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 Proposed Rule

AAOS strongly opposes the Centers for Medicare & Medicaid Services' (CMS) calendar year 2027 Medicare Physician Fee Schedule (MPFS) proposed rule and is calling 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 is proposing several policies at once that, together, represent one of the most significant threats to independent orthopaedic practice in decades. The combined effect is greater financial instability and increased pressure for physicians to sell their practices to hospitals and large health systems. Policies of concern include: 

• 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.