The proposal is part of a broader regulatory overhaul designed to strengthen Original Medicare, which CMS says serves roughly 70 million Americans. According to CMS, the objective is to move away from what it describes as a fragmented fee-for-service model and instead encourage better coordination of care while improving long-term health outcomes.
The initiative also aligns with the administration’s broader Make America Healthy Again agenda. The proposal follows the creation of the Make America Healthy Again (MAHA) Commission in February 2025, which places an emphasis on chronic disease prevention and broader health system reform.
CMS Wants To Shift Medicare Away From Fee-For-Service Care
For decades, Original Medicare has reimbursed physicians based largely on the volume of services they provide. According to CMS, this payment structure has contributed to fragmented care, with providers receiving compensation tied more closely to the number of services delivered than to patient outcomes.
The agency is proposing a model that rewards health care providers for coordinating treatment and improving patients’ long-term health. One of the central changes would allow Medicare Shared Savings Program ACOs that apply and receive approval to lower or completely remove cost-sharing for selected Medicare Part B items and services.
According to CMS, out-of-pocket costs can discourage beneficiaries from attending routine primary care appointments, chronic disease monitoring, and follow-up visits. The agency says reducing those costs could help patients receive what it describes as high-value care. The proposal also includes stronger financial incentives for accountable care organizations participating in these programs.
Technology and Provider Payments Are Also Part of the Overhaul
The proposed rule extends beyond patient cost-sharing. According to CMS, the agency is formally recognizing “Software as a Medical Service” while seeking additional information about the use of clinical artificial intelligence in diagnostics and algorithmic clinical decision-making.
CMS said it is examining how technology is being used in increasingly innovative ways throughout primary care. The agency stated that the goal is to develop a comprehensive and consistent payment approach for technology-enabled care, noting that such services may have lower delivery costs while potentially offering higher-quality care.
At the same time, the proposal could affect payment differences across health care settings. As reported by Newsweek, large hospital systems that receive higher reimbursements when routine services are billed through hospital outpatient departments rather than physician offices could be among those most affected. A 2026 Congressional Research Service report found that Medicare payments are typically higher for services provided in hospital outpatient departments.
Hospitals and Home-Based Care Providers Raise Concerns
Hospital organizations have challenged the idea that facility fees simply represent higher charges. According to the American Hospital Association, those fees help support around-the-clock emergency and trauma services, compliance with regulatory requirements, medical equipment, and broader community infrastructure. The organization has warned that limiting such payments could force hospitals to reduce services or cut jobs.
The proposal has also prompted concerns within the home-based care sector. Brian Fuller, managing director at the health care research firm ATI Advisory, told Home Health Care that the CMS proposal presents a cost-containment risk for home-based care providers. He said that when accountable care organizations face greater difficulty generating savings, post-acute and home-based services may be subject to tighter utilization management.
CMS is accepting public comments on the proposed rule through September 14. If the regulation is finalized, the changes affecting seniors’ health care costs could take effect as early as 2027.
