American Academy of Orthopaedic Surgeons President Wilford Gibson, MD, said CMS’ 2027 physician fee schedule final rule shows physician advocacy made a difference. But for hip and knee surgeons, he said, it still hurts.
“We did have evidence that they listened to us, and we appreciate that,” Dr. Gibson told Becker’s. “The thing is, when people are hurting, they don’t like hearing that.”
Dr. Gibson, a hip and knee surgeon himself, said joint replacement surgeons are still looking at significant overall cuts on total hip and total knee replacement. The reduction builds on years of cumulative cuts.
“We were clearly singled out as hip and knee surgeons,” he said.
What the final rule does
CMS released the final 2027 physician fee schedule and the final outpatient and ASC payment rule Nov. 4. Both take effect Jan. 1.
The final physician rule cuts the conversion factor 2.31%, to $32.63, for physicians who are not qualifying participants in an advanced alternative payment model. CMS had proposed a 1.68% cut in July. Much of the drop comes from the expiration of a temporary 2.5% payment increase for 2026.
The agency reduced its proposed cuts to total knee, total hip, total shoulder and shoulder hemiarthroplasty by nearly 50%. CMS set the work relative value unit for total hip and total knee replacement at 16.70, down from 19.11, a 12.6% cut. It had proposed cuts closer to 20%.
The rule also finalizes a 20% payment reduction for certain evaluation and management visits billed with modifier 25 on the same day as a procedure with a zero-day global period. Joint replacements, which carry 90-day globals, are exempt. Orthopedic surgery and hand surgery are among the specialties hit hardest by the change.
On the facility side, 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 ASC update.
‘They’re angry’
Dr. Gibson said the AAOS chose to call the final rule measurable and meaningful progress, and he stands by that. But he said many hip and knee surgeons he heard from at the American Association of Hip and Knee Surgeons annual meeting do not see it that way.
“That doesn’t leave people satisfied when you’re getting crushed by a 500-pound boulder instead of a 1,000-pound boulder,” he said.
He said the frustration runs deeper because orthopedic surgeons helped Medicare save money. His own practice ran Medicare bundled payment programs for about a decade and shared in the savings. Surgeons also added evening office hours so joint replacement patients would come back to the clinic instead of going to the emergency department.
“Doctors are saying, ‘Look, we did this. We worked with Medicare. We saved the money, and this is how they repay us,'” Dr. Gibson said. “And they’re angry.”
He also questioned the logic behind the cut. CMS revisited joint replacement values after more than half of the procedures were designated outpatient, he said, but that label does not mean the cases moved to ASCs. Many were still done in hospitals, with patients staying overnight.
The access question
Dr. Gibson said the cumulative cuts will push some surgeons to retire early or quit, and others to sell to hospitals or private equity. He said the hospital-employment route can raise costs because hospital-based care is paid at higher rates than independent offices.
He pointed to patients on Virginia’s Eastern Shore, who can travel nearly 100 miles and pay a $20 bridge toll to reach his practice. Under the modifier 25 change, those patients may be asked to return on a separate day for an injection.
“They don’t want to hear about having to come back,” he said.
He also warned that surgeons trying to make up lost revenue with more volume may push more cases into ASCs. “Some of these patients likely don’t belong in an ASC,” he said, which could lead to more emergency department visits and readmissions.
What other surgeons say the cuts will do
Other orthopedic leaders have told Becker’s the cuts will strain independent practices and speed consolidation.
Charles Taunt, DO, a hip and knee replacement surgeon at Michigan Orthopedic Center in Lansing, said the final rule combines with last year’s cut for a total reduction of more than 20%. He said that has compromised his practice’s ability to see patients quickly and staff its clinics.
“We simply can’t afford to provide all the resources to patients that we have in the past,” Dr. Taunt said. He added that rising ASC rates paired with falling physician pay leave moving cases into his ASC as “the only financially feasible option,” which pulls volume from the area’s local hospital.
Alexander Vaccaro, MD, PhD, president of Philadelphia-based Rothman Orthopaedics, said the most troubling part of the final rule is that the cut is deeper than proposed. He said smaller independent practices have fewer resources to absorb sustained payment pressure, which may accelerate hospital and corporate employment of physicians.
“A total hip replacement that restores mobility and independence … is some of the highest-value care in modern medicine,” Dr. Vaccaro said.
Michael Gallizzi, MD, a partner at The Steadman Clinic in Vail, Colo., said the same-day visit cut and the phase-out of the indirect practice cost index are projected to drive some of the largest specialty-level decreases for orthopedics. He said the changes raise the cost of treating Medicare patients compared with commercial patients and are likely to accelerate consolidation.
Before the rule was finalized, surgeons had warned of steep revenue losses. Twenty-eight surgeons at Knoxville-based Tennessee Orthopaedic Alliance cited an analysis projecting a $1.42 million, or 4.9%, annual drop in the group’s Medicare fee schedule revenue. The Delaware Society of Orthopaedic Surgeons estimated about $5 million a year in statewide cuts over 2026 and 2027.
What comes next
Dr. Gibson said the AAOS is pursuing relief from the lame-duck Congress and will work with the new Congress early next year. He said the academy will keep working with the American Medical Association, the RUC and CMS, even as some surgeons push for a more direct route.
“We recognize this process is progress, but we’re not declaring the problem solved,” he said. “We haven’t surrendered.”
He said orthopedic surgeons support value-based care but want a fair, transparent and data-driven process. He noted that hospitals are still working out how the Transforming Episode Accountability Model is performing, even as CJR-X, CMS’ mandatory nationwide joint replacement bundle, begins in 2028.
Asked to sum up how the rules will affect orthopedics in one word, Dr. Gibson chose access.
“It’s going to decrease access for patients,” he said. “First and foremost, we’re about protecting patient access. We want to be there when they need us.”
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