Article
The headline numbers
CMS released the proposal on July 14. For clinicians who qualify for the advanced alternative payment model track, the conversion factor would fall to $33.17, down 40 cents or 1.19%. For everyone else it would fall to $32.84, down 56 cents or 1.68%. The statutory updates of 0.75% and 0.25% and a small positive adjustment tied to work value changes are not enough to offset the end of the one-time 2.5% increase Congress provided for 2026. Comments are due Sept. 14.
Those are averages. Actual impact will vary by specialty and setting once CMS’s practice expense changes are applied. The agency proposes to phase out a practice expense step that relies on survey data from 2007 or earlier, replace it with a stabilizer that limits annual swings, and asks whether the payment difference between facility and office settings is still appropriate. That question matters to every system that bills for physicians working in hospital outpatient departments.
Other provisions hospitals should track
- 340B data for Part D. Covered entities would submit claim-level data to a Medicare Part D 340B repository for drugs dispensed at a 340B discount, starting with dates of service on or after Jan. 1, 2027. Pharmacy, contract pharmacy administrators and IT teams will need to plan for it.
- Lab payment cuts. Under the 2026 appropriations law, cuts to clinical laboratory payments tied to private payer data would phase in at up to 15% a year through 2029. Hospital outreach labs should watch closely.
- Accountable care. The rule includes a long list of Shared Savings Program changes, including a higher sharing rate in one track, a growth adjustment for new entrants and an end to prepaid shared savings. ACO leaders should study the benchmark details.
- Shared medical appointments. CMS proposes separate coding and payment for group visits, which could support chronic disease programs.
What to do before comments close
Ask finance to rerun physician enterprise forecasts for 2027 using the proposed conversion factors and your specialty mix. Most systems already subsidize employed groups, and a lower rate will widen that gap unless productivity or payer contracts make up the difference. Review compensation plans tied to Medicare-based work units, since a lower conversion factor does not automatically lower pay. Share real operating data with your state medical society and hospital association for comment letters, especially on the site-of-service question.
Archive entry for Jul 16, 2026, added Nov. 11, 2026.