CMS is quietly rewriting the rules on drug pricing, telehealth, and physician payment for CY 2027 MPFS. Manufacturers who skip past the RFIs may miss where the next round of policy gets built. The Calendar Year (CY) 2027 Medicare Physician Fee Schedule (MPFS) proposed rule is less about annual physician payment updates and more about how the Centers for Medicare & Medicaid Services (CMS) continues to reshape physician payment. While the proposed conversion factor reductions will receive attention, several policies would modernize physician payment, expand value-based care, strengthen drug pricing oversight, and advance future payment models focused on prevention and longitudinal care.
| Proposal status: These policies are not final. Comments are due September 14, 2026. |
CMS proposes lower conversion factors for CY 2027, largely because the temporary 2.5% payment increase enacted for CY 2026 expires at the end of the year. While the reduction will affect physician reimbursement, it is driven primarily by statute rather than new CMS policy.
CMS is modernizing physician payment
CMS proposes one of the most significant updates to physician reimbursement in years, including changes to the Practice Expense (PE) methodology and reduced reliance on outdated American Medical Association (AMA) survey data. CMS continues to reevaluate Relative Value Scale Update Committee (RUC)-recommended values where physician work, procedure time, or PE assumptions may no longer reflect current clinical practice. It is also seeking comments on the future of the Current Procedural Terminology (CPT) coding system and physician valuation process. These proposals point to a larger move toward a more objective, transparent, and evidence-based physician payment.
Value-based care continues to expand
CMS continues strengthening value-based reimbursement through proposed changes to the Medicare Shared Savings Program (MSSP) and new payment modifiers supporting longitudinal care. The rule also brings significant updates to the Quality Payment Program (QPP), including the transition from traditional MIPS reporting to MIPS Value Pathways (MVPs), digital quality measurement, and a proposed Electronic Prior Authorization (ePA) for Prescription Drugs measure. CMS also proposes refinements to the Ambulatory Specialty Model (ASM). These changes push physician reimbursement toward quality, care coordination, and total cost of care accountability, reinforcing the growing importance of demonstrating value across accountable care models.
The discarded-drug denial is the clearest manufacturer signal
CMS received one application for an increased applicable percentage for CY 2027: a renewed request from the manufacturer of Leukine® (sargramostim) for a 72% threshold, rather than the statutory 10% threshold. CMS proposes to deny the request. The agency found that current Part B claims showed discarded units ranging from 1.1% to 4.9%, averaging approximately 2.4%, and that the projected higher wastage was tied to potential future oncology vaccine-adjuvant uses that are not yet reflected in FDA-approved labeling or current utilization.
| Why it matters: The proposal suggests that CMS will look for product-specific, unavoidable loss supported by current labeling, preparation evidence, and observable utilization, not primarily projected future dosing. For manufacturers considering an application, the practical issue is timing: the evidence CMS wants may mature only as the new use enters practice, when refund exposure may already be developing. That makes early evidence planning around presentation constraints, minimum-fill or dose-preparation studies, labeling, and claims-based wastage important. |
The denial does not signal that relief is unavailable. CMS has previously recognized increased percentages for qualifying preparation-related loss, certain low-volume doses, and rarely utilized orphan drugs. It does signal a relatively high evidentiary bar and a narrow view of “unique circumstances.”
Other drug pricing provisions are operational – but consequential
CMS proposes several refinements to the Medicare Prescription Drug Inflation Rebate Program, continuing implementation of the Inflation Reduction Act. Key proposals include mandatory Part D 340B reporting beginning in 2027, updated treatment of AIDS Drug Assistance Program (ADAP)-related 340B units, guidance on first marketed date determinations, changes affecting certain skin substitute products, and clarifications related to manufacturer rebate obligations. These refinements increase expectations around reporting, transparency, and compliance as CMS continues implementing the Inflation Reduction Act.
Mandatory Part D 340B repository reporting. Beginning with claims dated January 1, 2027, covered entities would submit specified Part D claim-level data quarterly, including date of service, prescription reference and fill numbers, dispensing pharmacy NPI, NDC-11, and 340B identification information. CMS would continue using its Prescriber-Pharmacy Methodology for rebate calculations for now, while testing whether repository data are complete and reliable enough for future use. For manufacturers, this is a data-governance and reconciliation issue today and a potential rebate-liability methodology issue later.
Part B and Part D inflation-rebate refinements. CMS proposes clarifications for “first marketed date” and missing CPI-U data, as well as a revised method for identifying ADAP-related 340B-eligible Part D units. These are technical changes, but they can alter benchmark-period administration, unit identification, and dispute strategy.
Skin substitutes. CMS would extend the national payment methodology to certain non-sheet products currently priced by Medicare Administrative Contractors. It would also narrow the Part B inflation-rebate exclusion so that a skin substitute licensed as a biological under section 351 of the Public Health Service Act would be treated as a Part B rebatable drug. Because no currently marketed skin substitute products are licensed under section 351, this change would apply only to products approved in the future.
Clinical trial discussions. In a separate comment solicitation, CMS asks whether to create a HCPCS G-code for at least 20 minutes of physician or other qualified health professional time spent counseling a patient about clinical trial participation, including whether the service should be available through telehealth. For sponsors, this is a potentially meaningful, though early, signal that Medicare payment could recognize a documented barrier to trial enrollment: clinician time.
Telehealth proposals would change claims visibility, service availability, and operating models
CMS proposes several updates to Medicare telehealth, including adding new services to the Medicare Telehealth Services List, establishing new telehealth modifiers, and expanding teaching physician flexibilities. At the same time, the agency proposes tighter requirements for Remote Physiologic Monitoring (RPM) and Remote Therapeutic Monitoring (RTM), and it seeks comment on potential restructuring of the RPM/RTM code family. Together, these proposals reflect continued support for virtual care while increasing scrutiny of digital health reimbursement.
Core flexibilities continue through 2027. The geographic and originating-site waivers and expanded practitioner eligibility remain in place through December 31, 2027. Audio-only authority and the delayed in-person requirement for tele-mental health extend to January 1, 2028.
Five G-codes would be added to the telehealth list. CMS proposes adding new codes for clinical-staff advance care planning, shared medical appointments, pediatric speech-language pathology, and vaccine adverse-effects management. CMS received no outside requests to add or remove services for CY 2027; these additions originate with CMS’s own coding proposals.
New informational modifiers would identify delivery arrangements. Modifiers BB and BC would identify telehealth furnished through certain virtual-platform contracting or payment arrangements and telehealth furnished incident to a practitioner’s professional service. CMS states that the modifiers would not affect payment, but they would create new claims-level visibility into platform and staffing models.
Critical-care and teaching-physician rules would be refined. CMS proposes time-based descriptors for telehealth critical-care consultation codes. This would allow either the teaching physician or the resident to be physically present with the beneficiary, rather than the current setup, in which all three parties may be in separate locations.
RPM and RTM would face tighter conditions. CMS proposes to limit RTM to established patients; require a separately reportable initiating visit for both RPM and RTM; allow payment only when the clinical staff performing the service are employed by the practice, not furnished by contractors; and revisit device-cost assumptions. CMS also seeks comment on replacing the existing CPT structure with, or bundling it into, four HCPCS G-codes.
Why manufacturers and digital-health partners should care: These changes could affect contracted service providers, digital companion programs, outsourced monitoring vendors, decentralized research support, and provider adoption economics. The proposed contractor restriction is particularly material where a manufacturer-supported program depends on a third party to furnish clinical monitoring services. The new telehealth modifiers also suggest that CMS wants more data on who owns the platform and who furnishes the service, even where payment is unchanged today. |
The RFI catalog: 11 places where future policy could move
The proposed rule contains 11 formal RFIs. None creates immediate policy, but each identifies a policy area CMS is actively developing. The manufacturer relevance ranges from direct to indirect.
Formal RFI | What CMS is testing – and why manufacturers should care |
|---|---|
Primary care redesign / technology-enabled care | CMS focus: CMS asks about relative payment for longitudinal, acute, and consultative care; a possible two-track model for technology-enabled versus traditional care management; clinical AI and Annual Wellness Visits; outcomes evidence; and prospective primary care payment in MSSP and Original Medicare. Manufacturer relevance: Could shape payment for digital companions, adherence and prevention services, care-management infrastructure, and outcomes-based support surrounding a therapy. |
Community-based palliative care | CMS focus: CMS seeks input on eligibility, prognosis and functional criteria, interdisciplinary service elements, quality measures, supervision, and fraud-waste-abuse safeguards for palliative care outside hospice and hospital settings. Manufacturer relevance: Relevant to serious-illness pathways, supportive care, home-based services, caregiver support, and site-of-care strategy. |
Intensive lifestyle interventions for Alzheimer’s disease | CMS focus: CMS asks about cost savings, fraud risks, biomarker testing such as p-tau217, eligibility, multidisciplinary teams, supervision, service “dose,” and virtual delivery. Manufacturer relevance: Directly relevant to AD/ADRD diagnostics and biomarker developers, treatment-pathway design, earlier identification, and companion non-drug interventions. |
CPT coding and RUC alternatives | CMS focus: CMS asks about CPT licensing, medical-necessity considerations, alternatives to CPT as the national code set, objective alternatives to the CPT/RUC process, and possible use of ICD-10-PCS-style groupings. Manufacturer relevance: Potentially consequential for the coding and valuation pathway for new procedures, diagnostics, devices, and technology-enabled services. |
Electronic prior authorization in MSSP | CMS focus: CMS seeks comment on medical-item/service and prescription-drug ePA measures for ACOs using FHIR-enabled certified health IT, potentially beginning in 2028. Manufacturer relevance: Could influence access workflows, documentation standards, payer-provider data exchange, and friction at therapy initiation. |
Specialty care in MSSP | CMS focus: CMS asks about specialist engagement, attribution, benchmarking, performance measurement, waiver flexibilities, tools, and burden. Manufacturer relevance: Specialists drive many high-cost treatment decisions. Changes could affect clinical pathways, preferred therapies, site of care, and evidence expectations under total-cost accountability. |
Duplicate laboratory testing, imaging, and interoperability | CMS focus: CMS considers billing clarifications, MAC edits, recoupment, frequency limits, exceptions, accountability for unavailable prior results, and minimum data standards for shareable results. Manufacturer relevance: High relevance for diagnostics and imaging manufacturers: repeat-testing definitions, clinical exceptions, interoperability, and real-world evidence may determine whether utilization is protected or reduced. |
FHIR-based digital quality measurement | CMS focus: CMS outlines a possible 2028-2029 transition with FHIR-based reporting options and required reporting for transitioned measures beginning in 2030, while seeking input on readiness, barriers, scoring, and technical assistance. Manufacturer relevance: Important for data strategy, quality-measure development, EHR integration, registries, digital endpoints, and evidence generation. |
Future performance-based ePA measures | CMS focus: CMS asks how to move beyond an “at least one” ePA requirement toward broader use, while accounting for small and under-resourced practices. Manufacturer relevance: Could turn ePA from a compliance check into a measurable provider behavior, affecting the speed and consistency of access to drugs and medical technologies. |
MVP scoring | CMS focus: CMS asks about normalization within and across MIPS Value Pathways, timing, fairness, predictability, and stronger rewards or penalties. Manufacturer relevance: An indirect but important signal for how specialty-specific quality and cost incentives may influence clinician behavior and adoption. |
Star ratings for administrative-claims measures | CMS focus: CMS considers replacing the current equal-ranges approach with a standard-deviation methodology and potentially extending it to cost measures. Manufacturer relevance: Could affect provider reputation, patient choice, referral patterns, and network behavior, especially where claims-based outcomes or costs are visible to beneficiaries. |
What manufacturers should do before the comment deadline
With comments due September 14, 2026, manufacturers have a short window to turn this proposal into a clear plan. Four priorities stand out:
- Map direct exposure by reviewing discarded-drug refunds, Part B and Part D inflation rebates, 340B unit identification, and any skin-substitute implications.
- Stress-test evidence readiness, covering product presentation constraints, dose-preparation studies, FDA labeling, claims-based wastage, 340B reconciliation, and clinically appropriate repeat-testing evidence.
- Review service-model dependencies, including telehealth platforms, employed versus contracted clinical staff, RPM/RTM vendors, patient-support services, and decentralized trial workflows.
- Prioritize RFIs with objective data or operating experience, since CMS repeatedly asks for empirical, actionable evidence not only policy preferences.
Looking ahead
The CY 2027 proposal is not a major pharmaceutical payment reset. Its significance for manufacturers is more targeted: CMS is tightening data and evidence expectations, testing new visibility into care-delivery arrangements, and asking questions that could reshape coding, prior authorization, diagnostics, specialist incentives, and technology-enabled care. The immediate policies deserve operational review; the RFIs deserve strategic attention because they show where the next round of policy may be built.
Connect with our team at Simon-Kucher to assess what these proposals could mean for your business. We can map the relevant reimbursement policy stack to your product and channel strategy, stress-test your launch plans, and quantify cross-program exposure through scenario modeling – a moving you from regulatory policy fluency to precision-driven actions at launch or in-market.
Thanks for contributions from Christopher Schiavone and Judy Liu!
