By Danial Amjad, Policy Analyst
Medicare could change how it pays doctors under a new proposal from the Centers for Medicare & Medicaid Services (CMS), with a greater focus on rewarding providers for keeping patients healthy instead of simply paying for each service they provide.
Today, much of Medicare still operates under a fee-for-service model. Put simply, a doctor or healthcare system generally receives payment when it provides a covered service. The new proposal would continue Medicare’s transition toward “value-based care,” where providers have stronger financial incentives to coordinate care, prevent health problems, and improve patient outcomes.
The proposal would incentivize more healthcare systems to enroll as Accountable Care Organizations (ACOs), groups of doctors, hospitals, and other providers that coordinate care for people with Original Medicare. ACOs use a value-based care model rather than a fee-for-service model. CMS says patients treated by ACO 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.
In addition to pushing more health systems to become ACOs, the proposal would provide financial benefits to seniors who rely on ACOs for care. Beginning in 2027, certain ACOs would be allowed to reduce or eliminate patients’ out-of-pocket costs for some services.
CMS also wants to change how it measures physician performance. Traditional reporting under the Merit-based Incentive Payment System, known as MIPS, would end in 2029. Clinicians would instead transition toward more specialized reporting focused on measures relevant to their patients and fields of medicine.
The proposal is not final, and CMS is accepting public comments through September 14, 2026.
For seniors, the important question is whether changing the incentives behind Medicare can translate into better coordinated care, fewer unnecessary services, and ultimately lower costs. If the proposal is adopted and works as intended, Medicare would increasingly reward providers not for how much care they deliver, but for how well they deliver it.
