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

On November 4, 2026, CMS issued the Calendar Year 2027 Medicare Physician Fee Schedule final rule (CMS-1848-F), effective January 1, 2027, published at Federal Register docket 2026-22743. The rule recalibrates Part B payment structures to prioritize preventive care, coordinated primary care, and payment integrity, while introducing new billing codes and modifying existing payment methodologies. On quality reporting, the rule sunsets the traditional MIPS reporting option beginning with the CY 2031 performance period, giving clinicians through CY 2030 to transition to MIPS Value Pathways or Advanced Alternative Payment Models. The rule finalizes three new MVPs covering diabetes, hypertension, and hospitalists, and requires clinicians to report at least one specialty-specific Core Measure beginning CY 2027. The rule also finalizes two new billing codes for Advance Care Planning and codifies noncitizen Medicare eligibility criteria established by the Working Families Tax Cuts legislation. For the Medicare Shared Savings Program, the rule permits approved ACOs to reduce or eliminate Part B cost-sharing for assigned beneficiaries beginning April 1, 2027. CMS increases shared savings rates for eligible ACOs, creates new incentives for first-time participants, sets more predictable spending benchmarks, and simplifies EHR reporting and patient notice requirements. On payment integrity, the rule reduces payment by 20% for the lower-cost service when an office visit and a minor procedure occur on the same day, characterizing the reduction as elimination of duplicate payment for clinical work already captured in procedure valuations. CMS also closes an incentive payment loophole projected to prevent $2.38 billion in unintended windfall payments over ten years, and streamlines the rate-setting formula. The rule establishes national payment pathways for health and well-being coaching under general supervision, introduces dedicated billing for shared medical appointments with time-based add-on codes, increases valuations for smoking cessation and behavioral health assessments, and creates separate billing for clinical time devoted to diagnosing and counseling patients experiencing vaccine adverse effects. CMS also finalizes refinements to the Ambulatory Specialty Model, an Innovation Center model covering heart failure and low back pain, launching January 1, 2027.