• The proposed schedule includes a 1.19% decrease to the qualifying APM conversion factor, and a 1.68% cut to the nonqualifying conversion factor.
• The ACR president said the rule “fails to deliver” for physicians.

The newly proposed Medicare fee schedule for 2027 would cut physician pay by 1.68%, or 1.19% for those participating in qualifying alternative payment models, according to a fact sheet released by CMS.

The projected Medicare Physician Fee Schedule (PFS) for 2027, which CMS unveiled July 14, includes a conversion factor of $33.17 for physicians who participate in qualifying alternative payment models (APM), representing a decrease of $0.40 (–1.19%) from the current conversion factor of $33.57. Meanwhile, the nonqualifying APM conversion factor under the new rule would be $32.84, a decrease of $0.56 (–1.68%) from the current conversion factor of $33.40.

In response to the announcement, the American College of Rheumatology released a statement saying it was “disappointed” in the proposed rule, calling it “the sixth proposed cut in as many years.”

“As president of the ACR, I am hearing from these practices all over the country. If the trends continue, I feel certain they will sell their practices to larger health systems or stop seeing Medicare patients, neither or which are good for America’s seniors,” William F. Harvey, MD, MSc, FACR, told Healio in an interview.

The ACR president added that physicians across specialties have experienced a 33% cut in Medicare reimbursement, adjusted for inflation, since 2001.

“Caring for America’s elderly demands a working, sustainable Medicare system, but this rule fails to deliver,” Harvey said in the ACR statement. “Rheumatologists and other physicians continue to do the best they can with declining payment, but we’re reaching our breaking point.”

According to the CMS fact sheet, physicians participating in qualifying APMs would have received a 0.75% pay increase, while non-qualifying APM physicians would have seen a 0.25% bump, had it not been for the pre-scheduled termination of the 2.5% conversion factor increase included in the One Big Beautiful Bill Act. That temporary, 1-year increase for 2026 no longer being in effect for 2027 contributed to the overall PFS decreases, according to CMS.

Alongside the Medicare payment changes, CMS announced in a press release its intention to “sunset” traditional Merit-based Incentive Payment System (MIPS) reporting in 2029, in favor of “more clinically meaningful specialty-focused MIPS Value Pathways (MVPs).”

“Beginning with the 2029 performance period, traditional MIPS would sunset, marking the next phase in Medicare’s transition toward value-based care,” CMS said in the release. “MIPS eligible clinicians would have until the end of 2028 to transition to an MVP unless they participate in a MIPS APM and report the APM Performance Pathway (APP).”

According to Harvey, the ACR supports CMS’ “continued investment in MVPs and appreciates the development of pathways designed to better align reporting requirements with clinical practice.”

However, he added that the “Advancing Rheumatology Patient Care MVP must continue to evolve to reflect the breadth and complexity of rheumatologic care.”

“Rheumatologists manage a diverse patient population with chronic and often lifelong conditions,” Harvey told Healio. “A successful rheumatology MVP should support measurement of disease control, treatment safety, medication management, and patient-reported outcomes across these populations. Many of these concepts are currently captured through rheumatology-specific QCDR measures available through the ACR’s RISE Registry.

“We encourage CMS to collaborate with specialty societies and clinical registries to ensure MVP measures remain clinically meaningful and actionable, while minimizing unnecessary reporting burden by removing measures that are relevant to clinicians' practice,” he added.

The proposal also would introduce new MIPS Core Measures beginning in 2027. According to CMS, every clinician under this approach would report at least one measure considered fundamental to their specialty and patient population.

“The goal is to improve consistency and generate more meaningful quality data for patients, providers, and policymakers,” CMS said in the release.

CMS is also seeking to close what it calls a loophole in APM incentive payment. According to the release, this loophole would otherwise result in $2.38 billion in “windfall payments” to clinicians who do not participate in APMs over the next decade.

Also announced in the press release were proposed improvements to Medicare accountable care organizations (ACOs) through the Medicare Shared Savings Program. These changes include opportunities to share savings for certain participating ACOs, simplifying technology requirements and streamlining patient notices to reduce administrative burden, and, starting April 1, 2027, allowing ACOs with approved applications to reduce or eliminate beneficiary out-of-pocket costs for certain items and services.

The proposed rule additionally puts forward a series of PFS changes that CMS described as an effort to modernize Medicare physician payments.

“Over time, the PFS has accumulated layers of outdated payment policies and billing conventions that no longer fully reflect how health care services are delivered,” read the release. “CMS is proposing a targeted recalibration of payment rates to improve accuracy, transparency, and consistency.”

According to CMS, 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 areas where claims may not accurately reflect services provided; and
• increase transparency into how physician payment rates are calculated.

“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 Mehmet Oz, MD, MBA, said in the release. “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.”

In their own statements, the American College of Physicians (ACP) and the American Academy of Family Physicians (AAFP) each struck more positive tones than the ACR, praising many of the elements of the new PFS and proposed rule.

“Many of the provisions in the proposed rule could help strengthen primary care and drive innovation, priorities for which ACP has long advocated, including provisions related to primary care payment, behavioral health, advance care planning and evaluation, and management (E/M) services,” the ACP said in its statement.

The AAFP meanwhile praised what it described as “important provisions that can strengthen primary care by reducing barriers for patients and improving payment for the high-value care family physicians deliver.”

However, both primary care organizations joined ACR in expressing concern about the Medicare physician pay cuts.

“ACP remains concerned about the impact of these reductions on the long-term stability and adequacy of physician payment under the Medicare Physician Fee Schedule,” read the ACP statement.

The AAFP likewise said the decreases would “further destabilize physician practices and limit investment in primary care.”

“Medicare physician payments have declined 33% from 2001 to 2025 when adjusted for inflation, even as practice expenses have increased,” the AAFP said in its statement. “Reforming Medicare payment is critical for serving all patients across the health care system, because Medicare payment policies influence Medicaid, Tricare and commercial insurance.”

To that end, the ACP, AAFP and ACR each subsequently and individually released statements endorsing the Patients First Act of 2026.

Introduced on July 15 in the U.S. House as HR 9693, the Patients First Act would, among other provisions, establish inflation-linked payment updates to the Medicare PFS, create payment parameters to make changes to the PFS more predictable and increase the budget neutrality threshold that triggers payment.

The bill was introduced by U.S. Rep. John Joyce, MD, R, Pa., and has bipartisan support from 28 cosponsors, including Gregory Murphy, MD, R, N.C., and Kim Schrier, MD, D, Wash. It has been referred to the House Energy and Commerce and Ways and Means committees.

“Over the last 2 decades, Medicare reimbursement for physician services has failed to keep pace with inflation, and that is directly threatening patient access to quality rheumatic care,” Harvey said in the ACR statement. “We appreciate Drs. Joyce, Murphy and Schrier for working with physicians to propose workable reforms that will account for inflation, address budget neutrality constraints, reduce administrative workload for physicians, boost primary care, and create payment stability.”

According to the ACP, the reforms included in the bill would, if enacted, “provide much needed stability for the Medicare physician fee schedule over the long term.”

In its own statement, the AAFP described the bill as “a concrete step toward modernizing a payment system that has historically undervalued primary care.”

William F. Harvey, MD, MSc, FACR, can be reached at tarnold@rheumatology.org.