On November 4, 2026, the Centers for Medicare & Medicaid Services (CMS) released the Calendar Year (CY) 2027 Medicare Physician Fee Schedule (PFS) Final Rule. The rule finalizes several important updates to the Medicare Shared Savings Program (MSSP) and quality reporting requirements.
For ACOs, some of the most notable changes include increased shared savings opportunities, adjustments to benchmarking methodology, and additional flexibility in quality reporting. CMS also finalized new physician payment policies that could affect both practice revenue and ACO expenditures.
Some of these policies will improve financial opportunities for ACOs, while others will require a closer look at existing financial projections and reporting plans. As we noted in our analysis of the proposed rule, CMS was strengthening the case for ACO participation. The final rule largely follows in that direction, while introducing tradeoffs that ACOs will need to evaluate based on their individual circumstances.
Changes to MSSP Financial Methodology
One of the more significant updates involves the Accountable Care Prospective Trend (ACPT), which is used to update ACO historical benchmarks. For agreement periods beginning in 2027 or later, CMS will calculate the ACPT annually and establish guardrails to limit differences between the prospective trend and actual national expenditure growth.
CMS will also apply the lower guardrail to qualifying ACOs in existing agreement periods beginning in 2024, 2025, and 2026, with application beginning in PY 2025. CMS has delayed PY 2025 financial reconciliation until November 2026 to implement this change. For ACOs anticipating shared savings payments, the revised timeline may affect near-term cash flow planning.
CMS also finalized several changes for ACOs entering new agreement periods in 2027:
BASIC Level E: The maximum shared savings rate will increase from 50% to 60%.
Prior savings adjustment: The scaling factor will increase from 50% to 75%.
ENHANCED track: The maximum positive regional adjustment weight will decrease from 50% to 35% for qualifying ACOs.
Targeted growth adjustment: A new adjustment will encourage participation among clinicians and beneficiaries with limited recent accountable care experience.
The increased sharing rate at BASIC Level E could make that level more financially attractive for certain ACOs. At the same time, the reduced regional adjustment for ENHANCED-track ACOs may affect organizations that have historically benefited from strong performance relative to their region. For ACOs starting or renewing their MSSP in 2027, CMS is allowing changes to track selections during the November 12–17 Phase 2 RFI window. This gives applicants an opportunity to revisit their selections in light of the finalized policies.
ACOs entering new agreement periods should revisit their financial models to understand whether the updated methodology changes their expected shared savings or preferred participation track.
More Options for Quality Reporting
Quality reporting continues to be an area of focus as CMS works toward broader adoption of digital quality measurement. The final rule maintains several existing reporting options while introducing additional flexibility for ACOs.
Importantly, CMS will continue allowing MIPS Clinical Quality Measure (MIPS CQM) reporting beyond PY 2026, including the associated reporting incentive. This gives ACOs additional time to prepare for electronic reporting rather than requiring an immediate transition.
Beginning in PY 2027, ACOs will also have the option to report Medicare eCQMs. Unlike traditional eCQMs, which use an all-payer population, Medicare eCQMs will use an assigned Medicare beneficiary population.
This could be particularly helpful for ACOs that have struggled to aggregate quality data across multiple electronic health record (EHR) systems. However, ACOs selecting Medicare eCQMs will not qualify for the existing eCQM/MIPS CQM reporting incentive or the Complex Organization Adjustment.
Other finalized changes include:
Continued use of flat benchmarks for Medicare CQMs.
Revising the definition of Medicare CQM eligible beneficiaries to more closely align with the ACO assigned beneficiary population.
Removal of two measures from the APP Plus measure set: Initiation and Engagement of Substance Use Disorder Treatment (Quality ID 305) and Adult Immunization Status (Quality ID 493).
Beginning in PY2026, ACOs may exclude certain Participant TINs from quality reporting under qualifying circumstances, including unexpected practice closures or specialty EHR limitations. The remaining TINs must represent at least 95% of assigned beneficiaries, and ACOs must continue to meet applicable data completeness requirements.
CMS is also replacing MSSP Promoting Interoperability reporting requirements with three alternative pathways for demonstrating certified electronic health record technology (CEHRT) use beginning in PY 2027. These pathways are based on electronic quality reporting, FHIR-based capabilities, or specified CEHRT-use metrics.
Before selecting a reporting method, ACOs should assess their current EHR capabilities, the effort required to collect and validate data, and how reporting costs and scoring incentives compare across available options. This will be particularly important for ACOs working across multiple EHR systems.
Physician Payment Changes and Implications for ACOs
The final rule also includes several physician payment changes that may affect ACO participants and their practices.
One of the most notable is CMS' decision to replace the existing G2211 visit complexity add-on payment with two voluntary modifiers:
B1 modifier: A 16% payment increase for eligible evaluation and management (E/M) services.
B2 modifier: A 32% payment increase for ACO participants (MSSP providers and LEAD participant providers) furnishing qualifying longitudinal care.
The B2 modifier can be used for both aligned beneficiaries and those not attributed to the ACO. Claims submitted with the B2 modifier will be included in beneficiary assignment calculations, historical benchmark expenditures, and performance-year expenditures, making it important for ACOs to consider both the reimbursement opportunity and potential financial implications.
Additional Operational Changes
Beyond financial methodology and quality reporting, CMS finalized several changes to MSSP operations and beneficiary engagement requirements.
Beneficiary notifications: CMS is revising beneficiary notification requirements beginning in 2027. Rather than tying the notice to a beneficiary's first primary care visit, ACOs or their participants must provide the standardized written notice at least once during an agreement period, by May 30 unless CMS specifies a later date. CMS is also eliminating the follow-up communication requirement. These changes should provide ACOs with greater flexibility in how they manage beneficiary notifications.
Prepaid Shared Savings: CMS will sunset the Prepaid Shared Savings (PSS) payment option, prohibiting new ACO applications after the January 1, 2027 start date. ACOs currently participating can continue receiving prepaid shared savings payments through December 31, 2027.
Part B cost-sharing: Beginning April 1, 2027, eligible MSSP ACOs will be able to apply to reduce or eliminate Medicare Part B cost sharing for certain services furnished to eligible beneficiaries. This voluntary option could help ACOs address financial barriers to care for certain beneficiaries. Organizations considering the benefit will need to weigh its potential value against the associated costs and administrative requirements.
What ACOs Should Prioritize for 2027
The 2027 PFS Final Rule introduces several changes that ACOs will need to account for in their financial and operational planning. While the finalized policies generally strengthen incentives for accountable care participation, their financial and operational implications will vary across organizations.
As ACOs prepare for 2027, there are three areas that warrant particular attention:
Financial methodology and participation strategy: For organizations entering new agreement periods, how do the benchmarking and shared savings changes affect financial projections and participation track decisions? Existing ACOs should also consider whether updated methodologies affect their expected performance.
Quality reporting readiness: Do the available reporting options align with current EHR capabilities, reporting resources, and longer-term digital quality strategies? ACOs should evaluate the operational requirements and financial implications of each approach before selecting a reporting pathway.
Physician payment implications: How will the new payment modifiers affect reimbursement for participating practices and overall ACO expenditures? Understanding both sides of this change will be important for financial planning.
Taken together, these changes reinforce the importance of evaluating how finalized CMS policies affect each ACO's financial position, operational capabilities, and participation strategy heading into 2027.