CMS Finalizes CY 2027 Physician Fee Schedule to Shift from Sick Care to Healthcare and Curb Waste

WASHINGTON, D.C.-NOVEMBER 4, 2026-The Centers for Medicare & Medicaid Services (CMS) is prioritizing prevention, strengthening primary care, cracking down on duplicate billing, and reinforcing fiscal stewardship across Medicare. A new final rule advancing payment policies under Medicare Part B modernizes physician payment structures to reward health maintenance and coordinated primary care rather than disjointed, volume-based intervention. Through targeted enhancements to the Medicare Shared Savings Program (Shared Savings Program) and fee schedule recalibrations, CMS is shifting the health system's focus from reactive sick care to proactive healthcare.

"Medicare should reward clinicians for keeping people healthy," said HHS Secretary Robert F. Kennedy, Jr. "Under President Trump's leadership, we are putting prevention and primary care at the center of Medicare, closing payment loopholes, and cracking down on waste. This rule directs resources toward coordinated care that puts patients first. We are changing what Medicare pays for to change what our health system delivers."

"For too long, fee-for-service payment has rewarded volume over value, fueling a reactive system of sick care," said CMS Administrator Dr. Mehmet Oz. "This final rule breaks from that status quo. By ending duplicate billing and closing costly loopholes, we are protecting taxpayers and directing Medicare dollars to clinicians doing the hard work of keeping patients healthy."

Modernizing Quality Reporting and Statutory Mandates

Marking a decade of progress under the Quality Payment Program, CMS will officially sunset the traditional Merit-based Incentive Payment System (MIPS) reporting option beginning with the CY 2031 performance period. Clinicians will have through CY 2030 to transition to the MIPS Value Pathways (MVPs), which already cover approximately 98%of clinicians, or Advanced Alternative Payment Models. This reflects two additional years of transition time compared to the proposed rule. The rule also finalizes three new MVPs focused on diabetes, hypertension, and hospitalists, and requires clinicians to report at least one specialty-specific "Core Measure" starting in CY 2027.

Additionally, the Calendar Year (CY) 2027 Medicare Physician Fee Schedule (PFS) rule finalizes two new billing codes dedicated to Advance Care Planning and codifies noncitizen Medicare eligibility criteria established by the Working Families Tax Cuts legislation.

Expanding and Strengthening Accountable Care Organizations

Accountable Care Organizations (ACOs) are vital to improving primary care and helping beneficiaries live healthier lives. Data shows that patients aligned with an ACO are less likely to experience uncontrolled diabetes or hypertension and are more likely to receive recommended preventive care. In performance year 2024, 75% of the 476 participating ACOs earned shared savings totaling $4.1 billion, while generating net savings for the Medicare Trust Funds of approximately $2.5 billion compared to projected spending benchmarks.

The Shared Savings Program has generated savings for the Medicare Trust Funds for eight consecutive performance years, and to build on this progress, the final rule:

• Permits ACOs to Eliminate Patient Cost-Sharing: Starting April 1, 2027, approved ACOs may reduce or eliminate Part B cost-sharing for many items and services for assigned beneficiaries, directly lowering out-of-pocket costs for essential care.
• Incentivizes Growth: CMS increases shared savings rates for eligible ACOs, provides new incentives for first-time participants, and sets more predictable spending targets.
• Cuts Red Tape: The rule simplifies electronic health record reporting requirements, streamlines patient notice mandates, and removes outdated administrative hurdles.

Restoring Payment Integrity and Curbing Waste

CMS is recalibrating fee schedule valuations to reflect the true complexity and resources of modern care and closing loopholes that allow users to game the system:

• Ending Duplicate Billing: When an office visit and minor procedure occur on the same day, CMS will reduce payment by 20% for the lower-cost service, reducing duplication in payment by patients and the Medicare program for clinical work already covered in the procedure's valuation.
• Closing Windfall Loopholes: The rule corrects an incentive payment loophole, preventing an estimated $2.38 billion in unintended windfall payments over the next decade.
• Improving Rate Accuracy: CMS is streamlining outdated steps from its rate-setting formula, leading to greater simplicity and transparency for clinicians and patients while allowing payment policy to adapt to changes in healthcare delivery.

CMS Expands Access to Preventive Care and Wellness in Support of MAHA Initiative

CMS is finalizing critical coding and payment expansions to strengthen preventive care and wellness across the nation. CMS is establishing national payment pathways for health and well-being coaching under general supervision, introducing dedicated billing for shared medical appointments with flexible time-based add-on codes, and boosting valuations for smoking cessation and behavioral health assessments.

Additionally, the agency is finalizing separate billing for the dedicated clinical time required to diagnose, treat, and counsel patients experiencing vaccine adverse effects, reinforcing our commitment to patient trust and robust clinical support. These pivotal updates ensure Medicare resources directly support proactive, patient-centered care and improve health outcomes for Americans.

Ambulatory Specialty Model

CMS is also finalizing refinements to the Ambulatory Specialty Model - a CMS Innovation Center model launching Jan. 1 that holds specialists accountable for the quality and cost of care associated with the longitudinal management of two common chronic conditions, heart failure and low back pain, to slow disease progression and reduce avoidable hospitalizations and low-value procedures.

For more information on the CY 2027 Physician Fee Schedule Final Rule, which is effective Jan. 1, 2027, visit the Fact Sheet forCalendar Year (CY) 2027 Medicare Physician Fee Schedule Final Rule.

For a fact sheet on the updates on the Shared Savings Program, visit: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2027-medicare-physician-fee-schedule-final-rule-cms-1848-f-medicare-shared-savings.

To view the final rule on Federal Register, visit: https://www.federalregister.gov/d/2026-22743.