"Do we downsize? Do we stop seeing Medicare patients?" Terry Rosenthal, CEO of The Orthopaedic Clinic in Opelika, Ala., put those questions on the record in a September 25 interview with Becker's Spine Review. He was not being dramatic. He was describing the conversation independent orthopedic groups are having right now about the 2027 Medicare Physician Fee Schedule, and one proposal in it hits harder than most.
CMS wants to cut the physician work value of total hip, total knee and total shoulder replacement. The numbers are in the proposed rule published in the Federal Register on July 16, 2026. Total hip arthroplasty, CPT 27130, would fall from 19.11 work RVUs to 15.37. That is a 19.6 percent cut. Total knee, CPT 27447, would drop 16.6 percent. Total shoulder and shoulder hemiarthroplasty would lose 19.0 and 20.8 percent. In all four cases the AMA's valuation committee had already recommended reductions of 10 to 13 percent, and CMS decided those did not go far enough.
None of this is final. Comments closed September 14, and CMS typically publishes the final fee schedule in early November for a January 1 start. But the agency built its case on Medicare's own site-of-service data, which makes it hard to wave away. Orthopedic practices and the ASCs they own should model the proposed values now, while there is still time to adjust contracts, staffing and 2027 budgets.
Key Takeaways
The CY 2027 Medicare Physician Fee Schedule proposed rule (CMS-1848-P) would cut work RVUs for four arthroplasty codes: 27130 total hip (down 19.6%), 27447 total knee (down 16.6%), 23472 total shoulder (down 19.0%) and 23470 shoulder hemiarthroplasty (down 20.8%).
In every case CMS proposed a value below the RUC recommendation, which had already cut each code by 10 to 13 percent.
CMS says Medicare data from 2021 to 2023 show each procedure performed less than 50 percent of the time in the inpatient setting, while its 90-day global period still included inpatient hospital visits.
The headline cuts apply to work RVUs. The proposed conversion factor would also fall 1.19 percent for qualifying APM participants and 1.68 percent for everyone else.
Comments closed September 14, 2026. If finalized, the new values take effect January 1, 2027. The AAOS has asked CMS to keep the 2026 work values for all four codes.
What exactly did CMS propose?
Four codes. All of them came up for review after the RUC's Relativity Assessment Workgroup flagged them in April 2025 as a site-of-service anomaly. The RUC surveyed surgeons, sent recommendations to CMS, and CMS went lower on every one.
| CPT | Procedure | CY 2026 wRVU | RUC rec. | CMS proposed | Change |
|---|---|---|---|---|---|
| 27130 | Total hip arthroplasty | 19.11 | 16.70 | 15.37 | -19.6% |
| 27447 | Total knee arthroplasty | 19.11 | 16.70 | 15.94 | -16.6% |
| 23472 | Total shoulder arthroplasty | 21.58 | 19.35 | 17.49 | -19.0% |
| 23470 | Shoulder hemiarthroplasty | 17.44 | 15.60 | 13.81 | -20.8% |
Source: CY 2027 PFS Proposed Rule, CMS-1848-P, 91 Fed. Reg. 43873 to 43875 (July 16, 2026). Change is CMS proposed value versus the current CY 2026 work RVU.
The work RVU is the piece of the fee that pays for the surgeon's time, skill and effort. It is not the whole payment. Practice expense and malpractice RVUs make up the rest, and CMS is also proposing to adopt the RUC's updated practice expense inputs for these codes. So the final dollar change per case will depend on more than the work value. The work value is where the big cut sits.
Why is CMS cutting deeper than the RUC recommended?
Time. The RUC's own survey showed total time for total hip arthroplasty falling from 377 minutes to 305, a 19 percent drop. Total knee went from 374 minutes to 305. Yet the RUC recommended cutting the work value by only 13 percent for each. CMS read that gap as a hidden increase in intensity and rejected it.
The agency was blunt about the logic. Time and intensity are the two components of physician work, and "significant decreases in time should be reflected in decreases to work RVUs although not necessarily in a linear manner," the proposed rule states. CMS also noted that the code descriptors had not changed and that the RUC's values sat near the top of the scale for 90-day global procedures with similar time. It described these as procedures "typically done on a routine and elective basis."
The site-of-service argument is the part practices should take seriously. The 90-day global package for these codes was built on an inpatient stay, with inpatient hospital visits folded into the price. Most of these cases no longer happen that way. The RUC itself recommended removing two inpatient visits from the hip and knee packages and three from total shoulder. CMS is pricing the outpatient reality.
How much money is at stake per case?
Here is simple arithmetic on the work component alone, using the proposed non-APM conversion factor of $32.84 and before geographic adjustment. Total hip loses 3.74 work RVUs, about $123 per case. Total knee loses 3.17, about $104. Total shoulder loses 4.09, about $134. Hemiarthroplasty loses 3.63, about $119.
Those figures look manageable one case at a time. They are not the whole picture. The conversion factor itself would also drop 1.68 percent for most physicians, which touches every service on the fee schedule, not only joints. And the same proposed rule would cut payment by 50 percent for separately identifiable same-day E/M visits billed with modifier 25 alongside a procedure with a 0, 10 or 90-day global period. For an orthopedic clinic that bills injections and office visits together every day, the two proposals stack.
Multiply by volume and payer mix. A group that performs several hundred Medicare primary joint replacements a year is looking at a real number. A group whose commercial contracts are written as a percentage of the current Medicare fee schedule is looking at a bigger one.
Is this cut final?
No. This is a proposed rule. CMS can finalize it as written, soften it, or change the approach entirely after reviewing comments. The comment period closed September 14, 2026.
Orthopedic organizations pushed back hard. The American Academy of Orthopaedic Surgeons filed comments on September 14 asking CMS to maintain the CY 2026 work RVUs for total shoulder, total hip and total knee arthroplasty, along with shoulder hemiarthroplasty. The American Alliance of Orthopaedic Executives has also asked CMS to reconsider the cuts.
The final rule usually arrives in early November. If CMS finalizes these values, they take effect January 1, 2027. That leaves roughly eight weeks between the final rule and the first claims paid at the new rates.
Where does this hit the revenue cycle first?
Not at the surgery. At the payment posting. On January 1, Medicare claims will start paying at whatever values CMS finalizes. If your expected reimbursement tables still carry 2026 rates, variance reports will flag correct payments as underpayments and your team will chase them. Worse, a real underpayment can hide inside the noise.
Commercial contracts come next. Some agreements pay a percentage of the current year's Medicare fee schedule. Others lock to a specific year. The language decides whether a Medicare work RVU cut flows straight into your commercial revenue on January 1 or waits for the next negotiation. Most practices do not know which of their contracts float until they look.
Then the global period. Post-operative care inside the 90 days is still bundled. The valuation now assumes less of it. When the bundle pays less, every unrelated service that is correctly documented and billed with modifier 24 or 79 matters more, and every one written off by habit costs more.
What This Means for Your Practice
Treat the proposed values as your 2027 planning case until CMS says otherwise. Do not wait for November to start the model.
Model the hit by code and payer. Pull your 2025 and year-to-date 2026 volume for 27130, 27447, 23472 and 23470. Apply the proposed work RVUs and the lower conversion factor. Then layer in modifier 25 exposure for your clinic visits.
Read the rate language in every major commercial contract. Flag any agreement that pays a percentage of the current Medicare fee schedule. Those rates move on January 1 if the rule is finalized.
Update expected reimbursement tables the week the final rule drops. Your payment variance reporting is only as good as the fee schedule it compares against.
Audit global period billing. Confirm unrelated post-operative services are documented and billed with the right modifier instead of disappearing into the bundle.
Revisit the 2027 budget. Staffing, equipment replacement and site-of-service decisions all look different if joint replacement professional fees drop by close to a fifth.
Frequently Asked Questions
Get Ahead of the 2027 Fee Schedule
A proposed cut becomes a real one on a specific day. Cosentus works with orthopedic practices and ASCs to model fee schedule changes by code and payer, find the contracts that move with Medicare, and keep payment variance reporting accurate when the rates change.
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