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The Trump administration is proposing what may end up being some of the most significant Medicare payment reforms in years, aiming to reshape how doctors are paid and shift the program’s focus toward prevention and primary care.
If the proposal goes into effect, physicians across the country would be affected, and it could influence how care is delivered to the more than 70 million Americans covered by Medicare.
“We’re proposing some of the most significant Medicare reforms in recent years to strengthen primary care, expand accountable care, and modernize physician payment,” Centers for Medicare & Medicaid Services (CMS) administrator Dr. Mehmet Oz said in a statement. “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.”
Medicare’s physician payment system determines how doctors, specialists, and other clinicians are reimbursed for caring for the program’s beneficiaries. While the reforms could reduce administrative burdens and reward providers for better patient outcomes, concerns have emerged regarding proposed physician payment reductions and the phaseout of a major performance-reporting system.
The changes are part of the proposed 2027 Medicare Physician Fee Schedule and remain subject to a public comment period before any final rule is issued.
Expanding Accountable Care Organizations
The proposed reforms specifically target Medicare’s physician payment and value-based care programs. According to the CMS, the changes are designed to expand accountable care organizations (ACOs), modernize physician payments, and move the healthcare system away from paying primarily for the volume of services provided.
“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, in a statement. “Our goal is simple: deliver better outcomes for patients by appropriately incentivizing providers, improving quality measurement, and reducing administrative burden.”
CMS is proposing a series of changes aimed at making Medicare ACOs—groups of doctors, hospitals, and other healthcare providers that coordinate services and receive incentives for controlling costs while improving quality—easier to join and more financially attractive to providers. The agency said expanding accountable care could strengthen preventive services, improve coordination among providers, and help reduce unnecessary spending within Medicare.
“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,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
Traditional MIPS Would Be Eliminated
One of the most important shifts in the proposal is the decision to gradually phase out the traditional Merit-based Incentive Payment System, commonly known as MIPS. CMS plans to end traditional MIPS reporting in 2029 and move clinicians into more specialized reporting pathways focused on specific areas of medicine.
“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 said in a release. “Over the past decade, CMS has worked with clinicians to refine the program and reduce reporting burden. The proposed rule reflects that evolution by establishing MIPS Value Pathways (MVPs), as the primary reporting option in MIPS.”
The proposal would instead push providers toward value-based payment arrangements that reward outcomes rather than just service volume.
“For beneficiaries, there really isn’t a direct impact,” Thompson said. “The goal is to create better incentives around prevention and healthier outcomes rather than simply paying for more procedures.”
Revisions to Physician Payment Rules
CMS is also proposing changes to the formula used to determine physician reimbursement rates, saying the goal is to better reflect the time and complexity required to care for patients. The agency said the revisions are intended to increase transparency around payment calculations and strengthen its oversight of billing practices.
However, some physicians could still see lower Medicare payment rates in 2027 because a temporary 2.5 percent physician payment increase approved by Congress for 2026 is scheduled to expire. According to CMS estimates, payment conversion factors could decline by roughly 1.2 percent to 1.7 percent depending on a physician’s participation in advanced payment models.
How Could Medicare Patients Be Affected?
The proposals do not directly reduce Medicare benefits for recipients, but they alter how doctors and healthcare organizations are reimbursed by the program. CMS has said patients could benefit from a greater emphasis on preventative care and better care coordination. Theoretically, reducing administrative burdens on physicians could allow clinicians to spend more time with patients and less time on reporting requirements.
“For beneficiaries, this could equate to better-coordinated preventive care and lower out-of-pocket costs for certain services, but possible physician payment reductions and new restrictions could also put pressure smaller providers,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek.
He continued: “The idea behind these changes in the long-term is to make a Medicare system that increasingly rewards doctors for managing a patient’s overall health rather than simply billing for individual services, but its success will depend on whether CMS can reduce paperwork and spending without driving some doctors and practices out of the program.”
What Happens Next
The proposals are currently open for a 60-day public comment period. CMS will review feedback from physicians, hospitals, and other stakeholders before issuing a final rule governing Medicare physician payments for 2027.
“Long term, only time will tell. My concern has always been incentives,” Thompson said. “Anytime you tie compensation to a metric, behavior changes. There is the possibility physicians become more selective about the patients they take on, or there could be some ‘padding’ of the stats.”
Contact Newsweek editors for this story: Jason Lemon and Anthony Murray.
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