This month's feature connects the dots between physician reimbursement, prescription drug coverage, Medicare Advantage plan design and the growing financial pressures facing independent healthcare providers and pharmacies.

Inside This Issue

• CMS Restructures Physician Payment
Learn why Medicare is shifting physician reimbursement toward preventive care and chronic disease management, and what proposed payment reductions could mean for access to independent physicians.

• Why Medicare Plans May Look Different in 2027
Understand how rising healthcare costs and new CMS policies could influence premiums, provider networks, prior authorization requirements and supplemental benefits next year.

• Part D Gets More Expensive Up Front
The standard Part D deductible increases to $700, while the annual out-of-pocket maximum rises to $2,400. We explain what these numbers really mean and how they'll affect your prescription drug costs.

• Does the Medicare Prescription Payment Plan Help?
Spreading prescription costs throughout the year can ease monthly cash flow, but it doesn't reduce what you owe. I’ll explain when this program makes sense and when it may not.

• HMOs vs. PPOs: Is the Landscape Changing?
Will Medicare Advantage plans continue offering broad PPO networks, or are tighter HMO networks becoming more common? I examine the trends and what they could mean for your choice of doctors.

• The Hidden Impact on Your Healthcare
Independent physicians and community pharmacies are facing increasing financial pressure from Medicare reimbursement changes. Discover why those business challenges can ultimately affect your access to care, prescription costs and plan options.

Most Medicare changes are discussed one piece at a time.

We hear about a new prescription-drug deductible and implementation of a new max out of pocket. We hear that a Medicare Advantage plan is changing its dental allowance or that a doctor is no longer accepting a certain insurance plan. We discover that a local pharmacy can no longer fill a medication at a sustainable reimbursement rate so you now you need to pick it up at a larger chain pharmacy.

These developments may appear unrelated, but they are increasingly connected.

For 2027, the Centers for Medicare & Medicaid Services, (CMS), is proposing significant changes to the way Medicare pays physicians. At the same time, Medicare Part D beneficiaries will face a higher standard deductible and a higher annual out-of-pocket limit. Medicare Advantage and prescription-drug plans must then design their premiums, copayments, provider networks and extra benefits around these new financial realities.

The result is that changes affecting physicians and independent pharmacies can eventually reach Medicare beneficiaries through higher costs, narrower provider networks, more restrictive plan rules or reductions in supplemental benefits.

Before discussing what beneficiaries should expect, it is important to distinguish between what has been finalized and what is still under consideration.

The 2027 Medicare Advantage and Part D payment policies have been finalized. However, the 2027 Medicare Physician Fee Schedule remains a proposed rule as of July 2026. CMS is accepting public comments through September 14, 2026, and the physician-payment provisions could change before the final rule is issued.

How CMS proposes to restructure physician reimbursement

Medicare does not simply assign a dollar amount to every physician service. Under the Medicare Physician Fee Schedule, the value assigned to a service is adjusted and then multiplied by a dollar-based conversion factor.

For 2027, CMS has proposed two conversion factors:

Those figures would represent decreases of approximately 1.19% and 1.68%, respectively, from the corresponding 2026 conversion factors. One reason for the decline is the expiration of a temporary 2.5% physician-payment increase that applies only during 2026.

That does not mean every doctor will receive exactly 1% to 2% less from Medicare. The effect will vary by specialty, geographic area, services performed and participation in value-based arrangements.

CMS is attempting to redistribute payment toward primary care, preventive services, care coordination and the continuing management of complex patients. At the same time, certain procedural, diagnostic and separately billed services could face greater reimbursement pressure. CMS describes the broader goal as moving Medicare away from paying primarily for the volume of services and toward paying more for prevention, coordination and measurable health outcomes.

One proposed change would replace the current flat-dollar treatment of the G2211 complexity add-on code with a percentage adjustment to the related office visit. CMS is also proposing an additional payment adjustment for qualifying clinicians participating in certain accountable-care arrangements.

In practical terms, CMS is sending physicians a message:

Medicare increasingly wants to pay for coordinated, long-term management of patients, not merely isolated office visits and procedures.

That may create opportunities for primary-care physicians, geriatricians and practices that manage chronic conditions over time. However, participating in these payment models can also require more reporting, technology, care coordination, staff time and financial accountability.

Why a small physician-payment reduction can become a larger problem

A reimbursement reduction of 1% or 2% may not sound dramatic. But physician practices are also dealing with increasing wages, higher insurance costs, rent, medical supplies, technology expenses and increasing administrative requirements from plan sponsors via prior authorizations, peer reviews, denials and appeals.

When Medicare payments remain flat or decline while business expenses rise and use of the practice’s staff time increases, the practice’s actual profit margin can fall much more quickly than the reimbursement percentage suggests.

Private practices may respond by:

This does not mean Medicare beneficiaries will suddenly lose access to their doctors on January 1. But persistent reimbursement pressure can gradually reduce the number of independent practices willing or financially able to participate in every Medicare Advantage network.

How physician payments affect Medicare Advantage plans

Medicare Advantage plans are private insurance plans that receive payments from CMS to provide Medicare-covered services. CMS has finalized policies expected to increase payments to Medicare Advantage plans by an average of 2.48%, or more than $13 billion, in 2027.

That sounds favorable for the plans, but it does not guarantee that every insurer, county or individual plan will receive the same increase. It also does not mean physicians will automatically receive higher reimbursement from Medicare Advantage insurers, which is part of the reason why certain providers and healthcare systems go in and out of network.

The plan must use its CMS revenue to cover:

The plan sponsor must also negotiate separate contracts periodically with doctors, hospitals, pharmacies and other providers.

Therefore, CMS can increase its overall payments to Medicare Advantage plans while individual providers still experience payment pressure. A physician may decide that the reimbursement offered by a particular Medicare Advantage plan does not adequately compensate the practice for the care, paperwork, prior authorization and claim-denial risk involved.

When that happens, the provider may decline the contract or leave the network. Based on experience, this has been happening more frequently over the past three years with major healthcare systems in the region.

For beneficiaries, this can create a difficult situation: the plan may still be available, but the doctor may no longer participate.

Will there be more Medicare HMOs and fewer PPOs in 2027?

We do not yet have enough public information to state that 2027 will definitely bring more HMOs than PPOs. Final county-level plan offerings, provider networks, premiums and benefit packages will become clearer when insurers release their official 2027 plan information before the Annual Enrollment Period.

However, there are reasons to watch for movement toward tighter networks and more restrictive plan designs.

An HMO generally gives the insurer greater control over:

A PPO generally gives members more freedom to see out-of-network providers, although they may pay substantially more in terms of premiums, copays and coinsurance for doing so.

From an insurer’s perspective, an HMO can be easier to manage financially because the plan can negotiate with a defined provider network and direct more care through contracted physicians and facilities. A PPO’s out-of-network exposure makes utilization and costs more difficult to control.

The Medicare Advantage market was already experiencing disruption before the 2027 bidding cycle. In 2026, insurers reduced offerings or left some counties as they responded to rising medical expenses, reimbursement changes and profitability concerns.

This creates a plausible, not certain, 2027 scenario in which some insurers:

The 2.48% average CMS payment increase may reduce some of that pressure, but rising healthcare costs and local market conditions will still influence each plan’s decisions.

What happens when doctors will not accept an HMO?

An HMO is only useful when its provider network includes the doctors, hospitals and specialists a beneficiary needs.

Most HMOs generally require members to use contracted providers, except for emergency care, urgently needed care and certain other limited circumstances. Some also require a primary-care physician to coordinate care or provide specialist referrals.

When fewer physicians in an area accept a particular HMO, beneficiaries may face:

This is especially important in rural communities and areas with relatively few specialists. A network can technically satisfy regulatory requirements while still being difficult for patients to navigate in practice.

It is also important not to treat all HMOs as identical. The name of the insurance company alone is not enough; beneficiaries need to check the specific plan’s provider directory and confirm participation directly with their doctors.

And sometimes, checking the directory is not enough. Provider practices can still decide whether to accept a plan or not based on historic timely and satisfactory reimbursement.

Are Companies Hiding plans?

You may be asking yourself why companies would do this.  It seems ironic.  If a certain plan has been great for years, then why would the plan not be offered.  The simple answer is commission and/or the plan has ceased to be profitable. It may not be that companies are hiding all the plans, but no Medicare broker is going to suggest a plan when they do not get compensated for the work they do. 

No one likes working for free. 

However, this isn’t the only reason.  Plan sponsors (private health insurance companies) make it very difficult for the broker to help enroll Medicare beneficiaries by limiting the ways they can help. 

Plan sponsors have either removed plans from broker enrollment platforms or required only one way to enroll in a certain plan, and if enrollment occurs, the broker does not get compensated for their work, which actually works to restrict enrollment in these plans. 

Why? Because those plans have ceased to be profitable for the plan sponsor so if they can’t remove the plan during the year, they put a multitude of obstacles in the way to restrict plan enrollment. 

In fact, brokers, if they wanted to, can’t help you enroll into a Part D plan since most Part D plan sponsors have removed plans from enrollment portals.  All brokers can do is show you estimates for Part D plans and point you in the right direction. Most Part D plan enrollments take place at Medicare.gov now.

The 2027 Part D deductible rises to $700

The standard Medicare Part D deductible is scheduled to increase from $615 in 2026 to $700 in 2027.

That is an increase of $85, or approximately 13.8%. The annual Part D out-of-pocket threshold is also scheduled to rise from $2,100 in 2026 to $2,400 in 2027, an increase of $300 or approximately 14.3%.

The $700 figure is the standard deductible established under the defined Part D benefit. It is the maximum deductible a standard Part D plan may charge.

Every plan will not apply the full $700 deductible to every medication., but most have in recent past.

A plan may:

This means beneficiaries should not look only at the deductible amount when comparing plans. They should examine how the deductible applies to their particular medications.

For example, one plan might have a $700 deductible that applies only to higher-tier brand-name and specialty drugs. Another might have a lower deductible but higher copayments throughout the year. A third could charge a premium in exchange for more predictable copayments.

The least expensive plan will depend on the beneficiary’s complete medication list and the monthly premium, plan deductible, copays and coinsurance.

The Part D out-of-pocket maximum increases to $2,400

The $2,400 out-of-pocket threshold is the amount of qualifying prescription-drug spending that moves a beneficiary through the Part D deductible and initial coverage phases and into the catastrophic phase.

Once the beneficiary reaches the catastrophic phase threshold, the beneficiary generally pays no additional cost sharing for covered Part D medications for the remainder of the calendar year.

CMS has finalized regulations making the redesigned Part D structure permanent for 2027 and beyond, including the elimination of the old coverage-gap phase and the removal of beneficiary cost sharing in the catastrophic phase.

Nevertheless, increasing the threshold from $2,100 to $2,400 means a beneficiary with high prescription costs could be responsible for up to $300 more in qualifying out-of-pocket spending during 2027 than during 2026.

For someone living primarily on Social Security and retirement savings, that additional expense may be significant, particularly when it occurs early in the year.

Does the Medicare Prescription Payment Plan solve the higher deductible problem?

The Medicare Prescription Payment Plan can help with the timing of prescription costs, but it does not reduce the deductible or eliminate the expense.

The program allows beneficiaries with Part D drug coverage to spread their out-of-pocket prescription costs across monthly bills instead of paying the entire amount at the pharmacy counter. Every Medicare drug plan is required to offer the option.

Consider a beneficiary who fills an expensive medication in January and owes a large amount because the new deductible has not been met.

Without the payment program, the beneficiary may have to pay the amount up to the full deductible and copays at the pharmacy counter.

With the payment program, the plan pays the pharmacy and bills the beneficiary over the remaining months of the year according to the program’s payment formula.

This can make cash flow more manageable, but three cautions are important.

First, the program does not discount the medication. The beneficiary still owes the full applicable deductible, copayment or coinsurance.

Second, it does not necessarily divide the cost into 12 equal payments. The monthly amount is recalculated based on the balance owed, new prescription costs and the number of months remaining in the year, which can and normally increases costs at the end of the year.  This can make budgeting a tougher problem to deal with since holiday spending and increased energy bills can be a factor during this time of year.

Third, the program is usually most helpful when a beneficiary has high costs early in the calendar year. Someone who enrolls late in the year has fewer months over which to spread the remaining balance.

The best way to describe the program is:

It can be a budgeting tool, not a prescription-drug subsidy.

For many retirees, that budgeting assistance may still be valuable. A $700 expense in January can be difficult to absorb all at once. Spreading it over several months can reduce the immediate strain on household cash flow, even though the total amount owed does not change.

Why Part D changes matter to independent pharmacies

Independent pharmacies are directly affected by Part D plan reimbursement, PBM contracts and the timing of payments.

Part D plan sponsors now bear a greater portion of prescription-drug costs under the redesigned benefit. This can give plans and their pharmacy benefit managers a stronger incentive to control expenses through:

Independent pharmacies may also dispense certain drugs subject to Medicare’s negotiated Maximum Fair Price program. In some transactions, the pharmacy may acquire a drug at a price above the Medicare-negotiated amount and then rely on a subsequent manufacturer refund to reconcile the difference.

That can create a temporary cash-flow gap for the pharmacy.

The pharmacy may ultimately receive the appropriate payment, but it must first purchase the medication, dispense it and then wait for all components of reimbursement. For a small business filling numerous high-cost prescriptions, that timing difference can tie up a substantial amount of working capital and become a debt issue.

When pharmacy reimbursement becomes inadequate or too unpredictable, an independent pharmacy may:

For beneficiaries, the consequence can mean fewer convenient, high touch pharmacies, longer travel distances, reduced access to personal medication counseling and greater dependence on mail-order or specialty-pharmacy systems.

Are dental, vision, OTC and grocery benefits likely to be reduced?

I get asked this question a lot.  It’s too early to know exactly which 2027 plans will reduce dental, vision, over-the-counter or grocery benefits. Insurers have not yet publicly released all final 2027 benefit packages. We’ll know more October 1^st.

Plan sponsors generally finance many of these extras through rebate dollars available after bidding below Medicare’s county payment benchmark. MedPAC estimates that Medicare Advantage rebate payments average approximately $2,660 per enrollee in 2026 and are used to provide supplemental benefits and reduce beneficiary cost sharing.

If a plan’s hospital, physician, drug and administrative expenses rise faster than its available revenue, the insurer may need to make trade-offs.

Possible 2027 responses include:

So, in essence, this looks like a continuation of what’s been occurring for the past couple of years. Dental and vision benefits may be somewhat more durable than broad grocery or flexible spending-card benefits because they are widely expected by Medicare Advantage shoppers. But a plan can preserve the name of a benefit while reducing its practical value.

For example, a plan may still advertise dental coverage but:

The same principle applies to OTC and grocery benefits. The plan may retain them but reduce the dollar amount, frequency or number of members who qualify.

Grocery benefits are often offered as Special Supplemental Benefits for the Chronically Ill. Eligibility may depend on a qualifying chronic condition and other plan requirements, so they are not automatically available to every Medicare Advantage enrollee.

What beneficiaries should watch during the 2027 Annual Enrollment Period

The greatest mistake a Medicare beneficiary can make is assuming that a current plan will remain unchanged.

A plan may keep the same company name and even the same plan name while changing important details underneath it.

Every beneficiary should review:

Is it the full $700? Which medication tiers are subject to it?

Are all current medications still covered? Did any drugs move to a higher tier?

Is the beneficiary’s current pharmacy still preferred, merely in-network or no longer participating?

Are the beneficiary’s primary-care physician, specialists and preferred hospital still in-network for that specific plan?

Does the plan cover out-of-network care? Are referrals required? What happens when traveling?

Review inpatient hospital, outpatient surgery, imaging, specialist, physical therapy and emergency-room costs—not just the premium.

This is separate from the $2,400 Part D drug threshold.

Compare the actual dental allowance, provider network, covered services, OTC amount and grocery eligibility—not merely whether the benefits appear on the brochure.

A low-cost plan may be less attractive if accessing medically necessary care becomes more difficult.

Premiums, deductibles, copayments, prescriptions and expected healthcare use should be considered together.

The connection beneficiaries should understand

Physician reimbursement, pharmacy reimbursement and Medicare plan design are not separate issues. They’re connected.

When physicians receive inadequate reimbursement, they may leave a plan’s network or stop accepting new patients.

When independent pharmacies cannot purchase and dispense medications profitably, patients may lose access to a trusted local pharmacy.

When Medicare Advantage and Part D plans face higher medical and prescription expenses, they may redesign benefits, narrow networks, increase cost sharing or reduce supplemental benefits.

Each part of the Medicare system affects the others.

The 2027 changes do not mean that every Medicare Advantage plan will become worse, every PPO will disappear or every extra benefit will be reduced. Some plans may remain stable, and others may improve.

But beneficiaries should expect a year in which careful comparison matters more than ever.

A zero-dollar premium and an attractive dental or grocery benefit can draw attention. Yet the most important questions remain:

Those questions should guide the decision, not deceptive television commercials, the gift card or the size of the benefits printed on the front page of a brochure.

In The Margin

Medicare beneficiaries are often encouraged to compare premiums and extra benefits. In 2027, they will also need to look beneath the surface.

The financial pressure placed on physicians, pharmacies and insurance plans eventually reaches the patient. It may arrive as a higher deductible, a changed formulary, a smaller dental allowance, a narrower provider network or a doctor who no longer accepts the plan.

The margin between a plan that looks attractive and a plan that actually works may be found in the fine print.

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After reaching record highs earlier this month, the stock market has taken a step back over the past several trading sessions. While declines like these can be unsettling, they're also a normal part of investing.

So what's driving the pullback?

Several factors appear to be contributing:

Inflation has improved significantly compared to the past few years, but it's still the economic story everyone is watching.

Higher energy prices could make continued progress more difficult, and that's one reason markets have become more cautious this week. While inflation is moving in the right direction overall, investors know the path back to the Federal Reserve's long-term goal is unlikely to be perfectly smooth.

The Federal Reserve remains in a "wait-and-see" mode.

Most economists expect policymakers to leave interest rates unchanged at their upcoming meeting while continuing to evaluate inflation, employment, consumer spending, and broader economic conditions before making any future moves.

For retirees, this means borrowing costs are likely to remain relatively high for now, but it also means savings accounts, CDs, and money market funds continue to offer yields that haven't been available for many years.

This week marks one of the busiest periods of second-quarter earnings season.

Several of the largest technology companies—including Alphabet, Tesla, Intel, and IBM—are reporting results, and investors will be paying close attention to revenue growth, artificial intelligence spending, and guidance for the remainder of the year.

Strong earnings could help restore market confidence, while disappointing reports could increase short-term volatility.

Mortgage rates remain elevated compared with the ultra-low levels many homeowners became accustomed to during the pandemic.

While rates have stabilized somewhat, they're still influencing decisions for retirees considering downsizing, relocating, or purchasing a second home. If you're thinking about making a housing move in retirement, it's important to evaluate not only today's interest rate but also the long-term affordability of your new home.

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If retirement travel means scenic drives, mountain views, exceptional food, and local art, Asheville deserves a place on your list.

Nestled in the Blue Ridge Mountains, Asheville offers a wonderful combination of outdoor adventure and relaxed southern hospitality.

Spend the morning exploring the historic Biltmore Estate, enjoy lunch at a local café, then finish your afternoon driving a portion of the Blue Ridge Parkway.

Sometimes retirement travel isn't about going farther.

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Sports and leisure aren't always about competition.

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One of the greatest challenges many retirees face isn't a lack of money—it's a lack of routine and meaningful connection after leaving the workforce.

That's why so many retirees discover fulfillment through volunteering.

Whether it's helping coach a youth sports team, serving at a local food bank, working with your church, mentoring young professionals, or assisting at community events, volunteering provides something retirement can't buy:

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Retirement isn't simply about stepping away from work.

It's about stepping into the next chapter of your life with intention.

Maybe this week is the perfect time to ask yourself:

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