2027 Medicare cuts could reduce hip and knee replacement pay by 20%. Here’s what orthopedic practices are doing about it

An orthopedic practice could perform just as many hip and knee replacements next year, but get paid substantially less for that work. OrthoForum estimates that the proposed 2027 Medicare cuts for orthopedic practices could reduce physician payments for those procedures by about 20%. For practices with a busy joint replacement schedule, that’s a budget squeeze worth preparing for. 

CMS released the proposal in July. If finalized, the changes would take effect January 1, 2027, with the final rule expected in early November. 

In the meantime, practices have a few places to start. Collecting outstanding balances, filling canceled appointments and cutting down on administrative work can help protect revenue as reimbursement tightens. In this first installment of our specialty-by-specialty series, we’ll walk through what CMS is proposing for orthopedics and what practices can do now to prepare. 

What CMS is proposing for 2027 

The proposal would change orthopedic payments in several ways. Here are three to keep on your radar. 

First, CMS would lower the value assigned to the physician work for four joint replacement procedures. That value—called a work relative value unit (RVU)—helps determine how much Medicare pays for each procedure: 

• Total knee replacement: Work RVUs would fall from 19.11 to 15.94, a 16.6% reduction. 
• Total hip replacement: A 19.6% reduction. 
• Total shoulder replacement: A 19.0% reduction. 
• Shoulder hemiarthroplasty: A 20.8% reduction. 

One important distinction: These Medicare percentages reflect physician payment cuts, not total payment. Across orthopedic surgery, CMS projects a 7% payment reduction from RVU changes. Medicare also proposes lowering the dollar rate used to calculate payments by 1.68% for clinicians who aren’t qualifying alternative payment model participants. Together, those changes would mean an estimated 8–9% decline, based on our calculations. 

Second, Medicare could pay less when a patient has an office visit and a procedure on the same day (for example, a visit to assess knee pain followed by a joint injection). If both services qualify for separate billing, Medicare would pay the higher-priced service in full and the lower-priced service at 50%. The proposal applies when the same physician, or physicians in the same practice, provides those services and the procedure has a 0-, 10- or 90-day “global period.” 

Third, CMS would change how Medicare accounts for the costs of running a practice, such as rent and administrative staff. It would phase out part of the payment formula based on older expense data for each specialty. That could change how much practices receive, depending on their specialty and where they provide care. 

At the same time, a separate proposal would increase payments to hospital outpatient departments and surgery centers by 2.4% if they meet quality-reporting requirements. In other words, a facility could receive more for a procedure while the physician performing it receives less.  

Why orthopedics faces outsized exposure 

Orthopedic practices are heading into these proposed cuts with budgets already under pressure. According to the American Medical Association, Medicare physician payments fell 33% from 2001 to 2025 (after adjusting for inflation). The 2027 proposal would continue that long-running squeeze. 

How much tighter things get will depend on a few factors: 

• Joint replacement volume: Practices that perform more Medicare-covered joint replacements could feel the cuts more sharply than those that rely mainly on other services or payers. OrthoForum’s estimated 20% reduction applies specifically to Medicare physician payments for hip and knee replacements, rather than every procedure or a practice’s total revenue. 

• Combined appointments: Evaluating joint pain and providing an injection in one visit is a common part of orthopedic care. Because the same-day payment proposal would affect these appointments, the financial impact could reach beyond the surgical schedule. 

• Where care takes place: CMS projects an 8% payment reduction from RVU changes alone for orthopedic physician services delivered in hospitals and surgery centers—the largest facility-setting cut among specialties in its impact table. Practices that perform many surgeries in these settings should review what that could mean for their revenue. 

• The cost of delivering care: Lower reimbursement doesn’t lower the cost of coordinating surgery, managing billing or supporting recovery. Those expenses would consume a larger share of joint replacement revenue, leaving less room for uncollected balances, empty appointments and time-consuming administrative tasks. 

5 operational levers practices can pull now 

Practices can start preparing before the final payment rates are settled. A useful first step: Look for places where money goes uncollected, appointments go unfilled, or routine tasks take more staff time than they need to.  

Here are five areas to start: 

1. Check coverage and authorization requirements early: Confirm insurance eligibility, patient benefits, and any required prior authorizations before the visit or procedure. Give staff a clear process to resolve gaps and track pending approvals. For a joint replacement, discovering a coverage issue after surgery can mean substantial payment delays or a denied claim on top of any reduction in reimbursement. 
2. Make payment part of the check-in process: Give patients a clear explanation of what they owe and convenient ways to pay copays and outstanding balances. When someone can’t pay in full, explain the available payment options. Collecting earlier reduces follow-up work and keeps balances from sitting unpaid. While it won’t replace lost Medicare reimbursement, orthopedic billing efficiency can help practices capture more of the patient payments already due. 
3. Cut down on repetitive administrative work: As revenue per procedure falls, reducing the staff time required to support each visit can help protect margins. Look at how often staff reenter information, check coverage manually or chase incomplete registration forms. Automating appropriate steps and making sure information moves between systems can free up time for the most important questions and problems. 
4. Fill openings in the schedule faster: Make it easy for patients to cancel or reschedule, and use waitlists and automated outreach to quickly offer those slots to others who need care. Matching patients with clinically appropriate openings can protect revenue while helping them get care sooner. Be sure to track how often (and how quickly) you fill canceled appointments to see where there’s room to improve. That way, you can adjust how you schedule same-day visits and procedures and prioritize clinical needs and patient convenience. 
5. Keep a clear record of post-operative care: Document each patient’s follow-up care, including who provides it and when. CMS is reviewing whether surgical payments accurately reflect the follow-up visits patients receive. Clear records help teams coordinate care, bill appropriately and understand the time and cost involved in recovery. Documentation won’t prevent a payment cut, but it can help practices with revenue protection, tracking costs and providing reliable data for future reviews of how Medicare values surgical care. 

What high-performing orthopedic practices are already doing 

Collecting more of what’s owed and keeping appointments filled can give practices more room to manage reimbursement pressure. With 1 in 7 orthopedic visits already checking in through Phreesia, these workflows are already part of daily operations for many groups—and can also contribute to gains in collections, appointment attendance and staff time. 

For instance, South County Orthopedic Specialists reported a 4.9x higher collections rate when patients checked themselves in and a 4.5x lower no-show rate when patients completed pre-visit registration. Self-service intake also saved 1,500 hours of staff time in one year—the equivalent of about $33,000. 

For Dawn O’Connor, their practice manager, the value also includes giving staff more time for work that needs their attention. “Phreesia may not reduce our staffing needs, but it allows us to repurpose people for more complex tasks,” she says. That’s a huge benefit.” 

While these results don’t establish how much of a future Medicare cut those gains would offset, they do offer concrete examples of the operational improvements practices can pursue now. 

Conclusion

Orthopedic practices can’t control Medicare’s payment rates, but they can take steps to collect more of what they’re owed, keep schedules filled and free up staff time. Those improvements can give practices more breathing room as orthopedic reimbursement tightens in 2027. For a closer look at how one group put this into practice, read Summit Orthopedics’ story. 

Next up: how the 2027 CMS proposals affect dermatology practices.