CMS 2027 Physician Fee Schedule: What the ACO and Payment Changes Actually Require

Farzin Espahani

Strategic Advisor, Insurance Growth, Medicare Distribution, and Compliance

Published November 5, 2026

Consider a patient with diabetes whose doctor recommends a follow-up visit. The patient cannot afford the visit and puts it off. The doctor is paid for the first appointment, but the recommended follow-up never happens.

Unless someone from the practice contacts the patient, the care team may not know that cost is keeping them from returning. That conversation gives the team a chance to explain any available financial assistance and help the patient continue care.

The Centers for Medicare & Medicaid Services (CMS) finalized its calendar year 2027 Medicare Physician Fee Schedule on November 4, 2026, with most provisions taking effect January 1, 2027. The rule expands payment support for prevention and coordinated care, changes physician reimbursement, and adjusts incentives in the Medicare Shared Savings Program.¹

For payer and provider leaders, the opportunity is to connect those payments to care that patients can afford and complete. That requires a workable delivery process and an honest accounting of the expense.

Lower patient bills, lower payer spending, and lower provider costs are three different outcomes. A policy can achieve one while making another harder. The new rule should be evaluated against all three.

Where the rule could improve care

The provisions below primarily concern Original Medicare. Health plans and providers with Medicare Advantage or commercial contracts should check the relevant contract terms before assuming these payment changes flow through.

New payments can make a service financially possible. They do not establish who will contact the patient, resolve a referral, review a result, or respond when symptoms worsen. Those responsibilities need to be assigned before the service expands.

Lower patient costs need to lead to completed care

The ACO cost-sharing option could remove a barrier for eligible patients. It is voluntary and requires CMS approval. The permitted services exclude prescription drugs and durable medical equipment, prosthetics, orthotics, and supplies. It does not eliminate cost-sharing across Medicare.³

Research supports taking affordability seriously without promising that every reduction will pay for itself.

A randomized study published in the New England Journal of Medicine in 2011 examined full coverage for selected medications after a heart attack. Among 5,855 patients, removing copayments improved medication adherence by approximately 4 to 6 percentage points and reduced patient spending.

The trial did not find a statistically significant improvement in its primary composite clinical outcome or a statistically significant difference in total spending. Some secondary clinical outcomes improved.⁸

This was a medication study in a different population, not an evaluation of the 2027 Part B policy. It provides evidence that reducing financial barriers can change patient behavior, while leaving the size of any savings uncertain.

An ACO considering the new option should connect eligibility and billing records to appointment completion. Staff need to know which patients qualify, which services are covered, what to tell patients, and whether the recommended care occurred.

The evaluation should also capture why people still miss care. Transportation, caregiver availability, language, scheduling, and uncertainty about the treatment may remain barriers after the bill is reduced. These are issues to check with patients, rather than assumptions to make from claims.

Shared savings have grown but payments to ACOs are not provider profit

The Medicare Shared Savings Program gives participating organizations an opportunity to share in savings when they meet program requirements. Some arrangements also expose organizations to losses.

CMS has reported increasing net savings alongside growing performance payments to ACOs.

The columns describe different recipients. Net savings are what Medicare retains under the program's financial reconciliation. Performance payments go to participating ACOs. Those payments are not net profit after the organizations' own care management, technology, reporting, and administrative expenses.

The results also depend on program benchmarks. They should not be read as randomized estimates of what spending would have been without the program, or as evidence that every participating organization saved money.

For a provider group, the financial model needs to include both the work funded today and the timing and uncertainty of any later performance payment. A care manager's salary is payable regardless of when shared savings arrive.

Quality measures help test whether patients benefit

Financial results need to be reviewed alongside patient care.

CMS reported the following changes among ACOs using its Web Interface for quality reporting:

These results are encouraging. They do not establish that the payment model alone caused the improvement.

A payer or provider should use the same discipline locally. If spending falls, examine whether patients are receiving timely care and whether relevant clinical measures improve. Lower utilization accompanied by worsening disease control or longer waits would require a different response.

Patient experience also needs a place in the review. A referral marked complete in a system may still leave a patient unsure about the next appointment, medication instructions, or whom to contact. Checking that understanding gives the care team information a paid claim cannot provide.

Fewer hospital visits do not guarantee net savings

The experience of Comprehensive Primary Care Plus (CPC+) shows why the financial analysis needs to include the full program.

An evaluation published in JAMA examined five years of the model using matched comparison practices. CPC+ was associated with reductions in emergency department visits and some hospital utilization measures. It was not associated with a reduction in total Medicare expenditures.

After enhanced payments were included, spending was approximately $13 more per beneficiary per month in Track 1 and $24 more in Track 2, relative to comparison practices. The study also found no substantial changes in its claims-based quality measures.⁹

This evidence supports a narrower conclusion than a promise that investing in primary care will automatically save money. A program can reduce certain types of acute care while increasing spending elsewhere.

That does not settle whether the investment is worthwhile. Better access or lower patient burden may justify additional expense. Finance and clinical leaders need to agree on that objective and measure it directly.

A program presented as a cost-saving initiative should account for its staffing, technology, implementation, and administration, along with changes across the relevant categories of medical spending. Avoided hospital claims alone are an incomplete financial result.

Providers face payment pressure while investing in care

The rule's emphasis on prevention sits alongside a reduction in the base factors used to calculate physician payments.

These figures are not uniform cuts to every practice or service. They do mean that new payment opportunities need to be assessed against the organization's complete service mix.

A lower allowed payment reduces revenue before it reduces payroll, rent, or the time needed to document a visit.

The same-day policy illustrates the difference. For affected separately identifiable office or outpatient visits furnished by the same physician or practice with a zero-day global procedure, the highest-priced service receives full payment and other affected services receive 80%. The final policy excludes the proposed extension to procedures with 10- or 90-day global periods.²

The adjustment can apply to legitimate, separately billable care. An affected claim is not, by itself, evidence of improper billing.

Provider finance and revenue cycle teams should identify affected services, calculate the reimbursement effect, and update billing processes. Clinical leaders should also watch whether the economics create pressure to separate care into additional visits. Extra travel, time away from work, and caregiver demands belong in the patient impact assessment.

For organizations with both hospitals and physician practices, an avoided admission may reduce medical spending under a risk arrangement while also reducing hospital revenue. Leadership needs to understand both effects. A shared savings payment cannot be treated as a replacement for lost revenue without examining the amount, timing, and cost structure.

Administrative savings require removing work

The rule simplifies some ACO reporting and beneficiary notification requirements.¹ The financial benefit depends on what organizations do with those changes.

If a requirement is removed but staff continue preparing the same spreadsheet, reconciling the same duplicate list, or sending the same unnecessary follow-up notice, the workload remains.

Compliance, finance, and care delivery teams should review the affected process together. They should identify which steps are still required, which can be removed, and which controls need to remain.

Time saved should also be described accurately. Reassigning staff hours to patient outreach creates capacity. A reduction in overtime or outside spending creates a cash saving. Both can be valuable, but they belong in different parts of the business case.

The same discipline applies to new services. Before adding a vendor or workflow, identify the existing task it will improve, the person accountable for the result, and the evidence needed to confirm that the change helped.

Three actions for payer and provider leaders

For financial comparisons, account for differences in patient risk, enrollment duration, seasonality, and the time required for claims to arrive. Where feasible, use a comparable patient group. A simple before-and-after decline in spending can be misleading when the program starts with patients selected during an unusually expensive period.

The 2027 changes create reasons to revisit how care is funded and delivered. Before expanding a program, leaders should be able to show which patients received needed care sooner, what changed in their outcomes, and whether the resulting payments cover the cost of sustaining that care.