CMS Proposes Transformational Medicare Reforms to Expand Accountable Care, Modernize Physician Payment, and Shift from Sick Care to Healthcare

Centers for Medicare & Medicaid Services

FOR IMMEDIATE RELEASE
July 14, 2026

Contact: CMS Media Relations
(202) 690-6145 | CMS Media Inquiries

CMS Proposes Transformational Medicare Reforms to Expand Accountable Care, Modernize Physician Payment, and Shift from Sick Care to Healthcare

The Centers for Medicare & Medicaid Services (CMS) is proposing transformational reforms to Medicare’s physician payment and value-based care programs that would expand accountable care, modernize physician payment, reduce administrative burden, and help shift the healthcare system’s focus from treating illness to preventing it.

The proposals would make Medicare accountable care organizations (ACOs) easier to join and more rewarding to participate in, transition clinicians away from traditional Merit-based Incentive Payment System (MIPS) reporting toward more meaningful value-based care pathways, and update physician payment policies to better reflect modern clinical practice. Together, these reforms would strengthen primary care, improve patient outcomes, and support Medicare’s long-term sustainability.

“We’re proposing some of the most significant Medicare reforms in recent years to strengthen primary care, expand accountable care, and modernize physician payment,” said CMS Administrator Dr. Mehmet Oz. “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.”

“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. “Our goal is simple: deliver better outcomes for patients by appropriately incentivizing providers, improving quality measurement, and reducing administrative burden.”

Strengthening Medicare ACO Participation and Accountability

CMS is proposing significant improvements to the Medicare Shared Savings Program (Shared Savings Program), the nation’s largest value-based payment program. The proposed changes would support continued participation and growth in accountable care, while strengthening incentives for high-quality, coordinated care.

ACOs are a key part of the Administration’s efforts to strengthen primary care, improve preventive services, and help people with Original Medicare live healthier lives through better coordinated care. ACOs are groups of doctors, hospitals, and other healthcare providers who work together to coordinate care for people with Original Medicare. Their focus on prevention, care management, and patient engagement has produced measurable results for patients and taxpayers alike.

Patients receiving care from ACO healthcare providers are more likely to receive preventive services and screenings and less likely to experience uncontrolled chronic conditions such as diabetes and high blood pressure. ACOs also help reduce unnecessary spending by incentivizing healthcare providers to use healthcare resources more efficiently.

The Shared Savings Program has already demonstrated strong financial results. In performance year 2024, 75% of the 476 participating ACOs earned shared savings payments totaling $4.1 billion. Even after those payments, net savings of approximately $2.5 billion compared to projected spending benchmarks were generated for the Medicare Trust Funds. The Shared Savings Program has now generated savings for the Medicare Trust Funds for eight consecutive performance years. The proposed rule would build on this record by improving benchmark accuracy, supporting continued and expanded participation, and reducing unnecessary administrative burden.

The Shared Savings Program proposals would:

Increase opportunities to share savings for certain participating ACOs.
Create new financial incentives for organizations joining the program for the first time.
Establish more predictable spending targets to improve planning and participation.
Reduce administrative burden by simplifying technology requirements and streamlining patient notices.
Allow ACOs with approved applications beginning April 1, 2027, to reduce or eliminate beneficiary out-of-pocket costs for certain items and services, expanding a successful approach already adopted by many participants in the ACO REACH Model.

Modernizing Medicare Physician Payments

CMS is also proposing updates to the Physician Fee Schedule (PFS) to better reflect modern medical practice and support the Trump administration’s goal of shifting from sick care to healthcare.

Over time, the PFS has accumulated layers of outdated payment policies and billing conventions that no longer fully reflect how healthcare services are delivered. CMS is proposing a targeted recalibration of payment rates to improve accuracy, transparency, and consistency.

The proposed changes would:

Better align payments with the time, resources, and complexity involved in delivering care.
Account for efficiencies that occur when multiple services are delivered during the same patient encounter.
Improve oversight of billing practices and address areas where claims may not accurately reflect services provided.
Increase transparency into how physician payment rates are calculated.

As CMS works to shift the health system’s focus from treating illness to preventing it, accurate payment policies are essential to supporting better patient outcomes. By ensuring payment incentives reflect modern clinical practice, the agency aims to encourage the right care at the right time while maintaining stewardship of Medicare resources.

Advancing the Next Generation of Quality Reporting and Value-Based Care

CMS is also proposing to sunset traditional Merit-based Incentive Payment System (MIPS) reporting in 2029 and transition clinicians toward more clinically meaningful specialty-focused MIPS Value Pathways (MVPs).

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. 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.

Beginning with the 2029 performance period, traditional MIPS would sunset, marking the next phase in Medicare’s transition toward value-based care. MIPS eligible clinicians would have until the end of 2028 to transition to an MVP unless they participate in a MIPS APM and report the APM Performance Pathway (APP).

CMS is proposing three new MVPs focused on diabetes, hypertension, and hospital-based care to further expand participation opportunities and promote prevention. If finalized, the MVPs inventory would provide a relevant reporting option for approximately 98% of specialties.

The proposal also would introduce new MIPS Core Measures beginning in 2027. Under this approach, every clinician would report at least one measure considered fundamental to their specialty and patient population. The goal is to improve consistency and generate more meaningful quality data for patients, providers, and policymakers.

In addition, CMS is proposing to reform how it pays the APM incentive payment to close a payment loophole that could otherwise result in an estimated $2.38 billion in windfall payments to clinicians who do not participate in APMs over the next decade, helping ensure incentives are directed to providers actively delivering value-based care and improving patient outcomes.

Putting Patients and Providers First

Together, these proposals represent one of the most significant Medicare modernization efforts in recent years, expanding accountable care, modernizing physician payment, reducing administrative burden, and helping Medicare deliver better outcomes for beneficiaries while preserving the program’s long-term sustainability.

The proposed rule is open for public comment, and CMS encourages stakeholders across the healthcare system to provide feedback.

To view the proposed rule, please visit: https://www.federalregister.gov/public-inspection/current

For a fact sheet on the CY 2027 Physician Fee Schedule proposed rule, please visit: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2027-medicare-physician-fee-schedule-proposed-rule

For a fact sheet on the proposed Medicare Shared Savings Program changes in the CY 2027 PFS proposed rule, please visit: https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2027-medicare-physician-fee-schedule-proposed-rule-cms-1848-p-medicare-shared

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