Doctors will see their Medicare payments drop next year under a final rule released by the CMS on Wednesday.
Payment rates for most doctors will fall by 2.3% in 2027, while doctors who are enrolled in an alternative payment model will see their rates drop by 1.8%. Both are steeper cuts than initially proposed.
Medicare also finalized proposals that will reduce payment for some services that doctors perform on the same day in an effort to reduce duplicate payments, regulators said. The CMS will also boost certain payments for accountable care organizations, provider groups who assume financial responsibility for their patients’ health outcomes.
Although officials said the policies would reward physicians for improving seniors’ care, provider groups said the final rule would destabilize doctors.
The cuts are poised to “further degrade an already fragile payment system and amplify severe financial challenges caused by years of inadequate Medicare reimbursement,” Anders Gilberg, senior vice president of the Medical Group Management Association, said in a Wednesday statement.
Physicians have long advocated for reform to how Medicare pays them. Annual updates are required by law to be budget neutral, meaning Medicare physician pay has fallen behind the rising cost of delivering care, according to research. Congress normally steps in to hike Medicare’s physician pay rates before cuts go into effect.
Regulators cut payment for some same-day services
The CMS finalized a proposal to cut Medicare payments when an evaluation and management visit is provided on the same day as a bundled surgical service at the same physician practice.
Medicare will reduce payment by 20% for the lower-cost service, less severe than the 50% cut regulators proposed in the summer in response to pushback from providers.
ACOs get a boost
Regulators also finalized more financial incentives for ACOs, in attempt to funnel more providers into value-based care structures and away from fee-for-service models.
Under accountable care arrangements like the Medicare Shared Savings Program, ACOs work together to care for Medicare beneficiaries and receive a portion of any money saved as a result of better health outcomes. However, if ACOs fail to reach spending and quality targets, they may have to pay a penalty.
Starting next year, ACOs can see their payment per visit increase more than 30% as a result of a new modifier meant to recognize costs associated with providing longitudinal care, the CMS said.
ACOs will also be permitted to reduce or eliminate Medicare Part B cost-sharing for many items and services, in attempt to attract more patients to the organizations.
The CMS will also increase the shared savings rates for certain ACOs and provide more incentives for first-time participants.
Regulators said they hope the changes would add up to 1 million beneficiaries annually over a decade and increase federal savings by more than $5 billion.
The CMS has attempted to boost participation in ACOs, claiming the provider arrangements save Medicare money and lead to better patient outcomes. In the 2024 performance year, ACOs in MSSP generated savings for the Medicare trust fund of about $2.5 billion compared to expected spending benchmarks, the agency said.
MIPS begins to sunset
The Trump administration is sunsetting reporting options for the Merit-based Incentive Payment System, otherwise known as MIPS, a decade-old payment program that tied Medicare Part B payments to clinician performance.
Under the final rule, clinicians will have until 2030 to transition to MIPS Value Pathways, an alternative to MIPS focused on specific specialties and medical conditions, or Advanced Alternative Payment Models, other value-based payment tracks under Medicare.
Regulators elected to give clinicians more time to transition to the new reporting structure than in the proposed rule.
