Proposed Changes to Medicare Physician Fee Schedule for 2027

The Centers for Medicare & Medicaid Services (CMS) has introduced a proposed rule for the Medicare Physician Fee Schedule for 2027, aiming to reform key areas of Medicare. This proposal indicates a reduction in Physician Fee Schedule (PFS) conversion factors, following a temporary halt on scheduled cuts. Additionally, it seeks to enhance physician quality reporting and value-based care frameworks, including updates to the Medicare Shared Savings Program.

The rule presents two distinct conversion factors for physicians: one for those in qualifying alternative payment models within the Quality Payment Program and another for participants in the Merit-Based Incentive Payment System. These factors, potentially set at 0.75% and 0.25% respectively, represent decreases due to a federally mandated reduction. The proposed conversion could result in physician reimbursements reducing by $0.40 and $0.56, based on the model utilized.

Emphasizing a shift in practice expense methodology, CMS aims to decrease dependence on specialty-specific data from American Medical Association surveys, which have presented inconsistencies. The reform strategy includes implementing a practice expense stabilizer, phasing out prior methodologies gradually.

Significant adjustments are also proposed for indirect cost allocations related to doctor visits in skilled nursing facilities, aligning with current site-of-service payment differentials. Furthermore, services billed the same day as a global procedure could see a 50% payment reduction.

Introducing new billing codes, CMS aims to bolster care coordination through shared medical appointments and advanced care planning services. By 2029, there is a plan to shift from the traditional MIPS system to MIPS Value Pathways, aligning with modern clinical requirements.

The Medicare Shared Savings Program faces substantial revisions, targeting the encouragement of higher-performing accountable care organizations through adjusted financial benchmarks. Proposed changes include increasing savings rates and modifying scaling factors to mitigate the rebasing constraint known as the "ratchet effect."

In summary, these proposed changes are crafted to incentivize better patient outcomes while reducing unnecessary administrative tasks for providers. CMS Deputy Administrator, John Brooks, highlighted the objective of improving patient outcomes and simplifying processes for healthcare providers.