The 2027 Medicare Physician Fee Schedule and Orthopaedic Surgery: What Practice Leaders Need to Know Before September 14

The CY2027 Medicare Physician Fee Schedule proposed rule, published July 16, 2026, is the most consequential Medicare payment proposal orthopaedic surgery has faced in several years. The public comment window closes September 14, 2026.

Two provisions drive the impact.

1. First, the proposed conversion factor falls to $33.1693 for qualifying APM participants (−1.19%) and $32.8409 for everyone else (−1.68%).

2. Second, and far more significant, CMS proposes to pay only 50% for any service other than the highest-paid one when an office or outpatient E/M visit is furnished the same day as a procedure with a 0-, 10-, or 90-day global period.

A policy that reaches modifier 25 claims even when the modifier is correctly applied. Published analyses of the CMS impact tables project a combined −7% effect on orthopaedic surgery (−5% non-facility, −8% facility) on top of the conversion factor cut. If your group runs a high same-day-procedure clinic model, the exposure is concentrated exactly where your margin is.

The headline number is not the number that matters

Most coverage of a proposed rule leads with the conversion factor, and most practice leaders stop reading there. That instinct is wrong this year.

Per the CMS fact sheet, the proposed CY2027 conversion factors are:

• $33.1693 for qualifying APM participants — a decrease of $0.40, or −1.19%. This reflects a +0.75% statutory update offset by the expiration of the temporary CY2026 increase of 2.50%.
• $32.8409 for non-qualifying APM participants — a decrease of $0.56, or −1.68%, reflecting a +0.25% statutory update against the same 2.50% expiration.

A 1.68% cut is painful but survivable. The problem is that the conversion factor is a uniform multiplier applied to everyone, while the RVU redistribution underneath it is not uniform at all — and orthopaedic surgery lands on the wrong side of it.

Two things deserve emphasis. First, these are RVU redistribution effects that sit on top of the conversion factor cut, not instead of it. Second, CMS is publishing facility versus non-facility splits this year specifically because, in its own framing, some proposed policies are expected to have differential effects depending on site of service. For an orthopaedic group that has been shifting cases to an ASC or hospital outpatient department, the facility column is the one to model.

For context on where orthopaedics sits relative to peers in the same analyses: neurosurgery −2%, interventional pain management −2%, anesthesiology flat, cardiology +1%, physical medicine +1%, emergency medicine +1%. Dermatology and otolaryngology fare worse at −9%. Orthopaedic surgery is near the bottom of the distribution.

A note on sourcing. The −7%/−5%/−8% figures come from published analyses of the CMS impact tables rather than from the CMS fact sheet, which does not break out orthopaedic surgery. Before you build a budget on them, verify against the CMS impact table in the proposed rule itself or the specialty impact spreadsheet HFMA publishes each cycle.

The same-day E/M policy is the structural change

Buried in a section CMS titles "Accounting for E/M Resource Overlap Between Stand-Alone Visits and Global Periods" is the proposal that will reshape orthopaedic clinic economics if it is finalized.

The CMS fact sheet describes it plainly. CMS proposes to "reduce payment when a separately identifiable office/outpatient evaluation and management (E/M) visit is furnished by the same physician (or a physician in the same practice) on the same day as a 0-, 10-, or 90-day global procedure." The mechanism: "The most expensive service (either surgical or E/M visit) would be paid at 100% and all other surgical procedure(s) or E/M visit(s) furnished on the same day would be paid at 50%."

Read that carefully, because three details are easy to miss:

1. It applies to correctly-coded modifier 25 claims

The AMA's summary of the rule confirms the policy affects services using modifier 25. Significant, separately identifiable evaluation and management service. This is not an abuse-prevention measure aimed at improper modifier 25 use. The reduction applies even when the modifier is correctly appended and the visit is genuinely separately identifiable. CMS's stated rationale is that there is likely overlap and duplication between the E/M resources already reflected in the global surgical package.

The AMA has said it will vigorously oppose the policy, on the grounds that the affected procedure codes were already valued to include only the work and resource costs that exceed an E/M office visit, meaning the overlap CMS is correcting for was already accounted for in the valuation.

2. It is not always the E/M that gets cut

The rule reduces whatever is not the highest-paid service that day. For a knee arthroscopy with a same-day E/M, the E/M takes the 50% reduction. But for a low-RVU minor procedure, such as a joint injection, a trigger point injection, a small laceration repair. The procedure may be the service that gets cut, because the E/M is worth more. Modeling this correctly means running it at the code-pair level against your own claims history, not applying a blanket haircut.

3. "Same practice" is broader than "same physician"

The policy reaches a physician in the same practice, not just the same physician. In a multi-surgeon orthopaedic group where a patient sees a physician assistant or a partner for the visit and a surgeon for the procedure on the same day, the reduction still applies.

CMS's own impact estimate names otolaryngology, dermatology, and podiatry as the largest negative outliers, with hand surgery explicitly identified as affected to a smaller degree. If your group has a hand or foot-and-ankle service line running same-day injections and minor procedures in clinic, that is your exposure. The proposed effective date is January 1, 2027.

The efficiency adjustment continues, and it hits the procedure side

A −2.5% efficiency adjustment to work RVUs was finalized in the CY2026 rule and applies to all non-time-based services. It is not a new CY2027 proposal; it carries forward, and CMS's approach is to recalculate and reapply it on a three-year cycle. Time-based codes, such as E/M visits, care management, behavioral health, telehealth, and maternity codes with a global period, are excluded.

For orthopaedic surgery, the combined picture is a pincer. Surgical and procedural codes absorb the efficiency adjustment. Office E/M visits absorb the same-day 50% policy. There is no side of an orthopaedic practice's revenue that the CY2027 rule leaves alone.

Separately, CMS proposes a small positive work RVU efficiency adjustment of an estimated +0.53% for certain services, and is phasing out the 2007-vintage specialty-specific practice expense per hour data in favor of what it calls a "PE stabilizer" intended to mitigate short-term volatility. That practice expense methodology change is the most likely driver of the −4% PE hit showing up in the orthopaedic impact estimates.

The global surgical package is being quietly re-examined

Three items in the proposed rule signal that CMS is building toward a broader revaluation of 10- and 90-day global periods, which for orthopaedic surgery is the single largest long-term financial question in the rule.

First, CMS proposes to pause the MACRA Section 523 data collection requirement. The no-pay CPT 99024 post-operative visit reporting that surgeons have been submitting. The fact sheet frames it as "part of an iterative process to improve global surgical service valuation and payment accuracy." The rationale is more pointed: CMS cites evidence that post-operative visits during the global period are not occurring, even though payment for those visits remains embedded in the global package.

Second, CMS has posted an Excel file computing relative values that exclude post-operative visits for all 10- and 90-day global period services, and is soliciting feedback on revaluation strategies for future rulemaking. That is about as clear a signal as a regulator gives that unbundling or revaluation of global packages is on the roadmap.

Third, CMS is seeking comment on how to "right-size" global package payments and on whether 99024 reporting should expand to all physicians.

Orthopaedic advocacy organizations have pushed back on the underlying data. AAHKS has stated it believes the data CMS used to calculate post-operative minutes and visits is flawed and has published research supporting that position. AAOS's public statement on the rule was blunter: "CMS cannot continue to erode physician payment year after year and expect patient access to remain intact."

What to do before September 14

1. Model the same-day policy against your own claims. Pull 12 months of claims and identify every encounter with an office E/M plus a same-day 0-, 10-, or 90-day global procedure by the same physician or practice. For each pair, determine which service is higher-paid and apply a 50% reduction to the other. This is a code-pair exercise, not a blended-average one, and the answer will differ meaningfully by service line.
2. Split the model facility vs. non-facility. The projected −5% office / −8% facility divergence changes the economics of site-of-service decisions your group may already have in motion.
3. Comment by September 14. Comments must be received by September 14, 2026. Practice-level comments with actual data. How many same-day E/M encounters you furnish, what proportion are genuinely separately identifiable, what the reduction would cost your group, and carry more weight in the record than association letters alone. If your group is also affected by the outpatient rule, note that OPPS/ASC comments closed August 31, 2026.
4. Audit your modifier 25 documentation now anyway. Whatever happens to the payment policy, CMS has publicly signaled that it believes same-day E/M and procedure billing contains duplicated resource use. That is the language that precedes audit activity. Documentation that clearly establishes the separately identifiable nature of the visit is worth building before the scrutiny arrives, not after.
5. Stress-test the budget at −8%. For groups in or approaching a private-equity transaction, this matters disproportionately: a projected multi-year Medicare headwind affects EBITDA quality of earnings, not just next year's distributions. Buyers will model it. So should you.

Frequently asked questions

What is the proposed 2027 Medicare conversion factor?

CMS proposes $33.1693 for qualifying APM participants, a decrease of $0.40 or 1.19% from CY2026, and $32.8409 for non-qualifying APM participants, a decrease of $0.56 or 1.68%. Both reflect the expiration of the temporary 2.50% CY2026 increase, partially offset by statutory updates of 0.75% and 0.25% respectively.

How much will the 2027 fee schedule cut orthopaedic surgery payments?

Published analyses of the CMS specialty impact tables project a combined −7% effect on orthopaedic surgery across all settings, split as −5% in the non-facility (office) setting and −8% in the facility setting. These RVU redistribution effects are in addition to the conversion factor reduction of 1.19%–1.68%. Verify the figures against the CMS impact table before budgeting.

Does the CY2027 rule change how modifier 25 is paid?

Yes. CMS proposes that when an office or outpatient E/M visit is furnished by the same physician or a physician in the same practice on the same day as a procedure with a 0-, 10-, or 90-day global period, only the highest-paid service is paid at 100% and all other services that day are paid at 50%. The reduction applies to correctly-coded modifier 25 claims where the visit is genuinely separately identifiable. The proposed effective date is January 1, 2027.

When is the comment deadline for the CY2027 Physician Fee Schedule proposed rule?

September 14, 2026. The proposed rule (CMS-1848-P) was published in the Federal Register on July 16, 2026. Comments received after that date are not assured consideration. The related CY2027 OPPS/ASC proposed rule closed for comment on August 31, 2026.

Is the 2.5% efficiency adjustment new in the 2027 rule?

No. The −2.5% efficiency adjustment to the intraservice portion of physician work was finalized in the CY2026 rule and continues under CY2027. It applies to all non-time-based services, which includes surgical and procedural codes. Time-based codes, such as E/M visits, care management, behavioral health, telehealth, and maternity codes with a global period, are excluded. CMS's stated approach is to recalculate the adjustment every three years.

Is CMS eliminating the 90-day global surgical package?

Not in this rule. But CMS proposes to pause the MACRA Section 523 post-operative visit data collection (CPT 99024), has published an Excel file computing relative values that exclude post-operative visits for all 10- and 90-day global services, and is soliciting comment on how to "right-size" global package payments. Taken together these are strong signals that a broader revaluation of global periods is being prepared for future rulemaking.

The operational response

There is a version of the response to this rule that is purely defensive — model the cut, absorb it, cut costs. There is a better version, which starts from a different question: if Medicare is going to pay less per unit of work, how much work are you currently doing that you are not getting paid for at all?

For most orthopaedic groups the answer is substantial. Undercoded E/M levels. Missed modifiers. Documentation that does not support the level of service actually delivered. Denials that never get appealed because the appeal costs more than the claim. A 7% Medicare headwind is a genuine problem; so is a clean claim rate in the high 80s, and the second one is fixable without waiting for a rulemaking cycle.

Maia's Surgical AutoCoder delivers a reported 1–5% revenue lift and a 50% efficiency gain by populating codes, modifiers, and clinical justification inside the EHR before a human coder opens the chart. In a year when the fee schedule is moving against you, capturing what you have already earned is the fastest available offset.

See how Maia's AutoCoder helps Ortho groups with this automatically. Book a demo at usemaia.com.