The Centers for Medicare & Medicaid Services (CMS) has put forward a wide-ranging set of proposed reforms to Medicare's physician payment system and value-based care programs. The proposals aim to make accountable care more accessible, update how doctors are paid to better reflect how medicine is actually practiced today, cut down on unnecessary administrative work, and shift the overall focus of the healthcare system from treating illness after the fact to preventing it in the first place.

CMS Administrator Dr. Mehmet Oz called these some of the most significant Medicare reforms in recent years, saying the changes would make it easier for clinicians to focus on prevention, improve patient coordination, and ensure Medicare rewards better outcomes rather than just more services. John Brooks, CMS Deputy Administrator and Director of the Center for Medicare, added that the goal is straightforward: better outcomes for patients through smarter incentives, stronger quality measurement, and less administrative burden.

Strengthening Medicare Accountable Care Organization (ACO) Participation

A major part of the proposal focuses on the Medicare Shared Savings Program (MSSP), which is currently the largest value-based payment program in the country. ACOs are groups of doctors, hospitals, and other providers who coordinate care for people enrolled in Original Medicare. Their emphasis on prevention, care management, and patient engagement has already produced measurable results.

In performance year 2024, 75% of the 476 ACOs participating in the program earned shared savings payments totaling $4.1 billion. After those payments, the program still generated net savings of around $2.5 billion for the Medicare Trust Funds compared to projected spending. The program has now delivered savings for eight straight years.

The proposed changes to the Shared Savings Program would increase savings-sharing opportunities for certain ACOs, create new financial incentives for first-time participants, establish more predictable spending targets to make long-term planning easier, and reduce administrative burden by simplifying technology requirements and streamlining patient notices. The proposals would also allow ACOs with approved applications starting April 01, 2027, to reduce or eliminate out-of-pocket costs for members for certain services, expanding an approach already used in the ACO REACH Model.

Modernizing Physician Payments

CMS is also proposing updates to the Physician Fee Schedule (PFS) to make payment rates more accurately reflect what it actually takes to deliver care today. Over the years, the fee schedule has built up layers of outdated payment policies that no longer match how healthcare is actually delivered.

The proposed updates would better align payments with the time, resources, and complexity involved in providing care, account for efficiencies when multiple services are delivered during the same visit, improve oversight of billing practices, and increase transparency in how physician payment rates are calculated.

Transitioning Away from Traditional MIPS Reporting

CMS is also proposing to wind down traditional Merit-based Incentive Payment System (MIPS) reporting by 2029 and move clinicians toward MIPS Value Pathways (MVPs), which are more focused on specific specialties and clinical relevance.

When MIPS launched in 2017, the goal was to move Medicare away from fragmented fee-for-service toward a system that rewards quality and outcomes. The proposed rule takes the next step in that evolution by making MVPs the primary reporting option going forward. Beginning with the 2029 performance period, traditional MIPS would be phased out. Clinicians would have until the end of 2028 to transition to an MVP unless they participate in a MIPS Alternative Payment Model (APM) and report through the APM Performance Pathway (APP).

Three new MVPs focused on diabetes, hypertension, and hospital-based care are being proposed. If finalized, the full MVP inventory would cover a relevant reporting option for roughly 98% of specialties.

Starting in 2027, new MIPS Core Measures would also require every clinician to report at least one measure that is fundamental to their specialty and patient population. This is meant to improve consistency and produce more useful quality data.

CMS is also proposing to reform how APM incentive payments are calculated to close a payment gap that could otherwise result in an estimated $2.38 billion in unintended payments over the next decade to clinicians who are not actually participating in APMs.

The proposed rule is open for public comment and CMS is encouraging feedback from stakeholders across the healthcare industry.

The proposed rule is available at https://www.federalregister.gov/public-inspection/current.