A proposed Medicare payment change could cost one of the nation’s largest independent orthopedic groups $9 million over the next year, raising concerns that a policy intended to eliminate duplicate payments could instead force physicians to split routine care across multiple appointments.
Nicholas Grosso, MD, president of Bethesda, Md.-based Centers for Advanced Orthopaedics, raised the estimate during an Oct. 14 Becker’s Spine and Orthopedic Advisory Board discussion. He warned that the proposed reduction involving Modifier 25 could force physicians to reconsider how they schedule office visits and procedures.
The provision is part of CMS’ proposed 2027 Medicare Physician Fee Schedule, which would reduce reimbursement when a separately identifiable office or outpatient evaluation and management service is provided on the same day as a procedure with a zero-, 10- or 90-day global period. Under the proposal, the highest-valued service would be paid in full, while other eligible services would be paid at 50%.
CMS argues that providing an office visit and procedure during the same encounter creates efficiencies that are not fully reflected in current reimbursement, resulting in potentially duplicative payments.
Orthopedic leaders see a different problem: The policy could make it financially disadvantageous to deliver multiple services during a single appointment.
A $9 million problem for one orthopedic group
Dr. Grosso said his roughly 180-physician organization has been examining how the proposed changes could affect its operations.
At a recent group meeting, some physicians discussed separating office visits and procedures that would otherwise take place during the same encounter. For example, a surgeon could evaluate a patient who needs a knee injection but schedule the injection for a separate visit with a physician assistant rather than performing it immediately.
“That’s kind of insane if you think about it,” Dr. Grosso said. “It’s just very inefficient and makes the patient come back twice.”
He estimated that the Modifier 25 proposal alone could cost his organization $9 million over the next year if finalized.
The concern is not limited to one practice. Jeffrey Racca, MD, an orthopedic surgeon and CEO of Albuquerque-based New Mexico Orthopaedic Associates, previously told Becker’s that the Modifier 25 change alone could reduce his practice’s overall revenue by approximately 3%.
“We do not have the facility fees to offset the losses that we’re getting on Medicare,” Dr. Racca said. “We’re the low-cost providers of healthcare in the country, and we can’t offset our losses with other things.”
The financial impact extends beyond orthopedics
An analysis from Jiro Health estimated that the proposed modifier 25 reduction could reduce annual Medicare fee-for-service payments by approximately $889 million.
Private practices and solo physicians would account for $724.4 million, or 81.5%, of the modeled reductions. Six specialties, including orthopedic surgery, would account for approximately $732 million, or 82.3%, of the total.
The analysis examined deidentified Medicare claims from October 2024 through September 2025 across more than 67,000 billing providers.
“This proposal is often discussed as a technical payment change. The data shows something much larger: a nearly $1 billion annual impact concentrated among private practices and a small number of specialties,” Jiro Health CEO Greg Field said.
The proposed reduction also comes alongside other Medicare payment changes that could compound the financial pressure on orthopedic groups.
The OrthoForum and American Alliance of Orthopaedic Executives urged CMS to reconsider several provisions in the 2027 fee schedule, including Modifier 25 and reductions affecting joint replacement procedures.
The OrthoForum modeled approximately 19.7 million services and projected that Medicare physician payments would decline $86.8 million, or 5%, under the broader proposal. Major arthroplasty services accounted for approximately $58.4 million of the modeled reduction.
Physician organizations challenge CMS’ reasoning
The American Academy of Orthopaedic Surgeons has called for CMS to withdraw the Modifier 25 reduction, arguing that it could penalize physicians for providing medically necessary care during a single encounter.
In its comments on the proposed rule, AAOS warned that the combined payment changes could threaten independent orthopedic practices and increase pressure for physicians to sell to hospitals and large health systems.
The opposition extends beyond orthopedics. The American Medical Association and more than 150 physician and healthcare organizations urged CMS to abandon the proposal, arguing that existing payment methodologies already account for overlapping work when physicians perform separately identifiable evaluations and procedures during the same visit.
The organizations also questioned whether CMS had provided sufficient evidence to justify a uniform reduction rather than addressing potentially duplicative payments through targeted changes to individual procedure codes.
CMS proposed a similar reduction in 2018 for the 2019 fee schedule but ultimately declined to finalize it after receiving objections from physicians and other stakeholders.
The renewed proposal has drawn substantial opposition. Jiro Health’s review of the public comment docket identified more than 10,000 comments referencing Modifier 25, approximately 85% of which explicitly opposed the change.
Another pressure point for independent practice
For orthopedic groups, the Modifier 25 proposal adds to a reimbursement environment that surgeons say is becoming increasingly difficult to navigate.
Dr. Grosso previously told Becker’s that the cost of operating an orthopedic practice has increased approximately 60% since 2001, while inflation-adjusted Medicare physician reimbursement has declined approximately 33%.
Independent practices have responded by expanding ancillary services, investing in ASCs, negotiating commercial contracts and improving operational efficiency. But those strategies have limits.
The consequences could extend to patient access. Wilford Gibson, MD, president of AAOS, previously warned that additional payment reductions could push some independent groups toward hospital employment, private equity partnerships, reduced Medicare participation or closure.
CMS’ public comment period closed Sept. 14, and the agency is expected to finalize its 2027 physician payment policies later this year. Any finalized modifier 25 reduction would take effect Jan. 1, 2027.
For independent orthopedic groups already confronting rising costs and declining reimbursement, the decision could determine whether providing an evaluation and procedure during the same appointment remains financially sustainable.
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.
