WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services has outlined a broad strategy to overhaul Original Medicare by expanding accountable care, revising physician payment methods, increasing price transparency and modernizing claims processing in an effort to curb costs while improving care coordination.
The strategy, detailed alongside the agency’s proposed 2027 Physician Fee Schedule and Outpatient Prospective Payment System rules, seeks to shift Medicare away from traditional fee-for-service incentives toward payment models tied to quality and patient outcomes.
CMS said the reforms focus on three priorities: aligning spending with value, helping beneficiaries make more informed healthcare decisions and expanding provider accountability through accountable care organizations.
The agency plans to continue refining physician payment rates using empirical data and market-based pricing information rather than relying solely on historical administrative formulas.
Among the proposals, CMS is seeking public comment on improving payment accuracy for surgical global periods, expanding the use of private-sector pricing information in Medicare rate setting and reducing payment differences between care settings that encourage higher-cost treatment locations.
CMS noted that it has already begun paying physician-fee-schedule-equivalent rates for drug administration services provided in off-campus hospital outpatient departments, a change the agency estimates will reduce Medicare premiums and beneficiary cost sharing by nearly $6 billion over 10 years.
The agency is also examining broader site-neutral payment reforms affecting physician offices, hospital outpatient departments and post-acute care settings.
To discourage unnecessary services, CMS proposed revising payment policies when office visits and procedures occur during the same patient encounter, arguing that existing reimbursement can duplicate payment for evaluation and management services already incorporated into procedure values.
The agency is also seeking public comment on redesigning primary care payment, including broader service bundling and prospective payment models.
CMS separately proposed updating payment rates for remote physiologic and remote therapeutic monitoring to reflect lower device costs and establishing a framework for reimbursing software-based medical technologies that support clinical decision-making.
The strategy also expands incentives for participation in accountable care organizations.
Beginning in April 2027, approved Medicare Shared Savings Program accountable care organizations could reduce or eliminate beneficiary cost sharing for selected Part B services. CMS also proposed higher payments for primary care physicians responsible for coordinating care within those organizations.
The agency intends to revise Shared Savings Program benchmarks and risk-sharing arrangements to encourage new organizations to participate while addressing what it described as a “ratchet effect” that makes it harder for successful organizations to continue earning shared savings after benchmark rebasing.
CMS also proposed simplifying quality reporting requirements for accountable care organizations by maintaining the current Alternative Payment Model Performance Pathway Plus measure set rather than adding additional reporting measures.
The agency is requesting public comment on incorporating electronic prior authorization measures into future accountable care quality reporting.
Beyond payment policy, CMS said it plans to modernize Medicare’s technology infrastructure by improving healthcare data interoperability and replacing the program’s claims-processing platform with a system capable of real-time claims adjudication.
The agency also outlined plans to strengthen hospital price transparency by seeking comments on standardizing machine-readable pricing files, updating consumer-facing price displays and revisiting compliance standards for hospital price estimator tools.
CMS said the proposals are intended to preserve Original Medicare as enrollment in Medicare Advantage continues to grow while encouraging greater adoption of value-based payment throughout the healthcare system.
The proposals remain subject to public comment before any changes are finalized.
Support the local news that supports Chester County. MyChesCo delivers reliable, fact-based reporting and essential community resources—free for everyone. If you value that, click here to become a patron today.