CMS Finalizes CY 2027 Physician Fee Schedule Rule

The Centers for Medicare & Medicaid Services (CMS) on Nov. 4 finalized the Calendar Year (CY) 2027 Physician Fee Schedule (PFS), which changes physician payment policies, the Medicare Shared Savings Program (MSSP), evaluation and management (E/M) services, and reporting for drugs acquired through the 340B Drug Pricing Program. The rule takes effect on Jan. 1, 2027.

America's Essential Hospitals is analyzing the final rule and will provide members with a detailed Washington Briefing in the coming days.

Medicare Shared Savings Program

CMS finalized changes to the MSSP's financial methodology that intend to strengthen incentives for accountable care organization (ACO) participation, encourage savings, and respond to concerns about benchmarks for ACOs serving higher-risk populations.

Specifically, CMS will:

• Increase the shared savings rate for Level E of the Basic track from 50% to 60%
• Increase the prior savings adjustment scaling factor from 50% to 75%
• Risk-adjust the 5% cap on upward adjustments to an ACO's historical benchmark
• Reform the accountable care prospective trend component of the MSSP benchmark update factor

Physician Payment Policies

CMS finalized changes to reimbursement for certain E/M services, the efficiency adjustment for non-time-based services, and the indirect practice expense methodology.

CMS also will implement two distinct conversion factors, as required by Congress, based on physicians' participation in qualifying alternative payment models (APMs). For CY 2027, the conversion factor for qualifying APM participants will decrease by 1.83% compared with CY 2026, while the conversion factor for physicians and practitioners who do not qualify for these payment models will decrease by 2.31%.

340B Drug Pricing Program Requirements

CMS finalized a new reporting requirement that requires covered entities to submit certain data elements associated with Medicare Part D claims for 340B-discounted drugs to CMS' Medicare Part D Claims Data 340B Repository.

Reporting will begin with claims with dates of service on or after Jan. 1, 2027. Following stakeholder feedback, CMS will delay the first mandatory quarterly submission, covering the period between Jan. 1 through March 31, 2027, until Sept. 30, 2027.

Contact Director of Policy Rob Nelb, MPH, at [email protected] or 202.585.0127 with questions.