WASHINGTON, D.C. — The Centers for Medicare & Medicaid Services proposed restructuring Medicare’s physician payment and quality programs, including ending traditional MIPS reporting in 2029 and closing a payment provision projected to generate $2.38 billion in unintended clinician incentives over a decade.
The proposal would also revise payment calculations under the Physician Fee Schedule and expand financial incentives within the Medicare Shared Savings Program, the government’s largest value-based payment initiative.
The changes are intended to move more physicians and healthcare organizations away from volume-based reimbursement and toward models that reward coordinated care, preventive services and patient outcomes.
“We’re proposing some of the most significant Medicare reforms in recent years to strengthen primary care, expand accountable care, and modernize physician payment,” CMS Administrator Dr. Mehmet Oz stated.
CMS proposed eliminating traditional reporting under the Merit-based Incentive Payment System beginning with the 2029 performance year. Eligible clinicians would have through 2028 to shift to specialty-focused MIPS Value Pathways unless they participate in an alternative payment model and report through the APM Performance Pathway.
Traditional MIPS, launched in 2017, adjusts Medicare payments based on measures covering quality, cost, clinical improvement and technology use. Clinicians and industry groups have criticized the system’s reporting complexity and administrative requirements.
CMS proposed three additional reporting pathways focused on diabetes, hypertension and hospital-based care. The expanded pathway inventory would offer a relevant reporting option for an estimated 98% of medical specialties.
Beginning in 2027, clinicians would also be required to report at least one core quality measure considered fundamental to their specialty and patient population.
Another provision would change how CMS distributes incentive payments to clinicians participating in qualifying alternative payment models. The agency estimates the existing structure could produce $2.38 billion in payments over 10 years to clinicians who do not participate in those models.
CMS characterized those payments as a loophole and proposed directing the incentives to providers actively engaged in value-based care.
The proposed rule would separately revise the Medicare Physician Fee Schedule to account for efficiencies when multiple services are delivered during the same patient visit. It would also increase scrutiny of claims that may not accurately reflect the services provided.
The agency plans to recalibrate some payment rates based on the time, resources and complexity associated with delivering care while increasing transparency around how those rates are calculated.
CMS did not specify in its summary how the revisions would affect aggregate physician payments or individual medical specialties. Changes to the fee schedule can redistribute Medicare revenue among specialties even when overall spending remains constrained by statutory budget rules.
The proposal would also expand incentives under the Medicare Shared Savings Program, which allows accountable care organizations to receive a portion of the money they save Medicare if they meet quality requirements.
Accountable care organizations are networks of physicians, hospitals and other providers that coordinate services for people enrolled in Original Medicare. The model is designed to reduce unnecessary spending while improving preventive care and management of chronic conditions.
Of the 476 organizations participating during the 2024 performance year, 75% received a combined $4.1 billion in shared-savings payments. CMS reported that the program generated approximately $2.5 billion in net savings for Medicare trust funds after those payments.
The program has generated net Medicare savings for eight consecutive performance years, according to the agency.
Under the proposed changes, certain organizations could receive a larger share of savings, while first-time participants would become eligible for new financial incentives. CMS would also revise spending benchmarks to make financial targets more predictable.
Organizations with applications approved beginning April 1, 2027, could reduce or eliminate patients’ out-of-pocket expenses for certain services. Similar cost-sharing arrangements are already available through the ACO REACH Model.
CMS also proposed simplifying technology requirements and patient notices to reduce the administrative burden associated with participating in accountable care programs.
The proposal remains subject to public comment and may change before CMS issues a final rule.
The proposed rule is available through the Federal Register at https://www.federalregister.gov/public-inspection/current.
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