CMS Proposes Transformational Medicare Reforms to Expand Accountable Care, Modernize Physician Payment, and Shift from Sick Care to Healthcare

Administration Payment Rules Share CMS Proposes Transformational Medicare Reforms to Expand Accountable Care, Modernize Physician Payment, and Shift from Sick Care to Healthcare The Centers for Medicare & Medicaid Services (CMS) is proposing transformational reforms to Medicare’s physician payment and value-based care programs that would expand accountable care, modernize physician payment, reduce administrative burden, and help shift the healthcare system’s focus from treating illness to preventing it. The proposals would make Medicare accountable care organizations (ACOs) easier to join and more rewarding to participate in, transition clinicians away from traditional Merit-based Incentive Payment System (MIPS) reporting toward more meaningful value-based care pathways, and update physician payment policies to better reflect modern clinical practice. Together, these reforms would strengthen primary care, improve patient outcomes, and support Medicare’s long-term sustainability. “We’re proposing some of the most significant Medicare reforms in recent years to strengthen primary care, expand accountable care, and modernize physician payment,” said CMS Administrator Dr. Mehmet Oz. “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.” “Expanding accountable care is a critical part of making the Medicare program work well for patients,” said John Brooks, CMS Deputy Administrator and Director of the Center for Medicare. “Our goal is simple: deliver better outcomes for patients by appropriately incentivizing providers, improving quality measurement, and reducing administrative burden.” Strengthening Medicare ACO Participation and Accountability CMS is proposing significant improvements to the Medicare Shared Savings Program (Shared Savings Program), the nation’s largest value-based payment program. The proposed changes would support continued participation and growth in accountable care, while strengthening incentives for high-quality, coordinated care. ACOs are a key part of the Administration’s efforts to strengthen primary care, improve preventive services, and help people with Original Medicare live healthier lives through better coordinated care. ACOs are groups of doctors, hospitals, and other healthcare providers who work together to coordinate care for people with Original Medicare. Their focus on prevention, care management, and patient engagement has produced measurable results for patients and taxpayers alike. Patients receiving care from ACO healthcare providers are more likely to receive preventive services and screenings and less likely to experience uncontrolled chronic conditions such as diabetes and high blood pressure. ACOs also help reduce unnecessary spending by incentivizing healthcare providers to use healthcare resources more efficiently. The Shared Savings Program has already demonstrated strong financial results. In performance year 2024, 75% of the 476 participating ACOs earned shared savings payments totaling $4.1 billion. Even after those payments, net savings of approximately $2.5 billion compared to projected spending benchmarks were generated for the Medicare Trust Funds. The Shared Savings Program has now generated savings for the Medicare Trust Funds for eight consecutive performance years. The proposed rule would build on this record by improving benchmark accuracy, supporting continued and expanded participation, and reducing unnecessary administrative burden. The Shared Savings Program proposals would: Increase opportunities to share savings for certain participating ACOs. Create new financial incentives for organizations joining the program for the first time. Establish more predictable spending targets to improve planning and participation. Reduce administrative burden by simplifying technology requirements and streamlining patient notices. Allow ACOs with approved applications beginning April 1, 2027, to reduce or eliminate beneficiary out-of-pocket costs for certain items and services, expanding a successful approach already adopted by many participants in the ACO REACH Model. Modernizing Medicare Physician Payments CMS is also proposing updates to the Physician Fee Schedule (PFS) to better reflect modern medical practice and support the Trump administration’s goal of shifting from sick care to healthcare. Over time, the PFS has accumulated layers of outdated payment policies and billing conventions that no longer fully reflect how healthcare services are delivered. CMS is proposing a targeted recalibration of payment rates to improve accuracy, transparency, and consistency. The proposed changes would: Better align payments with the time, resources, and complexity involved in delivering care. Account for efficiencies that occur when multiple services are delivered during the same patient encounter. Improve oversight of billing practices and address