CMS released its proposed CY 2027 Medicare Physician Fee Schedule on July 14, setting up another cycle of physician pay cuts, and for spine and orthopedic surgeons, the exposure goes well beyond the headline number.
The proposal cuts the physician conversion factor 1.68% for most practitioners, down to $32.8409 from CY 2026 final rates. But specialty-level analysis suggests the impact on orthopedics runs deeper. Orthopedic surgery payments could decline an additional 7% beyond the headline conversion factor cut, and certain orthopedic procedures, including hip and knee replacements, could face cuts of up to 20% under the proposed rule’s methodology changes.
The cuts are not CMS choosing to reduce physician pay outright. They largely reflect the expiration of a one-year 2.5% conversion factor boost Congress included in the Working Families Tax Cut legislation for CY 2026 only, according to a blog post from law firm King and Spalding. Without new legislation extending or replacing it, current law reverts to a reduction relative to 2026 rates. Specialty societies are already pressing Congress for another patch, a pattern that has repeated in nearly identical form for four consecutive years.
When adjusted for inflation, Medicare physician payments have declined 33% from 2001 to 2025, according to AMA data. The proposed 2027 rates would extend that erosion into a fifth consecutive cycle.
What surgeons say needs to change
Two orthopedic surgeons told Becker’s that incremental patches are no longer sufficient and that the system itself needs structural change.
Alexander Lazarides, MD, orthopedic oncologist at Tampa, Fla.-based Moffitt Cancer Center, framed the issue directly as a patient access problem rather than a reimbursement dispute.
“The recurring cycle of annual physician payment cuts is no longer simply a reimbursement issue. It is a patient access issue,” Dr. Lazarides said. “As an orthopedic oncologist, I care for patients with sarcoma and metastatic bone disease whose treatment often requires multidisciplinary coordination, complex surgical planning and highly specialized care that is available at only a limited number of centers. Preserving access to that expertise should be a national priority.”
On the question of what would actually move the needle, Dr. Lazarides called for a fundamentally different payment structure.
“What would truly move the needle is a physician payment system that provides predictable, annual updates tied to inflation and the actual cost of delivering care, rather than relying on temporary congressional fixes year after year,” he said. “When reimbursement steadily declines while the cost and complexity of care continue to rise, the greatest risk is not to physicians. It is to patients who depend on access to highly specialized treatment that cannot be easily replaced.”
David Bailie, MD, president of the Arizona Institute for Sports Knees and Shoulders in Scottsdale, took a more structural position that led him to exit insurance entirely nearly a decade ago.
“My take is having others decide how much to pay a physician leads to many issues, including surgeons doing procedures by volume to make up for the low reimbursement,” Dr. Bailie said. “The market should decide. I charge a fair fee and have remained very busy under this method without gouging patients.”
Dr. Bailie argued the problem extends beyond CMS.
“I believe private insurance needs to be mandated by Congress to not be for-profit or publicly traded. They should be mutual companies with excess year-end savings given back to policyholders as a dividend,” he said. “Too many people are taking the money out of the system — funds that should be used for medical care.”
The tension is compounded by the companion CY 2027 OPPS/ASC proposed rule, which moves in the opposite direction: a 2.4% increase to facility payment rates, a new ASC conversion factor of $57.766 for quality-compliant facilities, and approximately 618 procedures proposed for addition to the ASC-covered procedures list.
For orthopedic and spine surgeons operating in ASCs, that split creates a specific problem. Facilities are being given more room to bring in higher-acuity cases, including total joint replacements and spine procedures, just as the physicians performing those cases face their steepest proposed cuts in years. The facility fee gain does not automatically offset the professional fee reduction. The two revenue streams flow to different entities under different formulas.
“Reimbursement compression has become a structural reality in healthcare, not an isolated event,” Ed Tolentino, administrator of Wildwood-based Outpatient Surgery Center of Central Florida, told Becker’s. “While we anticipated continued pressure on physician payments and have planned accordingly, further reductions increase the importance of operational efficiency, physician alignment and disciplined growth. The organizations that will succeed are those that consistently deliver high-quality care at a lower cost while maintaining strong clinical outcomes.”
HR 8622, the Medicare Physician Data-Driven Performance Payment System Act, represents one proposed structural fix. Whether that bill or similar legislation advances before the November final rule is published depends on congressional action that has historically been last-minute and uncertain.
The public comment period is open. Final rules are historically issued around November 1.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.