSSP and the forthcoming Long-term Enhanced ACO Design (LEAD) model when visits meet additional complexity thresholds.

CMS also proposes to replace the current flat-dollar payment for code G2211 with a percentage-based modifier approach. Under the proposal, visits furnished in eligible accountable care arrangements would receive a larger payment adjustment than similar complex visits furnished outside an ACO setting. CMS also proposes broader MSSP changes to strengthen participation in two-sided risk, encourage new entrants, refine beneficiary assignment, and improve the financial methodology. 

In addition, CMS proposes several technical and operational refinements to the Ambulatory Specialty Model, a mandatory Innovation Center model designed to test specialty-specific value-based payment arrangements. 

The agency also continues to move quality reporting toward more focused, clinically meaningful measures. CMS proposes to eliminate the Merit-based Incentive Payment System (MIPS), which has been in place for many years, and transition to specialty-specific MIPS Value Pathways (MVPs) by 2029. The agency’s rationale is that MVPs are more streamlined and would reduce physician burden. CMS also proposes to add three more MVPs in diabetes, hypertension, and hospital-based care to increase the opportunities for physicians to report relevant MVPs. 

HMA Analysis: CMS is using the PFS to drive the healthcare system toward rewarding higher-value, longitudinal care and away from isolated FFS encounters. Although the proposed payment differential for complex visits in accountable care arrangements could strengthen the business case for ACO participation, it also creates operational and financial questions for clinicians and organizations that remain outside these models. CMS also continues to refine its quality reporting structures and seeks to reduce burden on physicians to better measure the quality of care delivered to Medicare beneficiaries. 

3. Physician Payment Would Decline Overall, Despite Statutory Updates 

Despite a positive statutory update of 0.75% for qualifying Alternative Payment Model (APM) participants or 0.25% for non-qualifying clinicians, and a slight increase resulting from budget neutrality calculations, the proposed Medicare PFS Conversion Factor (CF) will decline in CY 2027 because the one-time statutory 2.5% increase Congress provided for CY 2026 expires before CY 2027.

As proposed, the qualifying APM conversion factor would decrease by approximately 1.19%, from $33.57 in 2026 to $33.17 in 2027. The non-qualifying CF would decrease by approximately 1.68% from $33.40 in CY 2026 to $32.84 in CY 2027. 

CMS also projects significant specialty-level variation from proposed relative value unit changes. Clinical social workers and clinical psychologists would receive the largest aggregate increases, while otolaryngology and dermatology would see the largest estimated reduction at −9%. The impact of changes in relative value units (RVUs) on allowed charges are aggregate projections. 

HMA Analysis: Although the CF reductions are relatively modest compared with some recent physician payment debates, the cumulative effect of annual updates, budget neutrality adjustments, and specialty-specific RVU changes remains material. The effect on practices and clinicians will vary by service mix, specialty, payer mix, and Medicare FFS volume. Physician practices, health systems, and specialty groups should model both aggregate and service-level impacts in their comments to CMS and begin planning for potential payment changes in 2027. 

4. CMS Proposes Targeted Payment Recalibration for Procedures, Visits, and Practice Expenses 

CMS proposes several changes to the service/procedure payment methodology to improve accuracy, transparency, and consistency in PFS rate setting. One notable proposal would reduce payment when the same physician or another clinician in the same group practice furnishes a separately identifiable Evaluation and Management (E/M) service the same day as a procedure by the same physician or another clinician in the same group practice. 

Under the proposal, Medicare would pay the highest-priced service at 100% and all other same-day surgical procedures or E/M visits at 50%. CMS states that efficiencies occur when the same practitioner (or a practitioner in the same group practice) provides an E/M service in conjunction with a procedure that already includes pre-service, intra-service, and post-service work through a “global period”). CMS expects the largest negative impact on otolaryngology, dermatology, and podiatry. 

HMA Analysis: These proposals reflect CMS’s continued interest in updating payment methods that the agency views as outdated or misaligned with care delivery. The same-day E/M and procedure proposal could create meaningful revenue pressure for certain procedural specialties. 

5. CMS Proposes to Align PFS Payment with Technology, Prevention, and Program Integrity Priorities 

The proposed rule includes several policies and RFIs that signal CMS’s interest in modernizing Medicare payment for technology-enabled healthcare while improving outcomes and strengthening program integrity. Remote patient monitoring is an area of particular focus for CMS. Consistent with recent Office of Inspector General reports and recommendations calling for additional oversight, CMS proposes guardrails for currently reimbursed technologies, including remote physiologic monitoring (RPM) and remote therapeutic monitoring (RTM). The proposed guardrails require that these services be furnished only to established patients and only to allow payment for RPM or RTM services performed by clinical staff employed by the practice—not when those services are delivered by contractors. CMS also is proposing revising how the agency will pay for these services given concerns about possible overvaluation of these services and outlines consideration of four new bundled codes. 

CMS also plans to shift reimbursement for software as a medical service (SaMS) analysis of laboratory tests from the Clinical Laboratory Fee Schedule (CLFS) to contractor pricing. In parallel, the agency requests comments on whether payment for SaMS analyses should align with policies proposed for hospital outpatient department that increasingly support clinical diagnosis, monitoring, and care management. 

Consistent with broader prevention and Make America Healthy Again priorities, CMS also proposes national valuation and payment conditions for health and well-being coaching services, payment for diagnosis and management of suspected adverse vaccine reactions, increased reimbursement for smoking and tobacco-use cessation services, and feedback on multi-domain interventions that may slow Alzheimer’s disease progression. CMS also proposes to recognize diabetes self-management training and medical nutrition therapy as qualified preventive services covered and paid as stand-alone billable visits under the Rural Health Clinic benefit. 

HMA Analysis: The proposed changes signal CMS’s interest in distinguishing between technology that supports integrated, clinician-led care and arrangements the agency believes may increase fragmentation or inefficient or concerning billing practices. Digital health, remote monitoring, software, laboratory, and AI interest-holders should consider the payment opportunities and compliance priorities CMS signals. Prevention-focused providers and rural health organizations also should assess how proposed coverage and payment changes could expand access to services that historically have been difficult to scale. 

Looking Ahead

HMA experts are analyzing the rule’s potential impact across physician specialties, health systems, ACOs, rural providers, digital health companies, and other interest-holders. Contact HMA’s Medicare experts to discuss how these proposals might affect your organization’s payment strategy, Medicare operations, and long-term positioning in this evolving healthcare landscape.