Dr. Mehmet Oz wants doctors to help patients stay well, and has proposed changes to Medicare’s payment rules to incentivize that shift.
Oz, the administrator of the Centers for Medicare and Medicaid Services, released the proposal on July 14, calling it the most significant Medicare reform in recent years.
“These changes would make it easier for clinicians to focus on prevention, improve coordination for patients, and ensure Medicare rewards better outcomes rather than more services,” Oz said in a July 14 statement.
The new rules would encourage more doctors and hospitals to join accountable care organizations, with traditional Medicare and Medicare Advantage remaining in place.
The changes aim to make it easier and more financially rewarding for doctors to focus on the long-term health of patients, though some see the change as a pay cut for doctors.
Here’s what Medicare aims to do.
Pay for Outcomes
The first change is to encourage more doctors and other providers to form accountable care organizations.
These are voluntary groups of doctors, hospitals, and other providers that provide coordinated care to patients with the goal of improving health outcomes and managing cost.
These organizations can be located in a specific region, or they may be formed to manage specific health problems such as chronic kidney disease.
Under this system, Medicare pays each provider individually for its services. But providers can also receive extra payments based on certain outcomes, such as how well their diabetic patients controlled their blood sugar or high blood pressure, or their follow-up on mental health screenings.
Traditional Medicare patients can still choose their own doctor. It’s the provider who joins the accountable care organization, not the patient.
In 2023, accountable care organizations received an additional $3.1 billion in compensation based on health outcomes in their patient populations.
The proposed rule changes would offer new financial incentives for organizations to join for the first time and remove some administrative burdens.
The program started in 2012, and there are now more than 500 accountable care organizations participating in the Medicare Savings Program.
Boost Payments for Primary Care
Medicare aims to increase payments for most primary care physician visits in 2027.
The increase applies to in-person visits for evaluation and care management, which account for more than 90 percent of primary care physicians’ billing to Medicare, according to a report from Becker’s Health.
The rate will increase by 16 percent or, for physicians in an accountable care organization, by 32 percent.
The purpose of the increase is to properly compensate physicians for the additional work involved in managing the health of a patient over the long term, according to the Centers for Medicare and Medicaid Services.
The American Academy of Family Physicians hailed the change, saying in a July 14 statement that it would make it easier for doctors to deliver high-quality care.
However, that increase is accompanied by a reduction in the rate doctors are paid for most other services. That would drop about 1.2 percent in 2027.
Dr. Jerry Penso, president and CEO of the American Medical Group Association, said the rates fall short of what it costs doctors to deliver care.
“The proposed rule reflects exactly what we were concerned about: a return to the bare statutory updates required under [federal law], which do not come close to keeping pace with inflation or practice costs,” Penso said in a July 14 statement.
The decrease in overall rates is partly due to the expiration of a temporary 2.5 percent increase that Congress applied to this year only.
New Quality Measures
Medicare also aims to replace the system it has used to measure quality. The Merit-based Incentive Payment System would be phased out by 2029 in favor of a value-based system.
The American Medical Association had criticized the current system as a good idea gone wrong.
“Its reporting requirements are overly burdensome and often appear to be clinically irrelevant. On top of that, the payment system hurts small, rural, and safety net practices,” the association said in a 2025 statement.
Starting next year, Medicare will focus on three “value pathways” to improve health outcomes: diabetes, hypertension, and hospital-based care.
Other changes would simplify the quality reporting process for physicians, which the American Medical Association said currently costs nearly $13,000 per year and requires more than 50 hours of effort per physician.
Value of Accountable Care
The proposed changes won’t have an immediate impact on Medicare patients because they apply to how doctors are paid by Medicare.
Yet some analysts see long-term benefits for patients in this shift to accountable care organizations.
The American Association of Retired Persons has praised the idea, saying accountable care organizations are transforming healthcare.
“I’ve seen firsthand how physicians can adapt and embrace [value-based care]—and when they do, practices change for the better, and most importantly, patients see improvements in their health, life, and relationships,” healthcare consultant and physician Mohamed Diab wrote for the American Journal of Managed Care in 2024.
The stated goal for Medicare is to have all traditional Medicare beneficiaries treated by providers who are part of an accountable care organization by 2030.
