The Centers for Medicare and Medicaid Services (CMS) recently released the proposed CY 2027 Physician Fee Schedule (PFS), which includes updates to the Quality Payment Program (QPP) and the Merit-based Incentive Payment System (MIPS).
Several of the proposed changes could have significant impacts on hospitalists and their practices. The following detailed summary highlights the key updates we’re watching closely.
Quick Take:
- The proposed rule lowers the 2027 conversion factor and changes the way PE RVUs are calculated and allocated. We are still evaluating the expected net impact on payment for hospitalist services.
- Alternative Payment Model status is tied to reimbursement and becoming increasingly important to CMS. A proposed change for 2027 affects Qualifying Participant (QP) determinations and will significantly impact hospital medicine groups that provide services for multiple organizations or bill through multiple TINs.
- Traditional MIPS is proposed to end after 2028, completing CMS’s shift to the MIPS MVP program. For the first time, CMS has proposed a Hospitalist MVP.
- The introduction of a new MIPS Core Measure framework may provide additional reporting opportunities for hospital medicine practices.
Conversion Factor and Payment Adjustments
After increasing the conversion factor (CF) in 2026 for the first time in six years, CMS is lowering physician reimbursement again with a proposed decrease for 2027. As a reminder, there are now two different CF rates to be aware of, as CMS introduced a separate CF in 2026 for qualifying Alternative Payment Model (APM) participants. The proposed CF for qualifying APM participants is $33.1693, which is a 1.19% decrease from CY 2026. The proposed CF decreases 1.68% to $32.8409 for non-qualifying physicians.
The 2027 rates reflect three key factors:
- The expiration of a temporary 2.5% update enacted for CY 2026
- A statutory increase in the Medicare Access and CHIP Reauthorization Act (MACRA) of 0.75% for qualifying APM participants and 0.25% for non-APM-qualifying physicians
- A 0.53% positive budget neutrality adjustment
PE Payment Changes
For hospital medicine, reimbursement may also be impact by proposed changes to RVUs. CMS is proposing three major changes in 2027 to the way it calculates and allocates indirect practice expense (PE) RVUs:
- Reallocating indirect PE allocation to better align indirect costs with work RVUs and clinical labor inputs
- Phasing out the Indirect Practice Cost Index over a two-year transition because it relies on outdated specialty survey data
- Creating a new PE stabilizer adjustment that would mitigate short-term volatility by limiting annual increases or decreases in PE RVUs to +/-5 percent for most existing services
Net reimbursement impact for hospital medicine is still under review.
Advanced APM Changes
With the addition of a higher CF for qualifying APM participants, one of the most significant proposals in the rule affects Qualifying Participant (QP) determinations.
Currently, QP status generally follows the individual clinician. Under the proposal, QP status would instead be tied to the participating TIN/NPI combination. This means APM-related benefits would only apply to services billed through the entity participating in the APM.
This change could have meaningful financial implications for hospital medicine groups, particularly in organizations where physicians bill through multiple TINs or provide services across multiple facilities, health systems, or billing entities. If finalized, the shift from NPI-based to TIN/NPI-based QP determinations could alter the financial value of APM participation for some providers.
Merit-based Incentive Payment System (MIPS)
Traditional MIPS Is Scheduled to End After 2028
CMS plans to sunset Traditional MIPS after the 2028 performance year. Beginning in 2029, clinicians required to participate in MIPS would be reporting through a MIPS Value Pathway (MVP). (Clinicians already participating in eligible APMs would continue reporting through the appropriate APM reporting pathway.)
This proposal reinforces the need for hospital medicine groups to evaluate future MVP reporting strategies over the next several years.
Hospitalist MVP Proposed
New this year is the introduction of a Hospitalist MVP. CMS has historically offered limited specialty-specific MVP options for hospital medicine providers. The new Hospitalist MVP is intended to provide a more relevant reporting pathway focused on inpatient care, care coordination, and quality outcomes important to hospital-based providers.
While the detailed measure inventory will continue to evolve, this proposal signals CMS’s recognition of hospital medicine as a distinct specialty with unique reporting needs.
Because Traditional MIPS is proposed to end after 2028, hospital medicine groups should begin evaluating how the new Hospitalist MVP may fit into their future reporting strategy. If finalized, this could become the primary reporting pathway for many groups beginning in 2029.
Quality Category Updates
CMS is proposing several changes within the Quality performance category, including:
- The addition of two new quality measures focused on prevention and chronic disease management
- Adoption of several QCDR measures into the MIPS CQM inventory
- Removal of 20 quality measures
- Substantive changes to 43 existing quality measures
All groups should be reviewing any commonly reported measures to determine whether proposed specification changes could affect performance rates, benchmarks, or reporting requirements.
New MIPS Core Measure Requirement
CMS is proposing to replace the current outcome measure and high-priority measure requirements with a new MIPS Core Measure framework.
Under the proposal:
- Approximately 78 measures would be designated as Core Measures.
- Participants would be required to report at least one Core Measure if applicable.
- Small practices would be exempt.
- Participants without an applicable Core Measure could attest and report an alternative measure.
- CMS proposes to allow topped-out MIPS Core Measures to continue receiving defined benchmarks rather than being subject to the traditional seven-point scoring cap. This could help preserve scoring opportunities and provide greater flexibility in measure selection.
Hospitalists and other specialty groups that have struggled with limited outcome measure options should closely review the final list of proposed MIPS Core Measures. Depending on which measures are finalized, the new framework may provide greater measure-selection flexibility and more reporting opportunities compared to the current outcome measure requirement.
Extreme and Uncontrollable Circumstances (EUC)
CMS is proposing to remove the requirement that automatic Extreme and Uncontrollable Circumstances (EUC) determinations rely specifically on PECOS data. This change would not affect the standard hardship application process but would provide CMS with greater flexibility when applying automatic EUC relief.
Performance Threshold Remains Unchanged
CMS is not proposing any changes to the MIPS performance threshold. The score required to avoid a negative payment adjustment remains 75 points, a threshold that has already been finalized through Performance Year 2028.
Improvement Activities
CMS is proposing:
- 6 new Improvement Activities
- 5 modified Improvement Activities
- 11 removed Improvement Activities
Many of the proposed additions focus on prevention, wellness, nutrition, and chronic disease management.
Looking Ahead
For hospital medicine, the 2027 proposed rule continues CMS’s movement toward specialty-focused reporting pathways and value-based care models. The proposed sunset of Traditional MIPS, the creation of a new Hospitalist MVP, the new Core Measure framework, and Advanced APM changes are likely to be the proposals with the greatest long-term impact. In particular, hospital medicine groups should begin monitoring the development of the new Hospitalist MVP and evaluating how it may fit into future reporting strategies.
In the meantime, the public comment period is open through September 14, 2026, with a final rule expected later this fall. Stakeholders should consider submitting comments on the proposed rule to share operational concerns, financial impact questions, and recommendations for implementation.
As always, the Ventra Health team will be monitoring the changes and planning for all issues that will impact our clients. Additional information and resources are available in our general overview of the CY 2027 Physician Fee Schedule Proposed Rule.
If you have questions about how these changes will impact your practice, please don’t hesitate to contact us.
