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The Centers for Medicare & Medicaid Services (CMS) has proposed a 2027 Medicare Physician Fee Schedule (PFS) that includes a 1.68% reduction in the conversion factor for the nonqualifying APM conversion factor. Physicians participating in qualifying Alternative Payment Models (APMs) face a slightly smaller decrease of 1.19%. These proposed adjustments, announced by CMS on July 14, 2026, arrive as medical organizations warn of mounting financial strain on clinical practices.
### Proposed Medicare Payment Adjustments for 2027
Under the proposed rule, the conversion factor for physicians in qualifying APMs would drop to $33.17, down from the current $33.57. For those not participating in qualifying APMs, the conversion factor would decrease to $32.84, down from $33.40. CMS attributes these downward adjustments primarily to the expiration of a 2.5% temporary increase that was authorized for 2026 under the One Big Beautiful Bill Act. Without that specific legislative support, the underlying payment structure faces a decline.
### Industry Reaction to Fee Schedule Trends
Medical societies have expressed significant concern regarding the cumulative impact of these payment policies. The American College of Rheumatology (ACR) stated that this marks the sixth proposed reduction in six years. William F. Harvey, MD, MSc, FACR, president of the ACR, noted that when adjusted for inflation, Medicare reimbursements have declined by 33% since 2001. According to the ACR, these sustained trends create a risk that private practices may be forced to sell to larger health systems or limit their capacity to accept Medicare patients.
The American Academy of Family Physicians (AAFP) and the American College of Physicians (ACP) also raised alarms regarding the potential for these cuts to destabilize primary care. While both organizations acknowledged positive elements within the proposed rule—such as efforts to simplify administrative burdens and improve payment for high-value care—they emphasized that current reimbursement levels fail to keep pace with rising practice expenses.
### Transition to MIPS Value Pathways
Beyond payment rates, CMS announced plans to “sunset” the traditional Merit-based Incentive Payment System (MIPS) reporting by 2029. The agency intends to shift the focus toward specialty-focused MIPS Value Pathways (MVPs). Clinicians will have until the end of 2028 to transition to an MVP, unless they report through a MIPS APM.
CMS described this move as a step toward more clinically meaningful quality measurement. The agency also proposed introducing new MIPS Core Measures by 2027, requiring clinicians to report at least one measure fundamental to their specific specialty. The ACR has expressed support for the transition to MVPs, provided that the measures remain actionable and relevant to the complexity of care provided in specialties like rheumatology.
### Legislative Proposals for Payment Reform
In response to the proposed 2027 fee schedule, the ACR, AAFP, and ACP have voiced support for the Patients First Act of 2026 (H.R. 9693). Introduced in the U.S. House of Representatives on July 15, 2026, by Rep. John Joyce, MD (R-Pa.), the bill seeks to establish inflation-linked updates to the Medicare PFS. The legislation aims to create more predictable payment parameters and adjust the budget neutrality thresholds that currently trigger automatic cuts. As of mid-July 2026, the bill has been referred to the House Energy and Commerce and Ways and Means committees for further consideration.
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