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Dr. Mehmet Oz, who runs Medicare for President Donald Trump, says Medicare has been paying doctors the wrong way.
“For too long, fee-for-service payment has rewarded volume over value, fueling a reactive system of sick care,” Oz said Nov. 4, as the Centers for Medicare & Medicaid Services finalized its 2027 payment rule for doctors. (1)
Here’s what he means. Under fee-for-service, doctors are “paid for each service performed,” as CMS puts it. (2) In other words, the more visits, tests and procedures, the more they’re paid. That pay isn’t tied to whether you end up healthier.
“Medicare should reward clinicians for keeping people healthy,” added Health and Human Services Secretary Robert F. Kennedy Jr. (1)
I’ve been a CPA since 1981, and I care less about the slogan than about your bill. So here’s the part that touches your wallet.
Starting April 1, 2027, CMS says approved groups of doctors and hospitals called accountable care organizations, or ACOs, “may reduce or eliminate Part B cost-sharing for many items and services.” (1) This year, after the $283 Part B deductible, you usually pay 20% of the cost of each covered service. (3)
Does that mean the 20% goes away? For most people, no. Here are five things to know.
1. Your 20% isn’t going anywhere for most people
In Original Medicare, there’s no yearly limit on what you pay out of pocket, unless you have supplemental coverage or other insurance. (4) On $10,000 of Medicare-approved care after your deductible, your share would usually be $2,000.
The new cost-sharing break doesn’t apply to anyone outside an approved ACO, and even inside one, it’s optional. (See No. 3.)
That’s why a Medicare Supplement policy, also called Medigap, still matters. Medicare describes it as extra insurance “to help pay your share of out-of-pocket costs in Original Medicare.” (5) Don’t drop yours on the strength of this rule.
If you don’t have one, or haven’t compared yours in a while, Healthcare.com can help you compare Medicare Supplement plans in one place.
Compare Medicare Supplement plans in minutes.
PLEASE NOTE: Medicare Supplement insurance is available to those age 65 and older enrolled in Medicare Parts A and B and, in some states, to those under age 65 eligible for Medicare due to disability or End-Stage Renal disease. The purpose of this communication is the solicitation of insurance. Contact will be made by an insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Medicare Supplement plans may require underwriting and enrollment is not guaranteed.
2. Why waiving your share is about “value”
This is the connection to Oz’s complaint. ACOs aren’t paid only by the visit. When an ACO succeeds “in both delivering high-quality care and spending health care dollars more wisely,” CMS says, it shares in the savings. (2)
So an ACO has a financial reason to keep you healthy and out of the hospital. CMS says the cost-sharing break is meant to “remove cost barriers for beneficiaries to receive services that will positively impact their health.” (6)
In plain English: If your 20% share keeps you from seeing the doctor, a small problem can become an expensive one. An ACO that picks up your share may come out ahead.
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3. It’s optional, and it isn’t everything
The ACO decides. An ACO “must apply to, and be approved by, CMS,” and CMS plans to take the first applications in early 2027. (6) Then the ACO picks which patients are eligible. (6)
Even then, the break doesn’t cover everything. It excludes durable medical equipment, prosthetics, orthotics and supplies, as well as prescription drugs. (6)
4. Find out if your doctor is in an ACO
Medicare says that if your primary care provider is part of an ACO, “they’ll give you a written notice or letter.” You can also simply ask your doctor. (7)
If the answer is yes, ask a second question next year: Is the group offering the cost-sharing break, and do I qualify?
Being in an ACO doesn’t lock you in. Medicare lists your right to visit any Medicare provider, “even if that provider isn’t part of an ACO.” (7)
5. The “volume” fix that affects everyone
The rule also goes after duplicate payment when you get two services on one trip to the doctor. When you have an office visit and a minor procedure on the same day, CMS will reduce payment by 20% for the lower-cost service, under the rule that takes effect Jan. 1, 2027. (1)
CMS says that cuts duplicate payments “by patients and the Medicare program.” (1) Since your share is a percentage of what Medicare approves, a smaller approved amount generally means a smaller share for you.
Bottom line
I think Oz is right that paying doctors by the visit rewards volume. Paying doctor groups to keep you healthy makes more sense.
But this rule doesn’t wipe out your 20%. A break on your share depends on whether your doctor is in an ACO, whether that ACO applies and is approved, and whether it picks you.
Keep your Medigap. Ask your doctor about it next spring. And if a break comes, treat it as a bonus.
Sources: 1. Centers for Medicare & Medicaid Services; 2. Centers for Medicare & Medicaid Services (glossary); 3. Medicare.gov; 4. Medicare.gov; 5. Medicare.gov; 6. Centers for Medicare & Medicaid Services (Shared Savings fact sheet); 7. Medicare.gov
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