The Trump administration is introducing significant changes to Medicare payment systems, aiming to reform how doctors are paid and shift focus to prevention and primary care. This proposal could affect doctors nationwide and influence the healthcare provided to more than 70 million Medicare beneficiaries.
According to Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services (CMS), the reforms aim to enhance primary care, expand accountable care, and modernize physician payment systems. Dr. Oz stated, “These changes would make it easier for clinicians to focus on prevention, improve coordination for patients, and ensure Medicare rewards better outcomes rather than more services.” The system that determines reimbursement for physicians playing a key role could see improved patient coordination and reduced administrative burdens with better outcomes. Yet, apprehensions regarding proposed reductions in physician payments and the gradual elimination of a key performance reporting system persist.
Expanding Accountable Care Organizations
The proposed changes focus on Medicare’s physician payment and value-based programs. CMS aims to broaden the scope of accountable care organizations (ACOs), update physician payment structures, and move away from service volume-based payments.
“Expanding accountable care is a critical part of making the Medicare program work well for patients,” stated John Brooks, CMS deputy administrator and director of the Center for Medicare. He continued, “Our goal is simple: deliver better outcomes for patients by appropriately incentivizing providers, improving quality measurement, and reducing administrative burden.”
These reforms propose to make Medicare ACOs more accessible and financially appealing, creating incentives for providers to control costs while enhancing quality. Expanding accountable care could boost preventive services, fortify provider coordination, and lessen unnecessary Medicare expenditures. Kevin Thompson, CEO of 9i Capital Group, shared, “The proposal continues the move away from fee-for-service and toward value-based payments, where physicians are compensated more for outcomes than the number of services they perform.”
Elimination of Traditional MIPS
A significant aspect of the proposal is the gradual elimination of the Merit-based Incentive Payment System (MIPS). CMS plans to terminate traditional MIPS by 2029, transitioning clinicians to more specialized reporting pathways focusing on specific medical areas.
In a release, CMS stated, “When MIPS was launched in 2017, its goal was to move Medicare away from a fragmented fee-for-service system toward one that rewards quality, outcomes, and value.” CMS collaborated with clinicians over the last decade to refine the program and reduce reporting burdens, opting to establish MIPS Value Pathways (MVPs) as the primary reporting choice.
The new payment arrangements prioritize outcomes over service volume, aiming to simply improve incentives around prevention and healthier outcomes.
Revisions to Physician Payment Rules
CMS suggests modifications to the formula determining physician reimbursement rates. These revisions seek to better reflect the time and complexity involved in patient care. Transparency in payment calculations and strengthened oversight of billing practices also feature among these changes.
Yet, some physicians might experience reduced Medicare payment rates in 2027 due to the expiration of a temporary 2.5 percent physician payment increase approved for 2026. CMS estimates indicate a potential decline in payment conversion factors by about 1.2 to 1.7 percent depending on a physician’s participation in advanced payment models.
Patient Impacts and Future Steps
The proposed changes don’t reduce Medicare benefits for recipients, but instead modify doctor and healthcare organization reimbursements. CMS reports that patients could benefit from an increased focus on preventative care and improved care coordination. Reduced administrative burdens might enable physicians to allocate more time to patients.
“For beneficiaries, this could equate to better-coordinated preventive care and lower out-of-pocket costs for certain services,” stated Alex Beene, a financial literacy instructor at the University of Tennessee at Martin. However, he expressed concerns about potential physician payment reductions and new restrictions adding pressure on smaller providers.
The proposals are open for a 60-day public comment period where CMS will review feedback before issuing a final rule for 2027. Kevin Thompson shared concerns about the proposal’s long-term effects, noting how tying compensation to metrics can alter physician behavior, such as patient selection or statistics manipulation.