How to Value a Medicare-Heavy Medical Practice in 2026

A practice with 70%+ Medicare revenue is a very different animal than a commercially-insured practice, and sellers who don't understand the distinction routinely leave money on the table — or worse, accept a lowball offer from a buyer who knows more about the economics than they do. I've seen Medicare-heavy primary care practices sell for as little as 0.3x revenue and as much as 1.8x revenue within the same city in the same year. The difference came down to one thing: whether the practice could deliver value-based care.

If you run a practice where traditional Medicare and Medicare Advantage make up the majority of your book, here's what buyers actually pay, who the buyers are, and how to position the practice to capture a premium.

The Baseline: What a Medicare-Heavy Practice Actually Trades For

Straight fee-for-service Medicare practices — primary care or specialty — trade at meaningfully lower multiples than commercial or cash-pay peers. Typical ranges:

• Fee-for-service primary care (70%+ Medicare): 0.3-0.7x collections or 2.5-4x EBITDA.
• Specialty practice (70%+ Medicare, e.g., cardiology, nephrology): 0.5-1.0x collections or 3-5x EBITDA.
• Medicare Advantage value-based primary care: 1.5-3x revenue or 7-12x EBITDA — sometimes higher when PCP-at-risk contracts and quality scores are strong.

That last bucket is where the action has been for the last six years. ChenMed, Oak Street Health (now CVS), Iora (now One Medical / Amazon), Cano Health, and VillageMD (Walgreens) have all paid dramatic premiums for primary care practices that can demonstrate medical loss ratio management on MA populations. A practice with 2,000 MA members under global cap arrangements can be worth multiples of the same practice running straight Medicare FFS.

Why Straight Medicare FFS Trades at a Discount

The discount to commercial payer mix isn't arbitrary. Buyers are pricing real risks:

Reimbursement compression. The Medicare Physician Fee Schedule has absorbed cuts in three of the last four years. The 2025 schedule reduced the conversion factor by 2.83%. Buyers model forward another 1-3% annual cuts and discount the cash flows accordingly. A commercial practice doesn't carry this risk to the same degree.

Lower unit economics. Medicare typically pays 60-75% of commercial rates for the same CPT code. A 99214 office visit might pay $110 from Medicare and $165 from BlueCross. Same patient, same physician time, same overhead — roughly 50% less revenue. That compresses margins and, by extension, the EBITDA multiple the buyer can justify.

Demographic ceiling. A Medicare panel gets older every year. Attrition from death and nursing home placement runs 4-8% annually. Unless the practice is actively recruiting the aging-in 65-year-old cohort, the revenue base is slowly melting. Buyers model this.

Complex compliance environment. Medicare audits, RAC reviews, MIPS reporting, ICD-10 specificity requirements — the compliance overhead is real, and buyers price in the risk of clawbacks and penalties that don't exist in cash-pay or commercial books.

The Medicare Advantage Premium

Here's where Medicare-heavy practices can flip the script. If your practice has meaningful exposure to Medicare Advantage under capitated or shared-savings contracts — and you can prove you manage the population well — you're in one of the hottest segments in healthcare M&A.

The reason is structural. Under MA, CMS pays the plan a risk-adjusted monthly premium (typically $900-$1,400 per member per month in 2026). The plan passes some portion to the primary care practice under various risk arrangements. A practice operating under a 90% global cap with 1,500 MA members and an 80% MLR is generating something like $3-5M of retained margin on $16-20M of gross premium — and that margin is far more predictable than FFS revenue.

What buyers actually pay for MA primary care:

• Per-member-at-risk multiples: $3,000-$8,000 per MA member for full-risk primary care, depending on MLR performance and contract quality.
• EBITDA multiples: 8-14x for clean value-based care platforms. Oak Street and CVS paid implied multiples well north of 20x on forward EBITDA during the 2020-2022 frenzy; those multiples have come down, but high single digits to low teens are still normal.
• Earn-outs tied to MLR and quality: 20-40% of the purchase price typically sits in a 2-3 year earn-out tied to maintaining MLR targets and Stars ratings.

Risk Adjustment: The Hidden Value Driver

If you're running Medicare Advantage patients, your HCC (Hierarchical Condition Category) coding accuracy is worth real money to a buyer. MA plans are paid based on the risk scores you submit. A practice that codes at 1.25 RAF versus one that codes the same population at 0.95 RAF is generating 30% more premium per member — legally, if the conditions are documented and supported.

I've seen deal values swing by 25-40% based on coding maturity alone. Buyers will send their own coders through your charts during diligence. If they find documented conditions you didn't code, they'll use it as a value driver. If they find codes you submitted without clinical support, they'll claw it back — and potentially walk the deal.

Who Actually Buys Medicare-Heavy Practices

The buyer universe is narrower than for commercial practices, but the institutional buyers in this space are well-funded and active.

Value-based care platforms: agilon health, Privia Health, Aledade, Pearl Health, and Wellvana contract with independent primary care practices to transition them to MA risk arrangements. They don't always buy the practice outright — sometimes they take an equity stake or a revenue-share.

Health system employed models: regional health systems still buy Medicare-heavy primary care practices to feed downstream specialty and hospital volume. The multiples are lower (often 0.5-0.8x collections) but the deal structure is simpler.

PE-backed specialty roll-ups: for cardiology, nephrology, and oncology practices with heavy Medicare mix, PE platforms (US Renal Care, US Heart and Vascular, American Oncology Network) pay 5-9x EBITDA for quality practices with strong ancillary mix.

What Moves the Needle on Value

MA mix and contract quality. Every percentage point you can shift from FFS Medicare to MA under a risk contract adds value — assuming the contract is favorable. Get your contracts reviewed before going to market; the difference between a 70% MLR cap and a 90% MLR cap is the entire practice value.

Ancillary revenue. In-office labs, imaging, chronic care management (CPT 99490), transitional care management (99495/99496), annual wellness visits (G0438/G0439), and remote patient monitoring all boost Medicare revenue meaningfully and are fully billable. A well-run Medicare practice captures $400-$800/year in ancillary CPT codes per active patient that under-optimized practices miss entirely.

Quality scores. MIPS scores, ACO quality metrics, and MA Stars performance directly affect buyer valuations. Practices in high-performing ACOs receive shared savings payments that drop straight to EBITDA. See our industry multiples guide for how these stack against other healthcare segments.

Panel growth. A Medicare practice that's actively capturing the aging-in 65-year-old population (through commercial-to-Medicare transitions and referrals) is growing. A practice that's not is shrinking. Buyers pay very different multiples for the two.

What to Fix Before Selling

Clean up your coding. If you're under-coding HCC conditions, hire a coder and do a chart review 12-18 months before sale. This is the single highest-ROI prep activity for a Medicare-heavy practice.

Capture the ancillary CPT codes. AWVs, CCM, TCM, and RPM programs take 3-6 months to stand up and 6-12 months to reach steady state. Start early.

Review your payer contracts. If you're not in-network with the dominant MA plans in your market, buyers will price that in. Renegotiate or join where you can.

Document physician succession. If you're the only physician and Medicare patients are deeply loyal to you personally, buyers will apply a 20-30% dependency discount. Adding an associate 2-3 years before sale is critical. The prep timeline works the same as any healthcare practice.

The Bottom Line

Medicare-heavy practices aren't inherently low-value — they're low-value when run as straight fee-for-service shops that haven't adapted to the value-based care environment. The practices that command premium multiples in 2026 are the ones that embraced MA risk contracts, built disciplined HCC coding programs, captured the ancillary CPT opportunities, and documented their clinical outcomes. If you're sitting on a fee-for-service Medicare practice and considering a sale, either do the work to transition toward value-based care or accept that the buyer pool will be narrower and the multiples lower. There's no middle ground.