Surgeons who perform hip and knee replacements will take a smaller Medicare pay cut in 2027 than CMS proposed in July, but a cut nonetheless. It lands as the facility side of the ledger keeps pulling joints toward outpatient settings and ASCs.
CMS released the final 2027 physician fee schedule (CMS-1848-F) and the final 2027 outpatient and ASC payment rule (CMS-1850-F) Nov. 4. Both take effect Jan. 1.
The American Association of Orthopaedic Surgeons welcomed CMS’ decision to scale back proposed Medicare payment cuts for several orthopedic procedures but called for broader physician payment reform.
“There is more work ahead to build a Medicare payment system that reflects the realities of delivering high-quality musculoskeletal care and supports sustainable physician practices,” AAOS president Wilford Gibson, MD, said in a statement. “AAOS will continue working collaboratively with CMS and Congress to advance policies that preserve access to musculoskeletal care and help keep our nation in motion.”
The American Association Hip and Knee Surgeons urged congress to revisit the cuts, and warned that the cuts could force independent practices to close or join larger hospital systems, potentially limiting patient access, particularly in rural communities.
Here is what changes for total joint replacement.
Physician fee schedule
1. The joint replacement cut is smaller than proposed. CMS set the work RVU for total hip and total knee at 16.70, down from 19.11, a 12.6% cut. It had proposed cuts closer to 20%.
Total shoulder falls to 19.35 from 21.58, a 10.3% cut. In each case, CMS adopted the AMA’s RUC recommendation instead of the deeper cuts it proposed, which were closer to 20%.
2. The conversion factor drops 2.31%. For most physicians, it falls from $33.40 to $32.63, mainly because a one-year 2.5% boost from Congress expires.
3. Surgeons’ work pay falls about 15%. Together, those changes drop the work portion of a hip or knee replacement from about $638 (19.11 RVUs × $33.40) to about $545 (16.70 RVUs × $32.63), before geographic adjustment.
4. Joints avoid the same-day visit cut. The new 20% cut applies only to procedures with 0-day global periods. Joint replacements have 90-day globals, so they are exempt.
5. Global surgery pay could be next. CMS says many post-op visits it pays for during global periods aren’t happening and may revisit how they’re valued.
6. Orthopedics faces practice expense cuts. A change to how CMS calculates overhead costs is projected to lower payments for orthopedic and hand surgery.
Outpatient and ASC rule
7. ASCs get a 2.3% raise. The ASC conversion factor rises to $57.721.
8. ASC joint payments rise faster than average. CMS estimates 2027 ASC payment will rise 4% for total knee, 5% for total hip and 7% for total shoulder, above the 2.3% overall update. Device-heavy procedures come out ahead because the device portion of their payment isn’t reduced by the ASC weight scalar, which falls to 0.814 from 0.872.
Joints are big business for ASCs. Total knee ranks second among ASC procedures by Medicare spending, at an estimated $529 million in 2026, behind only cataract surgery. Total hip ($284 million) and total shoulder ($215 million) also rank in the top 10
Still, all 10 of the most common ASC procedures will see payment cuts in 2027, according to ASCA.
9. More surgery can move to outpatient settings. CMS removed 637 more services from the inpatient-only list and added 618 codes to the ASC covered procedures list.
10. Hospital outpatient departments take a bigger cut. CMS raised a 340B-related payment offset from 0.5% to 2%. It stays until Medicare recoups $7.8 billion, likely in 2031.
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