2027 CMS Proposed Physician Fee Schedule Rule Illustrates Need for Systemic Reforms

AMGA’s MACRA Recommendations Provide Path Forward

Alexandria, VA – AMGA today issued a statement in response to the Centers for Medicare & Medicaid Services (CMS) Calendar Year 2027 Physician Fee Schedule (PFS) proposed rule.

“Once again, CMS has proposed conversion factor updates that fall well short of what it actually costs our members to deliver care,” said Jerry Penso, MD, MBA, president and chief executive officer of AMGA. “Last year’s increase was only possible because Congress stepped in with a one-time, one-year fix. That relief has expired, and the proposed rule reflects exactly what we were concerned about: a return to the bare statutory updates required under MACRA, which do not come close to keeping pace with inflation or practice costs.”

Under the Medicare Access and CHIP Reauthorization Act (MACRA), the CY2027 conversion factors reflect statutory updates of +0.75% for qualifying Alternative Payment Model (APM) participants and +0.25% for non-qualifying participants, plus an estimated 0.53% adjustment for changes in work RVUs, for proposed CY2027 conversion factors of $33.17 for qualifying participants and $32.84 for non- qualifying participants. Unlike CY2026, this year’s update does not include a congressionally mandated inflationary adjustment. The proposed CY 2027 qualifying APM conversion factor represents a projected decrease of $0.40 (-1.19%) from the current conversion factor; and, the proposed CY 2027 nonqualifying APM conversion factor represents a projected decrease of $0.56 (-1.68%) from the current conversion factor. 

“The update perpetuates precisely the instability we have cautioned against and the instability our MACRA and Value-Based Care Task Force spent two years studying,” Dr. Penso said. “A single year of congressional intervention was never a substitute for structural reform. The moment the temporary fix expired, the underlying erosion of physician payment reasserted itself. Medical groups and health systems  cannot build sustainable, high-value, team-based care on a payment system that swings between modest relief and a renewed decline every 12 months.”

The Case for MEI-Based, Sustainable Reform

AMGA continues to call for Congress and CMS to replace ad hoc annual patches with a permanent, predictable update tied to the Medicare Economic Index (MEI), the same standard already used to update payments for hospitals, skilled nursing facilities, and other Medicare providers. Physicians and other Part B clinicians remain the only major group of Medicare providers without an automatic inflationary adjustment.

This proposed rule underscores the concerns raised by AMGA’s MACRA and Value-Based Care Task Force. Convened in 2023 and composed of practicing physician executives from AMGA member medical groups and integrated systems, the Task Force spent two years identifying the structural flaws in MACRA’s implementation. The Task Force specifically recommended a baseline inflationary adjustment tied to the MEI along with reform of or elimination of budget-neutrality thresholds. 

This position now has significant momentum outside AMGA as well. The Medicare Payment Advisory Commission (MedPAC) has recommended that Congress repeal the current MACRA-mandated updates and replace them with a permanent annual update tied to the MEI (such as MEI minus one percentage point), calling the growing gap between physician input costs and Medicare payment a threat to beneficiary access. Bipartisan members of the House Doctors’ Caucus have circulated a discussion draft addressing MACRA modernization, including reforms to the PFS budget-neutrality threshold, which has not been meaningfully updated since the fee schedule’s creation and forces offsetting cuts elsewhere in the schedule any time CMS recognizes new or higher-value services.

“We are encouraged that MedPAC, members of Congress in both parties, and a growing coalition of provider organizations now agree on the need to realistically address the growing gap between practice costs and Part B reimbursements,” Dr. Penso said. “The MEI-based approach is not a new or radical idea but is simply extending to physicians the same inflation protection every other Medicare provider type already receives. What has been missing is the political will to make it permanent rather than episodic.”

Ambulatory Specialty Model: Technical Fixes, Same Structural Flaws

The proposed rule also arrives as the Ambulatory Specialty Model (ASM) prepares to launch on January 1, 2027. CMS's CY2027 proposed rule offers another round of operational refinements to ASM—new participant exceptions for TIN changes and specialty redesignations, added reporting flexibility for small practices on the Improvement Activities category, a new low back pain imaging measure, and a voluntary incentive for submitting patient-reported outcome data—but leaves untouched the structural concerns AMGA has raised since the model was finalized. While CMS has made targeted improvements across both the CY2026 final rule and this proposed rule, the ASM remains mandatory, two-sided, and duplicative of existing Quality Payment Program structures. 

“The ASM continues to introduce overlapping accountability, conflicting incentives for specialists already participating in the Medicare Shared Savings Program, and operational complexity that undercuts team-based, system-level care transformation,” Dr. Penso said. AMGA urges CMS to use the CY2027 rule to preserve entity-level Qualifying Participant determinations, reject mandatory specialty payment models in favor of voluntary participation, and align quality measurement across the ASM, MIPS, and MSSP — including through standardized, outcomes-focused measure sets — to reduce the duplicative reporting burden on specialists as the model takes effect.

AMGA will submit detailed comments on the CY2027 PFS proposed rule and will continue to work with CMS, Congress, and the physician community to advance comprehensive Medicare payment reform.
 

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About AMGA
AMGA is a trade association leading the transformation of healthcare in America. Representing multispecialty medical groups and integrated systems of care, we advocate, educate, innovate, and empower our members to deliver the next level of high-performance health. AMGA is the national voice promoting awareness of our members’ recognized excellence in the delivery of coordinated, high-quality, high-value care. More than 175,000 physicians practice in our member organizations, delivering care to one in three Americans.