On November 9, 2026, the Centers for Medicare & Medicaid Services (CMS) published its final Calendar Year 2027 Physician Fee Schedule rule (CMS-1848-F).
Alongside the physician payment updates, the rule makes significant changes to the Medicare Shared Savings Program (MSSP).Most of the changes take effect January 1, 2027, and several affect decisions that accountable care organizations (ACOs) must make this year.
CMS notes that the changes are meant to strengthen incentives for ACOs to join and stay in the program, to reduce administrative burden, and to bring more Medicare beneficiaries into accountable care relationships. Following is an overview of what is changing.
Stronger Financial Incentives
The sharing rate for BASIC track Level E rises from 50% to 60% for agreement periods beginning on or after January 1, 2027. The ENHANCED track maintains its 75% rate. CMS's analysis found that BASIC track Level E ACOs generated higher savings for the Trust Fund than ENHANCED ACOs, but fewer ACOs chose BASIC Track Level E. The rate increase is designed to close that gap.
To balance the tracks, CMS also reduced the maximum weight of the positive regional adjustment for lower-spending ENHANCED ACOs from 50% to 35% beginning in their second agreement period. Thus, while the adjustment still applies, its effect on benchmarks is smaller.
Several other changes affect benchmarks. The prior savings adjustment scaling factor increases from 50% to 75% for agreement periods beginning January 1, 2027, giving ACOs more credit for past savings. The 5% cap on upward benchmark adjustments will be risk-adjusted based on the severity and case mix of an ACO's assigned population, using CMS-HCC risk scores.
CMS is also adding a growth adjustment to reward ACOs that recruit clinicians and beneficiaries new to value-based care arrangements. The adjustment equals 5% of the ACO's unadjusted historical benchmark, multiplied by its share of new growth. It is added to the highest existing benchmark adjustment and cannot push the total above the risk-adjusted cap.
Finally, CMS is reforming the Accountable Care Prospective Trend, a component of the benchmark update. For agreements starting in 2027 and later, the trend can be no more than 1.0 percentage point below, or 1.5 points above, observed national growth. The lower limit applies retroactively to ACOs that started in 2024, 2025, or 2026, and CMS has delayed Performance Year 2025 reconciliation to November 2026 to implement it.
Visit Complexity Add-On Becomes Two Modifiers
The G2211 visit complexity add-on is replaced by two modifiers on office, outpatient, and home E/M visits. Modifier B1 pays 16% of the base E/M value to any practitioner who bills the visit. Modifier B2 pays 32% to MSSP ACO participants, ACO professionals, and ACO providers and suppliers, plus LEAD Participant Providers and ACO PC Flex ACOs, because CMS says clinicians in an ACO manage the accountable care relationship, including overall health, care coordination, and responsibility for quality and cost. B2 applies only when the visit's complexity is met, not on every visit, and its claims stay in benchmarks and reconciliation. CMS acknowledged that the higher rate raises beneficiary cost sharing, and finalized it over commenter objections that identical clinical work should not be paid differently.
Beneficiary Assignment
Beginning with performance year 2027, the definition of primary care services used for assignment adds screening, brief intervention, and referral to treatment; vaccine adverse effects management; and advance care planning.
Starting in 2028, CMS will exclude primary care charges billed through a non-ACO tax identification number (TIN) by ACO professionals when determining which ACO has the plurality of a beneficiary's primary care. Those charges are excluded only when the same clinician treats the beneficiary through an ACO TIN. CMS will also align enrollment criteria with current operations, so beneficiaries are eligible if they have at least one month of Part A and Part B coverage and no Medicare group health plan enrollment in the same month. CMS says these changes reduce the incentive for billing patterns to affect assignment outcomes.
Routing primary care through outside TINs can shift assignment in either direction, including through lemon dropping, in which high-need patients are billed through an external TIN to move them out of an ACO, or cherry picking, where ACOs pull lower-need patients into their ACO. Under the final rule, primary care charges that an ACO professional bills through an outside TIN are left out of the plurality comparison, which determines which provider group a beneficiary is assigned to. That exclusion applies only when the same professional also bills that beneficiary’s primary care under an ACO TIN. This approach reduces the incentive to route and reduces the ability for ACOs to lemon drop or cherry pick. ACOs that bill primary care through outside TINs should expect their assigned populations to change in 2028 and should model the impact with their own claims data.
Quality Reporting and CEHRT
For performance year 2027, the APP Plus quality measure set includes eight measures. CMS removed the substance use disorder treatment and adult immunization status measures.
ACOs gain a Medicare eCQM collection type, which reports eCQM measures using only assigned beneficiaries rather than all patients. Medicare CQMs will be scored against flat benchmarks.
ACOs may also exclude certain participant TINs from quality submissions. Permitted reasons include unforeseen events such as a practice closure, TINs using specialty-focused electronic health records that cannot support the measures, and other circumstances CMS determines. Exclusions based on patient demographics, health status, or a TIN's expected effect on performance are prohibited. After exclusions, reporting TINs must still represent at least 95% of assigned beneficiaries, and the existing 75% MIPS data completeness requirement continues to apply.
The CEHRT requirement is simplified. Starting in 2027, ACOs choose one of three paths: report certain eCQM-type measures using certified technology; do that and attest to FHIR API use; or attest to one of three ACO-level metrics covering e-prescribing, health information exchange, and provider-to-patient exchange. ACOs choosing the metric path may exclude TINs that meet specific special-status or hardship criteria, without seeking CMS approval, but must keep documentation for audit. CMS will also publicly report which pathway each ACO elected. CMS declined to create a separate exclusion for small practices.
Part B Cost Sharing and Prepaid Payments
ACOs may now apply to reduce or eliminate Part B cost sharing for eligible beneficiaries. The option excludes durable medical equipment, prosthetics, orthotics, supplies, and prescription drugs. Beneficiaries must be assignable and must not have secondary coverage that pays the cost sharing. ACOs may only reduce cost sharing when the service is expected to improve or maintain the beneficiary's health.
CMS plans to collect applications in early 2027, with a target approval date of April 1, 2027. A second application cycle is planned for summer 2027, with a January 1, 2028 start.
CMS is also discontinuing the prepaid shared savings option. ACOs already receiving prepaid payments will continue through December 31, 2027. The January 1, 2027 application cycle is the last one for new entrants. CMS cited low uptake and pointed to the advance investment payment option and the cost-sharing flexibility as alternatives.
Advance Investment Payments and Experience With Risk
Beginning in performance year 2028, advance investment payments use a simpler formula. ACOs receive $45 per beneficiary who is enrolled in the low-income subsidy, dually eligible for Medicare and Medicaid, or living in a rural county. Other beneficiaries generate $25 each, with the total capped at 10,000 beneficiaries. The Area Deprivation Index-based scoring is removed because CMS identified methodological problems with it.
CMS is also changing how it determines whether an ACO is experienced with performance-based risk. Starting in 2027, a participant TIN without a written agreement in a performance-based risk initiative will not count as experienced, even if it was included in that initiative's reconciliation. This change specifically applies to "Legacy" TINs in CMS Innovation Center ACO models.
Beneficiary Notifications
Effective January 1, 2027, the beneficiary notice is no longer tied to a patient's first primary care visit. ACOs must provide the standardized notice by May 30, and the separate follow-up communication requirement is removed.
What ACOs Should Do Now
Timing matters. ACOs applying for a January 1, 2027 start can switch between the BASIC and ENHANCED tracks, if eligible, during a Phase 2 window from November 12 through 17, 2026, ending at noon ET on November 17. Any ACO weighing Level E against the ENHANCED track should update its projections, factoring in the new benchmark adjustments and the ACPT guardrail. ACOs considering cost-sharing arrangements should prepare for early 2027 applications. Quality and compliance teams should review TIN-level data now, given the 95% coverage threshold and documentation requirements. Any ACO that bills primary care through outside TINs should model the impact now, using its own claims data to see how many beneficiaries are assigned through outside-TIN billing and how much of its primary care volume that represents.
CMS projects these policies will reduce program spending by $5.5 billion over the period from 2027 through 2036, with a range of $2.3 billion to $8.9 billion. These are projections, not guarantees.
*This article provides general information and is not legal or financial advice. ACOs should consult their regular EBG attorney or other qualified counsel and financial advisors before making decisions based on these rules.*
* * * *
If you have questions, please reach out to the author(s).
The Health Law Advisor blog is currently edited by Emily Chi Fogler.
Authors
Member of the Firm
Associate