Pay Cut, MIPS Phaseout, More Proposed in 2027 Medicare Physician Fee Schedule
By Phil West

Reinforcing medicine’s ongoing frustrations, if finalized as proposed, Medicare physician payment in 2027 will see another overall decrease, while the Merit-Based Incentive Payment System (MIPS) will be shelved in favor of a revised MIPS Value Pathways (MVP) reporting program in 2029, per the Medicare Physician Fee Schedule proposed rule published on July 16 by the Centers for Medicare & Medicaid Services (CMS).

The Texas Medical Association has initiated analysis of the 700-plus-page document, and plans to issue a comment letter by CMS’s Sept. 14 deadline advocating on behalf of its more than 60,000 member physicians.

What CMS refers to as “transformational” in its press release, medicine calls “frustrating” as the proposal contemplates physicians suffering yet another Medicare payment decrease despite rising inflation, says TMA President Bradford W. Holland, MD. 

“Physicians have been dealing with the faulty formula Medicare uses to pay physicians for too long,” he said. “What we really need is a permanent and sustainable solution that ensures practice viability and patient access for generations to come.” 

The new conversion factor rule does include a 0.53% positive budget neutrality payment adjustment to account for changes in work relative value units (RVUs) for some services. 

Remaining cuts are primarily reflective of the one-time 2.5% increase to conversion factors that Congress approved for one year only and expires Dec. 31, 2026. As proposed, qualifying physicians participating in an alternative payment model will receive a 1.19% cut to the conversion factor compared to 2026, which amounts to $33.1693 per RVU. The conversion factor for all other Medicare items and services, as proposed, would be subject to a 1.68% cut, resulting in $32.8409 per RVU.  

Last year’s one-time, one-year 2.5% increase to the conversion factor did little to close the chasm caused by decades of Medicare underpayments that have led to practice closures and patient access concerns, Dr. Holland adds. 

The American Medical Association’s initial analysis of the proposed fee schedule warned that physician payment updates, which currently do not align with underlying economic conditions like inflation, create long-term sustainability concerns for Medicare patients and the physicians caring for them. 

CMS is also proposing to phase out traditional MIPS reporting in the Quality Payment Program beginning with the 2029 performance period and transition clinicians to MVPs, a specialty-focused reporting framework within MIPS. Physician organizations say the MVP framework does not fully address many of MIPS’s longstanding shortcomings. AMA’s research indicates MIPS is unduly burdensome; disproportionately affects small, rural, and independent practices; and is divorced from meaningful clinical outcomes, issues that are similarly found in MVPs. 

CMS is proposing three new MVPs – focused on diabetes, hypertension, and hospital-based care – which, if added to the current inventory, would bring participant reporting options up to approximately 98% of specialties, per its press release. 

In that same release, CMS Administrator Mehmet Oz, MD, claims the latest  proposed physician fee schedule would strengthen primary care, expand accountable care, and modernize physician payment.

“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,” Dr. Oz said. 

But the slew of policy updates doesn’t address the decades of pay cuts physicians have endured, and the ensuing administrative changes are likely to increase burdens on practices. 

“It’s deplorable that this proposal balances on the backs of physicians,” Dr. Holland said. 

Proposed changes intended to improve the Medicare Shared Savings Program include enhanced financial incentives and advance investment payments designed to encourage participation by rural and first-time accountable care organizations (ACOs). CMS also proposes a new option for approved ACOs to reduce or eliminate beneficiary cost-sharing for most Medicare Part B items and services beginning as early as April 1, 2027.

Physicians can reach out to their congressional representatives to emphasize that any cuts to Medicare physician payment are unacceptable. Find your elected official in TMA’s Grassroots Action Center.

TMA and other physician organizations have advocated for reforming Medicare physician payment to reflect the Medicare Economic Index (MEI) used to calculate physician practice inflation. AMA’s analysis highlighted H.R. 6160, the Strengthening Medicare for Patients and Providers Act, which would permanently tie Medicare payments to the MEI. 

On July 15, a bipartisan group of physician-legislators introduced the Patients First Act (H.R. 9693), seeking to overhaul  the Medicare Access and CHIP Reauthorization Act and the Medicare physician payment system. 

TMA recently joined the chorus backing the Provider Reimbursement Stability Act of 2026 (H.R. 8163), which would update the budget neutrality threshold that requires any payment increases or decreases to offset one another, among other needed changes. 

TMA also supports H.R. 8622, the Medicare Physician Data-driven Performance Payment System Act of 2026, introduced in May to retool several longstanding concerns with MIPS.  The legislation could remain relevant if Congress pursues broader Quality Payment Program reforms or if CMS modifies its proposal before finalizing the rule.

As TMA continues to analyze the proposed rule’s impact on physicians to prepare more detailed comments, members with specific feedback for TMA to consider can email TMA Vice President of Medical Economics Mollie Mailman by Aug. 11.