MGMA outlines 2027 pay cut, end of MIPS and other federal changes coming for physicians

The final 2027 Medicare physician fee schedule, which as proposed would cut the conversion factor for most physicians 1.68%, is due in November. Federal funding runs out Dec. 11, and three temporary Medicare payment provisions expire at the end of the year. In January, a mandatory payment model for some specialists and Medicaid work requirements take effect.

"We're not seeing a lot of bills pass individually anymore, so this is our opportunity," Madison Hynes, M.P.P., an associate director of government affairs at the Medical Group Management Association (MGMA), said of the year-end spending package. She and James Haynes, J.D., also an associate director of government affairs, delivered MGMA's Washington update Sept. 27 at the MGMA Annual Conference 2026 in San Antonio.

The 2027 fee schedule

Under the proposed fee schedule, the conversion factor for most physicians would fall to $32.84. Physicians who qualify as participants in advanced alternative payment models (APMs) would see a 1.19% drop, to $33.17. MGMA filed comments on the proposal Sept. 14, and the Centers for Medicare & Medicaid Services (CMS) is expected to finalize it in November.

Haynes walked attendees through how Medicare prices each service. The conversion factor is multiplied by relative value units for physician work, practice expense and malpractice, each adjusted for geography. Any Merit-based Incentive Payment System (MIPS) adjustment and the sequester are then applied. Since 2026, the 2015 law that created the Quality Payment Program has required separate conversion factors for qualifying APM participants and everyone else.

Most of next year's cut comes from the expiration of a 2.5% increase that the One Big Beautiful Bill Act provided for 2026 only. A statutory update of 0.75% for qualifying APM participants and 0.25% for everyone else, plus a 0.53% positive budget neutrality adjustment, offsets part of the loss. Congress has approved temporary increases to soften fee schedule cuts in five of the last six years, Haynes said.

MGMA wants Congress to replace those patches with an annual update tied to inflation and to raise the threshold that triggers budget neutrality. Under current law, any change in relative values projected to increase spending by more than $20 million forces an offsetting cut across the fee schedule, a limit Haynes said has been in place for decades. The G2211 complexity add-on code, introduced a few years ago, took roughly $1 billion out of the fee schedule that way, he said.

CMS also proposed reducing payment when an evaluation and management (E/M) visit billed with modifier 25 falls on the same day as a 0-, 10- or 90-day global procedure. The cut applies when the same physician, or a physician in the same practice, performs both. The most expensive service that day would be paid in full and every other service at 50%. The rule floated a 25% reduction as an alternative, and MGMA opposes both.

Haynes said CMS is reviving a policy it proposed in 2019, reasoning that same-day payments cover duplicative costs. MGMA has joined a coalition of specialty organizations that has met with CMS and the White House. A large group of congressional offices also signed a letter opposing the change, he said.

"This would impact everybody, and it would undermine the ability of independent groups as well to operate," Haynes said. He named dermatology, otolaryngology and rheumatology as examples of affected specialties.

CMS would replace the G2211 add-on code, which Haynes said pays about $16, with two modifiers on the E/M base code. One would raise payment by 16%. The other, for clinicians in the Medicare Shared Savings Program (MSSP) or the Long-term Enhanced ACO Design (LEAD) model, would raise it by 32%. Haynes raised concerns about how quickly the switch follows CMS' earlier changes to the code.

The rule would change how CMS calculates practice expense relative value units by revising how indirect costs are allocated, phasing out the Indirect Practice Expense Cost Index and adding a stabilization adjustment. MGMA asked CMS to pause those changes because the agency did not provide a specialty-level analysis of their combined effect.

"It's hard to understand each individual change and how it impacts specialty practices," Haynes said.

The rule would accept a new unbundled family of maternity care codes, which Haynes said raises issues with potential G codes. It would also add G codes for advance care planning and change behavioral health coding.

Under the proposal, only a practice's own clinical staff could furnish remote physiologic monitoring and remote therapeutic monitoring, barring the third-party vendors many practices contract with. CMS would also require an initiating visit before the services begin and revalue numerous monitoring codes, which Haynes said would amount to a cut. CMS cited reports from the Office of Inspector General.

Practices using a contractor would face "a quick turnaround time to try to bring those in-house," Haynes said. Sens. Marsha Blackburn (R-Tennessee) and Mark Warner (D-Virginia), who sponsor the Rural Patient Monitoring Access Act, wrote to CMS warning the changes could undermine patient access, he said.

The end of MIPS

CMS proposed ending MIPS after the 2028 performance year. MIPS Value Pathways (MVPs) would become mandatory in 2029 for clinicians not participating in an APM. There are 27 voluntary MVPs now, and CMS proposed three more, covering diabetic disease, hypertension and hospitalists.

"Moving towards MVPs would kind of amplify some of the problems with MIPS," Haynes said. MVPs require four quality measures instead of six but keep cost measures and many of the reporting problems physicians already face under MIPS, he said.

For 2027, the 75-point performance threshold would stay in place. Clinicians would report one CMS-designated core measure, from a list Haynes put at about 78, in place of an outcome or high-priority measure. MGMA says that could force practices to report measures that aren't clinically relevant to them.

CMS left the cost category largely unchanged, though MGMA has long pushed to reform it. In the Promoting Interoperability category, CMS would drop the security risk analysis attestation, a change MGMA supports. The electronic prior authorization measure would be optional at first.

Once MVPs are mandatory, large multispecialty groups would have to split into subgroups by specialty and report separately, while smaller multispecialty groups would be exempt. Haynes called that administratively problematic and costly.

CMS also proposed determining qualifying APM participant status for each combination of tax identification number and National Provider Identifier (NPI) instead of by NPI alone. MGMA believes that could discourage APM participation, because groups would have to track clinicians who work in more than one practice.

Accountable care and the Innovation Center

In the MSSP, CMS proposed raising the shared savings rate in Level E of the BASIC track from 50% to 60%. It also proposed lowering the maximum weight on regional adjustments to 35% in the ENHANCED track.

Other MSSP proposals would assign more beneficiaries to accountable care organizations (ACOs). Benchmark changes would reward ACOs that lower spending, treat high-cost patients or recruit clinicians new to value-based care, and would add guardrails to the trend factor used to set benchmarks. The proposals would also extend current quality reporting options during the shift to digital measures, and CMS backed off earlier plans to require Promoting Interoperability reporting in the program.

Haynes, who noted the MSSP section runs more than 300 pages, called several of the changes relatively positive. He said the growth adjustment could prompt outreach to groups that haven't been in value-based care.

The CMS Innovation Center is focused on cost savings beyond its physician-focused models and is testing payment and technology initiatives involving artificial intelligence (AI), Hynes said. It has reduced payment in some shared savings and advanced APM arrangements, terminated a few models earlier in the administration and focused on mandatory specialty models that require downside risk. Some of its newest models are aimed at technology companies rather than physicians.

The Advancing Chronic Care with Effective Scalable Solutions (ACCESS) model, which launched July 5, pays technology-focused participants for digital services aimed at metabolic, musculoskeletal and behavioral health conditions. Hynes said its directory may have launched a few months late. She asked physicians who refer patients to ACCESS participants to share their experience with MGMA.

The LEAD model, a 10-year successor to ACO REACH with partial- and full-risk options, starts in January 2027. Many members are weighing whether to move into LEAD or reevaluate the MSSP, Hynes said, and MGMA has hosted a webinar with CMS on the model.

The mandatory Ambulatory Specialty Model begins in January 2027 for select specialists treating heart failure or low back pain, and CMS released the final participant list in September. The proposed fee schedule would add participation exceptions, adjust reporting requirements and add a rural scoring adjustment.

MGMA opposes the model's mandatory design. Hynes said the association has seen problems with how the model is being implemented and communicated to affected practices. MGMA brings member feedback directly to the Innovation Center teams running LEAD and the specialty model, she said.

MGMA wants a long-term extension of the advanced APM incentive payment and the freeze on qualifying thresholds. It also wants optional, physician-led models that offer partial-risk options for groups new to APMs.

Prior authorization

Since January, technology companies have used AI to review prior authorization requests for select traditional Medicare services in Arizona, New Jersey, Ohio, Oklahoma, Texas and Washington.

They do so under the Innovation Center's Wasteful and Inappropriate Service Reduction model, known as WISeR. When Hynes asked who in the room had encountered it, a few attendees raised their hands.

"The expansion of prior authorization in traditional Medicare is not what we want to see, given it is one of the biggest burdens of Medicare Advantage," Hynes said.

MGMA is also concerned about "the incentive of these technology companies to deny care," she said, because denials generate savings for the government and can raise the companies' own reimbursement. Hynes said the Innovation Center, once focused on physician-led models, is now trying experiments "really in the name of finding savings."

Since January, Medicare Advantage (MA) and Medicaid plans have had to decide standard prior authorization requests within seven days and expedited requests within 72 hours under a CMS rule, CMS-0057.

Hynes said MGMA is watching whether that is happening in practice. The rule also requires plans to support electronic prior authorization by Jan. 1, 2027, and some insurers have raised concerns about meeting that deadline, she said.

Plans began publicly reporting prior authorization metrics earlier this year, but some may be posting them "as a CSV file on some like backend website that's not accessible," Hynes said. MGMA wants CMS to collect and publish the data. Dozens of health plans pledged last year to reduce prior authorization, including in commercial coverage, but members tell MGMA the commitments aren't being carried out.

MGMA's legislative priorities include the Improving Seniors' Timely Access to Care Act, an MA prior authorization bill that Hynes said has 290 House cosponsors. They also include the Reducing Medically Unnecessary Delays in Care Act.

"You don't get more than that," Hynes said of the Seniors' Act's support. "It's a vast supermajority."

Medicare Advantage and downcoding

MA now covers more than 55% of Medicare beneficiaries. In MGMA's 2026 regulatory burden report, 90% of responding practices said they had seen a shift toward MA among their patients, and 79% of those said the shift has had a negative effect on their practice.

"I would say in the last year, that's been the thing we've heard from members most, or most often," Hynes said of downcoding.

MGMA has drafted legislation that would ban automatic downcoding in MA outright and is shopping it to congressional staff from both parties. A fallback version would allow the practice only when an insurer can show a physician has upcoded above a specified rate. The insurer would also have to notify the physician and could apply the policy for no more than 90 days. The draft names AI and other algorithms.

"Obviously, we're up there on the Hill, but so are all the big insurance companies," Hynes said.

Two other bills MGMA supports are the Medicare Advantage Improvement Act and the Prompt and Fair Pay Act. Between them, they would set a floor for MA payment at traditional Medicare rates and impose deadlines for paying claims, Hynes said. MA reform is unlikely to top the year-end agenda, she said, but it "will likely be a priority for the coming Congress."

Medicaid

States must implement Medicaid work requirements by Jan. 1, 2027. CMS has set out how states must implement them, Hynes said, but much will depend on each state's approach, which could include reviewing coding for medical frailty exemptions. She said practices should expect more administrative work and more uncompensated care.

Caps on state-directed payments at Medicare rates phase in beginning in 2028. Limits on provider taxes will also reduce federal matching funds for Medicaid expansion states.

"If you're feeling cuts right now, it's probably not necessarily reflective of federal policies," Hynes said. "These changes are all in the future."

States are making cuts now, she said, and more could follow as they receive less federal money.

Outpatient and other rules

The 2027 hospital outpatient payment proposal would extend site-neutral payment to imaging services without contrast furnished in off-campus hospital outpatient departments, after last year's expansion to drug administration. Haynes said CMS continues to see site-neutral policies as a source of savings.

The outpatient rule would remove 637 more procedures from the inpatient-only list, the second year of a three-year phaseout. It would add reporting requirements for off-campus provider-based departments, including department-specific NPIs and attestations required by a recent law. It would also cut payment for 340B-acquired drugs to average sales price minus 33.4%.

Several rules finalized this year are already in effect:

• The Department of Health and Human Services (HHS) finalized standards for electronic health care claims attachments and electronic signatures under the Health Insurance Portability and Accountability Act (HIPAA). Compliance is required by May 2028.
• A final rule on the No Surprises Act's independent dispute resolution (IDR) process cut the administrative fee to $15 per party per dispute, from $115. The process applies mainly to specialties such as emergency medicine and radiology, Haynes said. MGMA is backing legislation to make sure physicians are paid promptly after an IDR decision.
• Since July 8, practices that receive federal funds have had to keep at least one accessible exam table and one accessible weight scale under Section 504 of the Rehabilitation Act.

Fraud, privacy and AI

CMS has imposed nationwide moratoriums on Medicare enrollment of new durable medical equipment suppliers, hospices and home health agencies. It has also asked states to revalidate Medicaid providers. The agency is scrutinizing the rising cost of skin substitutes, has requested information on ways to fight fraud, has proposed changes to Medicare enrollment and has cracked down on agents and brokers in the health insurance marketplaces. Hynes said fraud prevention, including through prior authorization, will likely be woven into many CMS policies in the coming years.

MGMA opposed a proposed update to the HIPAA Security Rule, which has stalled, and continues to press the administration on what it would cost practices, Hynes said. MGMA is also watching possible HIPAA privacy rule changes and electronic prior authorization for drugs.

Asked about federal guidance on AI, Hynes said little has come from CMS or HHS, and there are few guardrails. "Right now that is kind of the big black box of policy in D.C.," she said.

What Congress could do

Funding usually lapses at the end of September, so the Dec. 11 deadline gave MGMA "a little bit of time to breathe," Hynes said. The Nov. 3 midterms could bring leadership changes in the House and Senate and leave the lame-duck session unpredictable. If control of either chamber changes, she said, there may be openings to push through bills such as the Seniors' Act.

Late last year's government shutdown, the longest in U.S. history, turned largely on the Patient Protection and Affordable Care Act's enhanced premium subsidies, which expired at the start of 2026, Haynes said. The appropriations bill Congress passed in February extended Medicare telehealth flexibilities through Dec. 31, 2027. MGMA wants them made permanent through the CONNECT for Health Act.

Three of the February bill's other Medicare provisions ran only through 2026:

• the 1.0 work geographic practice cost index floor
• the reinstated advanced APM incentive payment, along with lower qualifying thresholds for this year
• a delay of cuts to the clinical laboratory fee schedule

CMS recently released preliminary 2027 lab rates. Without congressional action, cuts averaging about 16% would phase in over three years, Haynes said. MGMA is backing the RESULTS Act with other groups to address them.

MGMA wants a year-end package to address Medicare payment, extend the expiring provisions and carry the Seniors' Act, which Hynes said has a low to "basically no price tag." The broader reform MGMA backs is the Patients First Act, which physician members of the House from both parties introduced over the summer.

It would tie annual conversion factor updates to the Medicare Economic Index, revise budget neutrality rules, redesign MIPS with a new committee to oversee quality measure selection, require comments on mandatory payment models and freeze APM qualifying thresholds.

The bill has about 50 cosponsors, and Hynes said many of them are nonphysicians.

MGMA's slides listed three narrower bills:

• the Strengthening Medicare for Patients and Providers Act, which would tie the annual update to the Medicare Economic Index
• the Provider Reimbursement Stability Act, which would modernize budget neutrality rules
• the Medicare Physician Data-driven Performance Payment System Act, which would overhaul MIPS

"I think the challenge with something like the Patients First Act is it's going to be very expensive," Hynes said.

Winning cosponsors has not been the hard part, she said. Getting a bill with a price tag in front of a committee has. "We're getting stuck on things that cost money in an administration and a Congress that is interested in finding savings," she said.

MGMA takes its regulatory burden report to congressional offices. Hynes said a detail such as a practice hiring four more back-office staff members in a year to handle prior authorization "does stick" with them.

Lawmakers from rural districts are especially interested in access to care, she said. MGMA is recruiting members for new ad hoc workgroups on billing and payment, MIPS and MVPs, value-based care, MA and health IT, and it scheduled a member town hall for Sept. 29.

Grassroots letters from members help MGMA tell offices that an issue is "a real problem in your district," Haynes said. He pointed to the 2015 law that replaced Medicare's old physician payment formula, which passed despite its cost.

"It's very tough, but you know these things can happen," Haynes said.

Medical Economics is in San Antonio at the MGMA Annual Conference, Sept 27-30, celebrating 100 years of MGMA, attending sessions and speaking with industry leaders. Follow our coverage on our MGMA conference page.