Medicare Tweaks Doctor Pay Rules for 2027
Published Date: 7/16/2026
Proposed Rule
Summary
Starting in 2027, Medicare and Medicaid are updating how doctors and clinics get paid to better match today’s medical care and laws. This includes new rules for drug price rebates, shared savings programs, and payments for rural and specialty care. These changes affect doctors, patients, and drug makers, aiming to save money and improve care quality.
Analyzed Economic Effects
6 provisions identified: 0 benefits, 1 costs, 5 mixed.
Medicare conversion factor decreases
CMS projects two separate Medicare physician conversion factors for CY 2027: the qualifying APM conversion factor is projected to decrease by $0.40 (−1.19%) from the current $33.4009, and the non‑qualifying APM conversion factor is projected to decrease by $0.56 (−1.68%) from the current $33.5875. These projected decreases would reduce the dollar amount used to convert RVUs into payments for clinicians under the CY 2027 Physician Fee Schedule.
Indirect practice expense allocation change
CMS proposes that for CY 2027 the indirect practice expense (PE) allocator would include both the work RVU and the clinical labor PE RVU for all services (except codes with 010‑ and 090‑day global periods). That replaces the current policy of including both only for services with separate technical and professional components, changing how indirect PE RVUs are calculated for many codes.
Two‑year phaseout of IPCI in PE method
CMS proposes to remove the indirect practice cost index (IPCI) from the PE RVU calculation over a two‑year transition for CY 2027: in the first year only half of the measured variation in the IPCI would be applied to the indirect allocator, and in the second year the IPCI would no longer be applied.
Changes to drug inflation rebate rules
CMS proposes updates to the Medicare Part B and Part D Prescription Drug Inflation Rebate Programs including rules for identifying the CPI‑U benchmark when CPI‑U data are unavailable, clarifying the definition of "first marketed date," and clarifying that certain skin substitutes would not be excluded from rebatable Part B drugs. CMS also proposes a Part D methodology modification to account for 340B‑eligible units for AIDS Drug Assistance Program (ADAP) enrollees for applicable periods beginning October 1, 2025, and proposes that 340B covered entities submit Part D 340B claims data to the Medicare Part D Claims Data 340B Repository beginning in 2027.
Shared Savings Program requirement changes
CMS proposes modifications to the Medicare Shared Savings Program (the ACO program) that change program requirements for how groups of providers (Accountable Care Organizations) are held accountable for quality and total cost of care for assigned Medicare fee‑for‑service beneficiaries. The program is voluntary and CMS describes updated requirements in this CY 2027 proposed rule.
Updates to RHC and FQHC payments
CMS proposes updates to payment and policy for Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) as part of the CY 2027 Part B rulemaking. These updates change how Medicare pays those clinics and related regulatory policies.
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Key Dates
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