AAOS President: CMS’s 2027 Payment Cuts Could Reshape Orthopedic Care

The Centers for Medicare & Medicaid Services’ (CMS) proposed 2027 Medicare Physician Fee Schedule contains enough formulas, relative value units, practice-expense calculations and payment modifiers to make even a seasoned reimbursement expert reach for a calculator.

Wilford K. Gibson, M.D., FAAOS, president of the American Academy of Orthopaedic Surgeons (AAOS), sees something considerably simpler buried beneath all that arithmetic.

If CMS gets this wrong, he says, some orthopedic practices may no longer be economically viable — and Medicare patients may discover that the orthopedic surgeon who used to be 20 minutes away is suddenly an hour or more down the road.

“This is the largest proposed cut that I’ve seen in 30 years,” Gibson told Orthopedics This Week.

And that is why AAOS is asking CMS to do something decidedly unbureaucratic: stop.

Or, as Gibson puts it, “press pause.”

A Conversion-Factor Cut Is Only the Beginning

At first glance, the headline numbers in the proposed 2027 Physician Fee Schedule do not look catastrophic. CMS proposes a conversion factor of approximately $33.17 for qualifying alternative payment model participants, down about 1.19% from 2026, and approximately $32.84 for other clinicians, a decline of about 1.68%.

But those averages obscure what is happening underneath.

The proposal includes changes involving same-day evaluation and management services, practice-expense calculations, facility-based physicians, remote monitoring and the global surgical package. Spine physicians in selected geographic areas will simultaneously enter CMS’s mandatory Ambulatory Specialty Model for low back pain.

For orthopedics, however, one proposal has commanded particular attention: reductions approaching 20% in the relative values associated with total hip, total knee, total shoulder and shoulder hemiarthroplasty.

Gibson emphasized that surgeons aren't starting from a pristine reimbursement baseline.

“These are things that have been cut, cut, and cut for multiple years now,” he said. “It is going to affect how we practice, and if it goes in as a final rule, it will affect how we deliver care, and it will affect access.”

AAOS also objects to the methodology. Gibson said CMS appears to be placing too much emphasis on time and presumed efficiencies while inadequately recognizing the intensity, complexity and risk of surgical care.

Efficiency, in other words, is not the same thing as absence of work.

The Strange Economics of Getting Better at Your Job

That distinction may be particularly important because orthopedic surgeons have spent years doing precisely what Medicare has encouraged them to do: moving appropriate patients out of expensive inpatient environments and into lower-cost outpatient settings.

Total hip and knee replacement provide obvious examples.

Properly selected patients can now undergo procedures in ambulatory surgery centers and return home the same day. That eliminates a substantial hospital expense.

But the patient has not magically ceased requiring care.

“When I see those patients and I operate on those patients and I send them home the same day, my staff and I get the phone calls,” Gibson said.

Outpatient joint replacement requires patient selection, preoperative optimization, education, nurse navigators, postoperative communication and systems capable of catching problems before the patient heads for the emergency department.

Orthopedic practices have become better at that.

The reward, Gibson argues, should not be to assume that because surgeons have made care more efficient, their work has become 20% less valuable.

“We’ve worked with Medicare to identify cost efficiencies that deliver greater value for patients and the Medicare program,” Gibson said. “Our efforts have advanced value-based care in orthopaedics, and then we get penalized for doing that.”

What Does a 20% Cut Actually Look Like?

Percentage reductions can become strangely bloodless in Washington. Twenty percent is just another number in a spreadsheet.

Gibson translated it into private-practice economics.

He is a total joint surgeon in independent practice. A 20% reduction in collections, he said, isn't necessarily absorbed by some comfortable profit margin.

“My margin doesn’t allow for that,” he said. “Some months I don’t even have a margin.”

Independent practices still have malpractice premiums, rent, clinical employees, billing personnel, information technology and payroll. Gibson noted that overhead can run into six figures per month and exceed $1 million annually for many practices.

About half of orthopedic surgeons still practice independently, making orthopedics one of the remaining strongholds of independent medical practice

A group with several surgeons has to spread those expenses across the physicians producing the revenue.

If a joint replacement surgeon suddenly cannot cover his or her allocated overhead, Gibson believes the consequences become predictable: reduced physician compensation, staff reductions, consolidation, hospital employment, retirement or departure from the practice.

The greatest vulnerability may be outside major metropolitan areas.

In a large orthopedic group, a struggling service line may have options. In a smaller community, the surgeon affected by the economics may be the only total joint surgeon in town — or the only general orthopedist performing a broad range of procedures.

“They’re not going to be able to survive this,” Gibson said of some practices.

And when that surgeon leaves, Medicare hasn't eliminated the patient's arthritis.

It has merely changed the ZIP code where the patient can get it treated.

Follow the 72-Year-Old With the Bad Hip

Gibson asks policymakers to follow the patient through the consequences.

Imagine a 72-year-old Medicare beneficiary with disabling hip arthritis.

Today, that patient may drive 15 or 20 minutes to a community orthopedic practice, receive an evaluation, undergo surgery locally and return to the same surgeon for follow-up.

If local practices consolidate or disappear, Gibson predicts that same patient may travel an hour or more just to obtain an appointment. Then comes another wait for surgery, another long trip for the procedure and repeated travel for postoperative care.

“If you’re in a rural area, you may not even have your doctor there in that same county anymore,” he said.

There is another irony.

CMS is trying to control healthcare spending. Yet if independent practices and ASCs become less viable, more care could migrate toward hospital outpatient departments and hospital systems — settings that can cost Medicare more.

Gibson worries that five years from now policymakers could look back and conclude, “Wow, this didn’t work out so well.”

He expects consolidation into large regional groups and health systems if the proposal proceeds substantially unchanged. He also fears older surgeons may simply decide that the economics no longer justify continuing to practice.

For an aging Medicare population needing more musculoskeletal care, fewer surgeons is an awkward solution.

The Half-Price Office Visit

AAOS is also fighting CMS's proposed multiple-service payment policy.

When a physician performs a separately identifiable evaluation and management service on the same day as certain procedures, CMS proposes paying the highest-valued service at 100% and reducing additional qualifying services by 50%.

CMS sees efficiencies.

Gibson sees a patient with a bad hip and bad knee.

The surgeon examines both and determines that the knee may be responsible for most of the patient's pain. An injection during the same encounter can provide both treatment and useful diagnostic information.

If the pain disappears, physician and patient have learned something important.

That encounter also consumes real resources: medication, syringes, needles, inventory management, staff, documentation and physician decision-making.

“Yeah, that’s efficiency, but that’s my cost that they’re not seeing,” Gibson said.

The alternative is economically rational but clinically absurd: finish the evaluation, send the patient home and schedule another appointment for the injection.

The policy designed to eliminate duplication may create another visit.

“It was a bad decision five to ten years ago,” Gibson said of a similar previous approach. “It’s a bad decision now.”

AAOS: “Press Pause”

AAOS is now pursuing what Gibson describes as a multi-pronged campaign involving CMS and other parts of the federal government, while mobilizing orthopedic surgeons and coordinating with other medical organizations.

The Academy's priorities are straightforward.

First, don't implement the proposed reductions to total hip, knee, shoulder and shoulder hemiarthroplasty as proposed.

Second, abandon the 50% reduction affecting same-day separately identifiable services.

Third, reconsider the changes to practice-expense methodology until their consequences are better understood.

Most important, Gibson wants CMS to maintain the 2026 payment structure long enough for the agency and physician community to examine the evidence together.

“We really want CMS to just push pause,” he said.

That is not, he emphasizes, opposition to payment reform.

AAOS supports value-based care, registries, patient-reported outcomes and efforts to reduce unnecessary spending. Orthopedic surgeons participated in the Bundled Payments for Care Improvement initiative and Comprehensive Care for Joint Replacement and helped demonstrate that joint replacement could migrate safely toward lower-cost settings.

AAOS members have also invested heavily in clinical registries capable of demonstrating which treatments work — and identifying problems with implants and other products.

The dispute is therefore not over whether Medicare should pursue efficiency.

It is over how efficiency should be measured and who should receive credit for producing it.

“We’re not giving up. We’re going to keep fighting.”

The proposed rule remains just that — a proposal. Public comments are due September 14, 2026, and the Medicare Physician Fee Schedule provisions would generally take effect January 1, 2027.

That leaves CMS with a choice.

It can view orthopedic efficiency primarily as evidence that procedures require less physician time and therefore deserve lower reimbursement.

Or it can examine the larger system that made those efficiencies possible: patient optimization, staff infrastructure, outpatient surgery, postoperative communication, outcome measurement and decades of accumulated clinical expertise.

For Gibson, the stakes extend well beyond physician income.

“I do think it’s going to be an access problem,” he said. “I do think people are going to have wait times to get common things done, like total hips, total knees.”

And AAOS isn't conceding the point.

“We’re not giving up,” Gibson said. “We’re going to keep fighting.”

Between now and September 14, that fight moves to CMS.

After that, America's orthopedic surgeons — and their patients — will find out whether Washington was listening.