Medicare's Annual Payment Rule Reworks a Very Large Spreadsheet
Published Date: 11/9/2026
Rule
Summary
Starting January 1, 2027, Medicare and Medicaid are updating how doctors and clinics get paid to better match real medical work and new laws. This includes new rules for drug price rebates, sharing savings programs, and payment updates for rural clinics and ambulance services. These changes affect doctors, patients, and healthcare providers, aiming to keep care fair, affordable, and up-to-date.
Analyzed Economic Effects
4 provisions identified: 0 benefits, 1 costs, 3 mixed.
2027 Conversion Factor Reductions
Beginning January 1, 2027, Medicare uses two conversion factors for physician payments. The 2027 qualifying APM conversion factor is projected to decrease by $0.62 (−1.83%) from $33.5675, and the 2027 nonqualifying APM conversion factor is projected to decrease by $0.77 (−2.31%) from $33.4009.
Finalized CY 2027 RVU Updates
CMS finalized relative value units (RVUs) for calendar year 2027 under the Medicare Physician Fee Schedule to update payment systems to reflect changes in medical practice and statute. These RVU updates apply starting January 1, 2027.
Indirect Practice Expense Allocation Change
CMS finalized a change to allocate indirect practice expense (PE) using both the work RVU and the clinical labor RVU for all PFS services, except codes with 10- and 90-day global periods. This finalized methodology applies to CY 2027 payment calculations.
Medicare Drug Inflation Rebate Program Updates
The rule finalizes updates to the Medicare Part B and Part D Drug Inflation Rebate Programs, including: rules for identifying the CPI-U when CPI-U survey data are unavailable; clarification of the term "first marketed date"; clarification that certain skin substitutes are not excluded from Part B rebatable drugs; modification of the Part D methodology to account for 340B-eligible units for AIDS Drug Assistance Program (ADAP) clients for the applicable period beginning October 1, 2025; and a requirement that Medicare providers and suppliers that are 340B covered entities submit Part D 340B claims data to the Medicare Part D Claims Data 340B Repository beginning in 2027.
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Key Dates
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