CMS has framed its proposed 2027 Medicare physician payment rule as a pivot from “sick care to healthcare.” For orthopedic and spine practices, the proposal carries a more immediate message: The widely reported 1.68% reduction to Medicare’s physician conversion factor may represent only a fraction of the financial impact.
CMS’ specialty-level analysis estimates that orthopedic surgery payments would decline an additional 7% under proposed changes to work, practice expense and malpractice relative value units. Facility-based orthopedic services would face an estimated 8% reduction, while nonfacility services would fall 5%.
The estimates are national averages and will not affect every group equally. Actual changes would depend on a practice’s procedure mix, site of service and billing patterns. The specialty impact figures also exclude the proposed conversion-factor cuts: 1.68% for clinicians outside qualifying alternative payment models and 1.19% for qualifying participants.
The distinction is critical. The headline conversion factor does not capture the full redistribution of Medicare physician payments in the proposal. CMS is not merely updating rates. It is reconsidering how much procedural work is worth, what it should cost to operate a specialty practice and which physicians should gain access to more favorable payment pathways.
For orthopedic and spine groups, the emerging bargain is clear: lower reimbursement for traditional fee-for-service care could be paired with stronger incentives for physicians willing to assume responsibility for utilization, functional outcomes and total patient spending.
The same-day orthopedic visit becomes a target
One of the most consequential provisions for orthopedic and spine practices involves visits and procedures delivered during the same encounter.
Under the proposed multiple-service payment policy, Medicare would pay the highest-valued service at 100% while reducing payment for all other surgical or evaluation and management services performed that day by 50%. The policy would apply when an E/M visit is billed with a procedure carrying a zero-, 10- or 90-day global period.
For musculoskeletal practices, that could affect a familiar clinical sequence: a patient arrives for an evaluation, undergoes an examination and receives an injection, reduction or other procedure during the same appointment.
CMS said in the full proposed rule that multiple services delivered during one encounter share clinical labor, supplies and other resources, and that paying each as though it were performed independently can overstate the cost of care. The policy could nevertheless make comprehensive same-day treatment financially less attractive.
CMS confronted that possibility when it considered a similar reduction in 2019. The agency declined to finalize the policy after commenters warned it could push physicians to schedule the visit and procedure on separate days, adding travel, time away from work and potential medical risk for patients. Seven years later, CMS is reviving the concept as part of an initiative it promotes as reducing burden and improving the patient experience.
Orthopedic groups will have to determine whether the proposal simply lowers reimbursement for work they already perform, or begins to change the design of the patient visit itself.
CMS is rewriting what an orthopedic practice costs
The agency is also proposing a major recalibration of how Medicare determines practice expenses. CMS said in its physician fee schedule fact sheet that parts of the current methodology rely on outdated specialty survey data and do not consistently reflect how contemporary practices operate.
Among the changes, CMS would phase out the Indirect Practice Cost Index over two years. The index helps account for differences in indirect costs, including administrative staff, office space and other overhead, among medical specialties.
CMS identified orthopedic and hand surgery among the specialties facing significant decreases from the practice-expense revisions and related coding changes. Its specialty impact table projects a 5% overall decline for hand surgery, including a 7% reduction for nonfacility services. Neurosurgery and interventional pain management would each face estimated 2% declines.
The proposal therefore reaches beyond what Medicare pays for an individual operation. It challenges the assumptions Medicare uses to calculate the infrastructure required to provide specialty care.
That could be particularly consequential for groups carrying the costs of clinical staff, imaging equipment, procedure rooms, information technology and other musculoskeletal infrastructure. Their actual operating expenses may keep rising even as Medicare recognizes less of those costs in its payment formula.
Remote monitoring faces new limits
Orthopedic and spine practices that have invested in postoperative or chronic-care monitoring could encounter another set of restrictions.
CMS is proposing to allow remote therapeutic monitoring only for established patients and to require a separately reportable initiating visit before monitoring begins. Clinical staff performing billable monitoring services would also have to be employed by the billing practice rather than supplied by an outside contractor.
CMS is also reassessing the prices assigned to monitoring devices and seeking feedback on replacing the existing remote physiologic and therapeutic monitoring code families with four bundled HCPCS G-codes.
The changes could force practices to reconsider programs built around outside technology companies that supply devices, monitoring personnel or both. A service designed to extend a surgeon’s reach beyond the clinic may become harder to operate unless the practice brings more of the infrastructure in house.
The better payment lane runs through accountable care
While traditional orthopedic fee-for-service payments face cuts, CMS is building more favorable pathways for physicians in accountable care. It is proposing to convert the G2211 office-visit complexity add-on into a modifier that would raise the associated E/M payment by 16%. It is also proposing a separate modifier, worth 32%, available only to clinicians in a Shared Savings Program or LEAD Model accountable care organization. That higher payment could apply to every Medicare beneficiary the participating clinician treats, not only patients formally attributed to the ACO.
CMS is also proposing to raise the maximum shared-savings rate for certain Shared Savings Program participants from 50% to 60%, create new incentives for organizations joining the program and revise benchmarks to make future spending targets more predictable. Beginning April 1, approved ACOs could reduce or eliminate beneficiary cost sharing for certain services, though prescription drugs and durable medical equipment, prosthetics, orthotics and supplies would be excluded.
CMS pointed to results to support the expansion. In 2024, 75% of the program’s 476 participating ACOs earned a combined $4.1 billion in shared-savings payments, and after those payments the program generated about $2.5 billion in net savings for the Medicare trust funds.
For orthopedic and spine leaders, the strategic implication is hard to ignore. Remaining outside value-based care could increasingly mean absorbing fee-for-service cuts without the incentives CMS is building elsewhere. Joining an ACO, however, does not guarantee that orthopedic specialists will control referrals, musculoskeletal care pathways or the distribution of shared savings. Practices would need to negotiate how procedural care, conservative treatment and functional improvement are valued inside organizations historically built around primary care and total-cost management.
Spine is moving onto a mandatory scorecard
The proposal also advances Medicare’s effort to make specialists financially accountable for how an entire episode of care unfolds. CMS’ Ambulatory Specialty Model is scheduled to begin Jan. 1. In selected geographic areas, orthopedic surgeons, neurosurgeons, pain physicians, anesthesiologists and physical medicine and rehabilitation specialists who treat enough Medicare patients with low back pain could be required to participate.
Future Medicare Part B payment adjustments could range from a 9% penalty to a 9% bonus in the model’s initial payment years and eventually reach 12% in either direction. CMS is proposing to assess clinicians partly on potentially unnecessary lumbar MRI use among patients with uncomplicated low back pain. Because the measure would be drawn from claims, physicians would not have to submit additional data, but their imaging patterns would shape future payment.
A separate functional outcome measure could incorporate tools familiar to spine practices, including the Modified Oswestry Disability Index and Patient-Reported Outcomes Measurement Information System assessments. The shift is notable. Spine physicians would no longer be judged only on what happened during an operation or office visit. Medicare would increasingly weigh whether imaging was ordered, how patients moved through the care pathway and whether their physical function improved.
That could reward groups with integrated physical therapy, pain management, navigation and outcomes-tracking capabilities. It could raise the exposure of independent surgeons whose performance depends on data and services controlled by hospitals, imaging providers or outside rehabilitation groups.
Orthopedics’ quality-reporting system is also changing
CMS is proposing to end traditional Merit-based Incentive Payment System reporting after the 2028 performance year. Beginning in 2029, most eligible clinicians would report through a specialty-focused MIPS Value Pathway unless they participate in a MIPS alternative payment model and use the Alternative Payment Model Performance Pathway.
The agency is proposing three additional pathways focused on diabetes, hypertension and hospital-based care, bringing the total to 30 in 2027. CMS estimates the pathways would offer a relevant reporting option for roughly 98% of specialties. For musculoskeletal clinicians, the 2027 Quality Payment Program proposal would also add five functional outcome measures for orthopedic patients and remove seven existing functional-improvement measures.
CMS is presenting the transition as a way to replace fragmented reporting with measures more relevant to a clinician’s specialty and patient population. But the change could also make functional outcomes increasingly central to reimbursement, requiring orthopedic practices to collect more consistent patient-reported data and connect those results to clinical workflows.
A broader regulatory squeeze
The payment proposal arrives as orthopedic and spine practices already face more aggressive Medicare oversight. A separate CMS proposal could increase scrutiny of ownership disclosures, enrollment information and billing relationships, including arrangements involving durable medical equipment. Errors could expose groups to payment suspensions, enrollment revocation or retroactive recoupment.
Taken together, the policies point toward a Medicare program that is becoming less tolerant of both procedural volume and administrative imprecision. Orthopedic and spine groups would be asked to operate with lower average payments, more restrictive billing rules and greater accountability for utilization and outcomes, while continuing to absorb rising labor, implant, technology and facility costs.
CMS called the package one of the most significant Medicare modernization efforts in recent years. For specialty practices, modernization will require more than updating billing systems. Groups will need to model the proposal code by code, quantify their exposure to same-day E/M reductions, review remote-monitoring arrangements, assess ACO participation and determine whether their physicians could be pulled into the mandatory low back pain model.
The public comment period closes Sept. 14. By then, orthopedic leaders will have to decide whether CMS’ proposed future creates a sustainable path for specialty care, or simply asks them to deliver more coordination, more measurement and more accountability for less.
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