Accountable care groups welcome final 2027 Medicare Physician Fee Schedule, but benchmark and sustainability questions remain

Accountable care organizations (ACOs) are praising Medicare’s final 2027 physician payment rule, even as the rule lowers per-service payment for physicians.

For health systems that sponsor ACOs or employ physicians, the reaction so far shows where groups see progress and where they want more.

The Centers for Medicare & Medicaid Services (CMS) finalized the 2027 Medicare Physician Fee Schedule on Nov. 4, effective Jan. 1, 2027. The conversion factor, the dollar amount Medicare multiplies by a service’s relative value units to set payment, is $32.95 for clinicians in qualifying advanced alternative payment models and $32.63 for all others. Those are cuts of 1.83% and 2.31%, deeper than the 1.19% and 1.68% CMS proposed in July.

ACO groups welcome benchmark and cost-sharing changes

The National Association of Accountable Care Organizations (NAACOS) said it applauds CMS for finalizing policies that will strengthen ACO sustainability, support program growth, reduce administrative burden and foster innovation, according to a statement from NAACOS President and CEO Emily Brower.

The group credited CMS with:

• Improving benchmarking, including an increased prior savings adjustment, guardrails on the Accountable Care Prospective Trend and enhancements to the Advance Investment Payments program
• Adding benchmark adjustments that encourage ACOs to recruit practices inexperienced with financial risk and to serve new beneficiaries
• Simplifying quality reporting requirements
• Expanding flexibility to reduce beneficiary cost-sharing and improving beneficiary communications

CMS said that starting April 1, 2027, approved ACOs may reduce or eliminate Part B cost-sharing for many services, and that the rule adds higher shared-savings rates and incentives for first-time ACO participants.

Concerns about long-term participants and benchmarks

NAACOS said more progress is needed on sustainability for long-term ACO participants and those serving patients with complex needs. It also wants innovations that improve cash flow to clinical practices.

Accountable for Health, an advocacy group of more than 60 providers, payers and innovators, struck a more mixed tone.

Mara McDermott, J.D., the group’s CEO, said the rule raises the credit ACOs receive for prior-year savings from 50% to 75% and creates a 32% payment increase for qualifying visits by clinicians in the Medicare Shared Savings Program and LEAD Model.

The group also said it was concerned about changes that could weaken financial incentives for successful ACOs, “including reductions to regional benchmark adjustments.” It was disappointed that CMS did not extend the enhanced evaluation and management modifier to clinicians in the Comprehensive Kidney Care Contracting Model.

Payment cuts and the call for Congress

The Medical Group Management Association (MGMA) acknowledged “modest policy improvements to enhance value-based care through MSSP” but said it is disappointed by “several destabilizing policies,” including the conversion factor cuts. Anders Gilberg, MGMA senior vice president of government affairs, said Congress must “intervene to prevent further harm” and should pass the Patients First Act.

The Primary Care Collaborative (PCC) said budget neutrality requirements mean across-the-board reductions will take effect Jan. 1 unless Congress acts.

“We urge Congress to take immediate steps to address the harmful payment cuts imminent in the new year,” PCC President and CEO Ann Greiner, M.C.P., said in a news release.

The American Academy of Neurology said it is “committed to working with Congress to avert this cut,” and supports an inflationary adjustment tied to the Medicare Economic Index.

Specialty service lines, including obstetrics

The American Association of Orthopaedic Surgeons (AAOS) said CMS reduced by nearly 50% the proposed cuts to total knee, total hip and total shoulder arthroplasty and shoulder hemiarthroplasty.

“Today’s decision represents meaningful progress for patients and the physicians who care for them,” AAOS President Wilford K. Gibson, M.D., said in a news release. AAOS also said that cuts of any magnitude could deepen workforce shortages, noting that more than 22 million Americans live in counties without an orthopaedic surgeon.

The American College of Obstetricians & Gynecologists (ACOG) welcomed the final rule’s inclusion of the American Medical Association’s new obstetric codes, which replace a bundled payment approach for prenatal care.

“The new codes will also allow physicians and researchers to access more data on quality of care and maternal health outcomes, ultimately supporting the sustainability of ob-gyn practices,” ACOG President Camille A. Clare, M.D., said in a statement. ACOG said it is also leading an evaluation of the gynecologic codes.

The American Medical Association (AMA) also applauded the change. AMA President Willie Underwood III, M.D., said in a news release that the new codes “will provide more meaningful clinical information, adding new insight and transparency for physicians and researchers looking to improve maternal health by better understanding the clinical drivers of maternal mortality.”

Prevention, behavioral health and remote monitoring

Groups focused on care delivery praised new payment pathways. PCC said the rule increases reimbursement for the Psychiatric Collaborative Care Model, which integrates behavioral health into primary care, and clarifies that health coaching can be offered under general supervision.

The American College of Lifestyle Medicine said the final rule added payment for longer shared medical appointments, which are team-based group visits.

“This rule signals a transformational shift toward better aligning payment with the upstream, comprehensive care patients need,” ACLM CEO John Findley, M.D., said in a news release.

The Peterson Center on Healthcare focused on remote monitoring. Executive Director Caroline Pearson said in a statement that the rule “will create broad disruption in the market” and that some providers and vendors may stop offering the service. She called for “payment tied to clinical outcomes and targeted to the patients who benefit.”

What’s next

With the rule effective Jan. 1, the ACO policy changes and the conversion factor cuts will land together.

Groups across the spectrum say further changes, in benchmarks and in the physician payment formula, remain on their agenda. Chief Healthcare Executive will keep tracking how the rule affects health system finances and physician strategy.