On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) announced the CY 2027 Physician Fee Schedule (PFS) proposed rule. The proposed rule includes modifications to further incentivize the use of electronic prior authorization in Medicare Ambulatory Specialty Models (ASMs) and the Merit-based Incentive Payment System (MIPS) by health care providers. This builds on prior CMS regulations related to prior authorization which imposed requirements on certain health plans, but not on health care providers (see 2024 CMS Interoperability and Prior Authorization final rule). These changes are not “PFS” in the technical sense of altering relative value unit (RVU) or conversion-factor payment calculations, but rather are Quality Payment Program (QPP) and Center for Medicare and Medicaid Innovation (CMMI) policy changes that are included in the same omnibus annual rulemaking package. For CMS’s proposed PFS and Hospital Outpatient Prospective Payment System (OPPS) payment changes, see our previous client alert, “Health Reimbursement Signals: CMS Proposes Payment Frameworks for ‘Software as a Medical Service.’”¹

Through the proposed prior authorization changes, CMS aims to promote interoperability by incentivizing clinicians to incorporate electronic prior authorization tools into their workflows. The proposal is worth close attention from digital health stakeholders because MIPS scores can affect Medicare reimbursement and because reimbursement considerations can materially affect adoption of software and AI products used in clinical workflows, including electronic prior authorization tools. Comments on the proposed rule are due September 14, 2026.

This alert explains MIPS and ASMs, the proposed changes, and how those changes aim to increase the use of FHIR-enabled electronic prior authorization tools in clinical workflows. FHIR, or Fast Healthcare Interoperability Resources, is a standard for electronically exchanging health information.

Changes to MIPS

Background. CMS adjusts Medicare payment for MIPS-eligible clinicians based on performance under MIPS. Clinicians who do not participate in a qualifying Alternative Payment Model (APM) are scored under four MIPS performance categories:

• Quality – clinical performance measures
• Cost – how efficiently a clinician manages resources for patient care
• Improvement Activities – participation in activities that improve care processes
• Promoting Interoperability – use of certified electronic health record technology (CEHRT)

These four categories combine into a MIPS final score, which determines whether a clinician receives a positive, neutral, or negative payment adjustment in a future year relative to the standard fee schedule amount. Under the current measure, clinicians attest yes or no to whether they requested at least one prior authorization electronically (excluding drugs) via a prior authorization API using CEHRT. The proposed rule would change how this measure operates beginning in CY 2027.

The Proposed MIPS Changes. Under the proposed rule, the electronic prior authorization measure would become optional in CY 2027 and would be available for bonus points rather than required for scoring under the Promoting Interoperability performance category. If reported, clinicians would have to use CEHRT with specified FHIR-enabled, ONC-certified health IT modules. Thus, to qualify for bonus MIPS points, an EHR’s prior authorization functionality would have to use FHIR-enabled APIs to communicate with payers. In CY 2028, CMS proposes to again require clinicians to report the measure, subject to applicable exclusions, while maintaining the required use of FHIR-enabled modules. Through these proposed changes, CMS aims to move clinicians toward adopting FHIR-enabled technology in prior authorization workflows rather than giving credit for use of any prior authorization API.

Prescription Drugs. CMS also proposes a new measure beginning in CY 2028 that would require the use of FHIR-enabled health IT modules to complete at least one electronic prior authorization request for a prescription drug. The current electronic prior authorization measure expressly excludes drugs.

Changes to ASMs

Background. The Ambulatory Specialty Model (ASM) is a new, mandatory Medicare Alternative Payment Model created by CMMI and finalized in the CY 2026 Physician Fee Schedule rule. The model aims to improve upstream management of chronic conditions and reduce avoidable hospitalizations and unnecessary procedures by targeting certain specialist practices. ASM eligibility is based on the following criteria:

• Clinicians are selected based on a combination of taxpayer identification number (TIN) and national provider identifier (NPI);
• Clinicians must bill claims under Medicare PFS;
• Clinicians are targeted based on whether their practice is relevant to an ASM targeted chronic condition;
• Clinicians must meet a historical volume threshold of condition-specific episode-based cost measure (EBCM) episodes; and
• CMS selects clinicians from mandatory geographic areas.

While ASM leverages the performance measurement framework from MIPS, ASM participants are exempted from MIPS requirements for applicable ASM performance years. Thus, ASM replaces MIPS for the clinicians it applies to. Physicians in ASMs are evaluated across the same four broad MIPS categories (quality, cost, improvement activities, promoting interoperability), but follow different rules on measure selection, scoring weights, and reporting level.²

The Proposed ASM Changes. CMS proposes new ASM electronic prior authorization measures that generally parallel the MIPS proposals, phased in for the 2027 and 2028 ASM performance years, along with a drug-specific measure for 2028. CMS proposes that the electronic prior authorization measure would be optional in 2027 and required in 2028. Although the ASM discussion does not separately restate every technical requirement, CMS proposes to include the Electronic Prior Authorization measure in the Promoting Interoperability ASM performance category under the HIE objective “consistent with MIPS,” starting in the 2027 ASM performance year.

Changes to ACOs

For Accountable Care Organizations (ACOs), CMS proposes three activities intended to simplify CEHRT reporting and promote FHIR-based clinical data transmission within the Medicare Shared Savings Program (Shared Savings Program or MSSP). ACOs currently satisfy their Promoting Interoperability and CEHRT obligations through a different mechanism than MIPS clinicians. Unlike the MIPS and ASM proposals, CMS would give ACOs a choice among several CEHRT reporting options in CY 2027 and gather feedback before determining future requirements.

CMS proposes replacing the current ACO CEHRT use requirement with a requirement that ACOs select one of three “allowable” activities in CY 2027:

1. Completely report at least one of the five ACO-reported measures in the APP Plus quality measure set through the eCQMs or Medicare eCQMs collection type using CEHRT.
2. Attest to the ACO’s use of FHIR capabilities to support reporting of at least one of the five ACO-reported measures in the APP Plus quality measure set using CEHRT.
3. Select and attest to one of the proposed Shared Savings Program CEHRT use metrics, which are based on a subset of MIPS Promoting Interoperability performance category measures, and which may be updated annually if there are changes.

Under the proposed rule, an ACO could select an activity that satisfies its Promoting Interoperability requirement and would then provide feedback to CMS about the activity selected. CMS states that this feedback would inform future CEHRT use requirements for ACOs.

In the proposed rule, CMS also seeks comment through an RFI on whether and how to apply electronic prior authorization measures to MSSP ACOs, including the following:

• Requiring the use of specific FHIR-enabled Health IT Modules within CEHRT to complete at least one prior authorization request and determination for at least one medical item or service during the performance period, or allowing that activity as an option for meeting MSSP CEHRT use requirements beginning with the CY 2028 performance year.
• Creating a new, ACO-specific electronic prior authorization measure to require use of specific FHIR-enabled health IT modules within CEHRT to complete at least one prior authorization request and determination for at least one prescription drug during the performance period, beginning with the CY 2028 performance year.
• Considerations CMS should take into account when developing electronic prior authorization measures for MSSP ACOs.

The Broad Picture

CMS appears to be providing a one-year transition period in CY 2027 to encourage adoption of FHIR-enabled technology for prior authorization before proposing to make the measure required again in CY 2028, while also developing a parallel drug-specific measure on a similar timeline. Taken together, the proposals reflect CMS’s broader emphasis on FHIR-enabled data exchange and electronic prior authorization across Medicare quality and value-based payment programs.

For ACOs, CMS has not yet settled on a specific electronic prior authorization measure. Instead, through the RFI, CMS is seeking comment on whether and how FHIR-enabled electronic prior authorization requirements should be incorporated into future MSSP CEHRT use requirements.

Looking Ahead

The electronic prior authorization proposals are part of CMS’s broader effort to reduce administrative burden and promote interoperable health information exchange. CMS ties these proposals to its CY 2027 goals of supporting prevention and wellness, reducing administrative burden, and promoting meaningful participation that drives quality and value. Electronic prior authorization is one component of CMS’s broader shift toward FHIR-enabled exchange across the Quality Payment Program and other Medicare programs.

To better understand how these proposals may affect your business or for assistance in addressing these regulatory proposals, please contact Wilson Sonsini attorneys Jodi Daniel and Ty Kayam, or any member of Wilson Sonsini’s Healthcare and FDA Regulatory practice.

Jared Park contributed to the preparation of this alert.

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[1] Centers for Medicare & Medicaid Services, Medicare and Medicaid Programs: CY 2027 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies (CMS-1848-P) (issued July 14, 2026; released for public inspection) (hereinafter “CY 2027 PFS Proposed Rule”). The Federal Register citation should be confirmed against the published version. Comments are due September 14, 2026.

[2] https://www.cms.gov/priorities/innovation/asm-ambulatory-specialty-model-frequently-asked-questions