On November 4, CMS did something it rarely does. It backed down.
In July, the agency proposed slashing the physician work value for total hip replacement to 15.37 and total knee replacement to 15.94. In the final rule, it settled on 16.70 for both.¹
The rule itself admits commenters convinced CMS the deeper cuts *”could significantly affect providers and create barriers to accessing care.”*¹
That’s a win for every surgeon who wrote in. It’s also exactly how a bad policy survives: by being slightly less bad than the version before it.
I have watched this cycle for years
I have performed more than 10,000 hip and knee replacements. I trained at Mayo Clinic. I have served in leadership at the American Association of Hip and Knee Surgeons, and I’ve sat inside this fight long enough to recognize the pattern.
Surgeons make the operation better. CMS measures the improvement. Then CMS cuts the surgeon for it.
This year was no different. The only thing that changed was the size of the incision.
16.70 is still a cut
Let’s be precise.
The work value for these two codes was 19.11. It is now 16.70. That is a 12.6% cut to the surgeon’s work value, on top of the 7.5% cut finalized for 2026.²
Then the conversion factor drops from $33.40 to $32.63, about 2.31% less for every unit of work in 2027.³
And that lands on a payment that had already fallen more than 55% between 2005 and 2025.⁴
Orthopedic and spine surgeons filed more than 1,000 comments opposing this rule.⁵ We moved CMS from a deep cut to a slightly shallower one. In the OR, a smaller wound is still a wound.
The 4% problem
Here is the number nobody in Washington wants to sit with.
AAHKS estimates that in 2027, the surgeon will account for roughly 4% of the total cost of a joint replacement.⁶
That 4% covers the diagnosis, getting the patient medically ready for surgery, the operation itself, and every follow-up across a 90-day global period.
The other 96% is the facility, the implant, anesthesia, and post-acute care. Meanwhile, facility rates went up in 2026, roughly 10% for hospital outpatient departments and 5% for surgery centers.⁷
I studied engineering before I studied medicine. In engineering, when you need to take weight out of a system, you don’t start with the lightest component. You start with the biggest mass.
A 12.6% cut to 4% of the bill is about half a percent of the episode. CMS didn’t find meaningful savings. It found the person with the least leverage.
The efficiency penalty
CMS’s logic goes like this: joint replacement moved to the outpatient setting, the inpatient visits built into the global period went away, so the surgeon’s work value should drop.⁸
Who moved it outpatient?
Surgeons did. We built the protocols, the blood management, the rapid recovery pathways that made same-day joint replacement safe. CMS followed, removing knee replacement from the inpatient-only list in 2018 and hip replacement in 2020.⁹ Hip and knee surgeons have been the number one participating specialty in Medicare’s alternative payment models.⁶
Here’s the part I have to own.
My profession, me included, spent two decades making this operation faster, safer, and cheaper. We published the outcomes. We moved the cases. And we never insisted that the value of that progress show up in how surgeons get paid.
We handed CMS the data. CMS used it against us.
That’s on us to fix.
The Episode Principle
CMS Administrator Mehmet Oz said this week that fee-for-service has *”rewarded volume over value.”*³ I agree. So pay for value.
What that requires is simple. I call it The Episode Principle: never price the surgeon without pricing the whole episode.
Hold 16.70 as the floor. No further revaluation of these codes until it rests on objective, procedure-specific data, not crosswalks to corneal transplants and gastric band procedures.¹⁰
Measure the work surgeons actually do. A JAMA study CMS itself cited found hip replacement takes 5% longer than its valued time, and knee replacement takes exactly as long.¹¹ Add the pre-op optimization, the phone calls, the portal messages. That work is real and it is unpaid.
Pay the person who lowers the episode cost. CJR-X becomes mandatory nationwide in 2028.¹² If CMS wants it to succeed, it has to reward the surgeon who drives the savings, not just the facility that books them.
Tie updates to inflation. MedPAC has already recommended linking physician updates to the Medicare Economic Index.⁹ A fee schedule that shrinks every year in real dollars isn’t a payment policy. It’s a slow exit plan for independent surgeons.
What surgeons need to do now
The letters worked. Don’t mistake that for victory.
Know your number. If you’re employed, find out how your contract defines the RVU schedule and your dollar-per-RVU rate. Your pay changes on January 1 whether anyone tells you or not.
Call your representative. AAHKS is asking Congress to support a freeze until real data validates surgeon work.
Build the alternative. At Indiana Orthopedic Institute, we stopped waiting for a payer to value our work. We built a physician-led model where surgeons own both the outcomes and the economics. It works.
CMS proved this week that it listens. It hasn’t proved it can do the math.
Until it does, the job is ours.
Footnotes
Medical Economics, “Medicare’s final 2027 fee schedule cuts physician pay more than proposed but softens the same-day visit penalty,” Nov. 2026.
Epstein Becker & Green memo to AAHKS, “Summary of the Proposed 2027 Medicare Physician Fee Schedule, Phase I,” July 22, 2026.
Chief Healthcare Executive, “CMS’ final 2027 physician fee schedule cuts pay and reworks ACO incentives,” Nov. 2026.
AAHKS, CMS Payment Resource Center, 2026.
Becker’s Spine Review, “Spine, orthopedic physicians flood CMS with comments on 2027 pay rule,” 2026.
AAHKS, “Surgeons Are the Value-Center, Not the Cost Center, of Joint Replacement,” Congressional brief, Aug. 19, 2026.
Becker’s Spine Review, “Joint surgeons on 20% Medicare cut: ‘We are at a breaking point,’” Oct. 2026.
Healthcare Inspired, “How the CY 2027 Physician Fee Schedule Proposed Rule Affects Orthopedic Practices,” 2026.
Healio / Orthopedics Today, “Medicare Physician Fee Schedule 2027: Surgeons who move cases are penalized for progress,” Oct. 2026.
Federal Register, CY 2027 Physician Fee Schedule Proposed Rule, July 16, 2026.
AAHKS, Phase 1 Comment Letter on the 2027 PFS Proposed Rule, Aug. 2026.
CMS Innovation Center, CJR-X Model page, 2026.
"Slightly less bad than the version before it" is exactly how this kind of thing survives. A 12.6% cut to the work value, on top of the 7.5% already finalized for 2026, still gets reported as CMS backing down.