Medicare Payment

Medicare is the Federal health insurance program for the nation's elderly. Part A of the program covers inpatient hospital services, inpatient care in skilled nursing facilities after hospitalization, home healthcare, and hospice care among other services. Part B of the program covers physician services, outpatient hospital care, diagnostic services, durable medical equipment, and ambulance services among other services. Part D provides coverage for prescription drugs.

Medicare continues to face both short-term and long-term fiscal challenges that impact both patients and physicians. Issues related to Medicare payment and CMS include the Merit-Based Incentive Payment System (MIPS), Alternative Payment Models (APMs), Physician Fee Schedule, and alternative payment models like the Transforming Episode Accountability Model (TEAM), the Ambulatory Specialty Model (ASM), and more.

The CY27 Medicare Physician Fee Schedule

AAOS strongly opposeed the Centers for Medicare & Medicaid Services' (CMS) calendar year 2027 Medicare Physician Fee Schedule (MPFS) proposed rule and called on CMS to pause implementation of the new proposed payment values, maintain the current 2026 values and work with physicians to develop a more stable and sustainable approach to Medicare physician payment.

CMS' proposed rule included several policies at once that, together, represent one of the most significant threats to independent orthopaedic practice in decades:

• Reducing payment for separate identifiable evaluation and management (E/M) services billed with Modifier-25 on the same day as procedures with 0-, 10-, and 90-day global periods;   
• Reducing relative value units (RVUs) for total shoulder, total hip, and total knee arthroplasty services along with shoulder hemiarthroplasty; and   
• Removing the Indirect Practice Cost Index (IPCI) from the calculation of practice expense RVUs.

As a result of this ongoing advocacy, CMS today released the final rule with notable adjustments to provisions directly impacting orthopaedic surgeons: 

• Cuts to relative value units (RVUs) for total hip, total knee, total shoulder arthroplasty, and shoulder hemiarthroplasty were reduced by roughly 50% compared to the proposed rule. 
• A 20% cut to the lesser of two E/M services billed with Modifier-25 on the same day as procedures with 0- day global periods. This is a positive shift from the proposed rule, which included a 50% cut for procedures with 0-, 10-, and 90-day global periods. 

“There is more work ahead to build a Medicare payment system that reflects the realities of delivering high-quality musculoskeletal care and supports sustainable physician practices. AAOS will continue working collaboratively with CMS and Congress to advance policies that preserve access to musculoskeletal care and help keep our nation in motion.”  - AAOS President Wilford K. Gibson, MD, FAAOS