The surgeon's national Medicare payment for a primary total knee (CPT 27447) has fallen every year since 2020 except one. A proposal for 2027 would take another fifth of it. Here is the mechanism behind it.
National average, non-APM surgeon, before geographic adjustment. Covers the operation plus all routine care for 90 days afterward. 2020 split between components is approximate. Sources 1, 2, 3.
The "15% cut" that is circulating understates it. In the proposed 2027 Physician Fee Schedule (released July 14, 2026), CMS would cut the work value of 27447 by 16.6%, and also cut its practice expense and malpractice values and the conversion factor. Stacked together, the national payment falls about 20%, from $1,160 to $922.
19.11 to 15.94. This is probably where "15%" comes from.
$1,159.64 to about $922. Comes on top of a 7.8% cut that already took effect in 2026.
| Component of 27447 | 2026 | 2027 proposed | Change |
|---|---|---|---|
| Work RVUs | 19.11 | 15.94 | −16.6% |
| Practice expense RVUs | 11.61 | 8.92 | −23% |
| Malpractice RVUs | 4.03 | 3.22 | −20% |
| Conversion factor (non-APM) | $33.40 | $32.84 | −1.7% |
| National payment | $1,160 | $922 | −20.5% |
Surgeons in qualifying alternative payment models see $1,165 to $931. This is a proposal: the final rule is expected around November 1, 2026, and could change. Sources 3, 4.
Since 2020 the surgeon's fee has dropped in dollars, not just in buying power. Over the same years, Medicare's facility payment for the very same knee in a hospital outpatient department or surgery center went up. Both lines below start at 100 in 2020.
Same procedure, opposite directions
National Medicare payment for CPT 27447, indexed to 2020 = 100. 2027 values are proposed; facility 2027 values apply the proposed 2.4% update.
Measured against inflation the gap is wider still. A peer-reviewed analysis of CMS fee data found the inflation-adjusted surgeon fee for primary TKA fell 57% from 2000 to 2024, before either the 2026 or 2027 cuts. Sources 2, 5, 6.
Surgeon fee for CPT 27447, dollars
National payment in nominal dollars, and what the 2020 fee would be worth had it tracked consumer prices (CPI-U; 2025 to 2027 estimated at about 2.8% a year).
No single villain. Several rules interact, and every one of them points the same way for a high-volume surgical code.
By statute, any revaluation that would move total spending by more than $20 million must be offset elsewhere. Raising one service means cutting another. In 2027 the pie is about $91 billion, and its biggest surgical slices are where the money comes from. CMS Administrator Mehmet Oz put the logic plainly in November 2025:
"we took money from specialties and gave it to primary care."
Hospital and surgery center rates rise each year with a statutory market-basket update (proposed +2.4% to +2.7% for 2027). The physician conversion factor is indexed to nothing. It is lower in nominal dollars than it was in 1998, and Congress has only patched it one year at a time. The AMA estimates physician pay fell 33% in real terms from 2001 to 2025.
TKA came off the inpatient-only list in 2018 and onto the surgery center list in 2020. Within four years the Medicare inpatient share of primary joints fell from essentially all of them to 29%. But the code's 90-day global package was still priced with hospital visits built in. CMS flagged that as a "site-of-service anomaly." The RUC itself agreed to strip two inpatient visits, half a discharge visit and ten minutes of surgical time.
The AMA's RUC recommended cutting work RVUs from 19.11 to 16.70. CMS said that was not enough: time fell more than value did, and it rejected the claim that intensity rose. It instead crosswalked TKA to a code with similar surgical time, CPT 67108 (retinal detachment repair with vitrectomy). The same crosswalk takes THA even lower, to 15.37.
In 2026 CMS halved the indirect overhead it credits to facility-based procedures, on the theory that hospital-employed surgeons don't carry office costs. For 2027 it proposes retiring the index that tied overhead to old specialty surveys. Malpractice RVUs are tied to work RVUs, so they fall too. Independent groups feel this most, because their rent and staff don't shrink.
Starting in 2026, CMS cut work RVUs for nearly every non-time-based service by 2.5%, assuming procedures get faster over time. That moved 27447 from 19.60 to 19.11. Time-based services like office visits and behavioral health were exempt, which shifts value away from procedures automatically.
Anthem nominated TKA as misvalued in 2018, leading to the 2021 cut from 20.72 to 19.60. In 2026 the Maryland Health Care Commission nominated it again, citing the same 2016 Urban Institute timing study. CMS also cites NSQIP operating-room data flagging 97 musculoskeletal codes whose assumed times look too long. Expect TKA and others to be revisited.
CMS's own impact table shows orthopedic surgery down 7% overall (8% in facilities, the worst of any specialty), while clinical social workers gain 12%, psychologists 11% and geriatrics 4%. A new office-visit add-on would pay primary care inside an ACO 32% more per visit. The policy goal is longitudinal and primary care, funded from procedures.
Sources 3, 4, 7, 8, 9, 10, 11, 12.
Each drop in 27447's work RVUs traces to a specific event. The 2027 proposal would be the largest single step.
CPT 27447 work RVUs
Step changes in the physician work value. 2027 is proposed.
Both arguments have real evidence behind them. What follows is each side's strongest version.
Sources 3, 4, 8, 13, 14.
Set an annual Medicare volume to see the national-average difference between 2026 and the 2027 proposal. Real numbers vary with geography, payer mix and APM status.
Uses non-APM national rates: TKA $1,159.64 to $922, THA $1,161 to $925.
Surgeons paid on work RVUs by an employer can see this flow into total pay, since many contracts apply one dollar-per-RVU rate to every payer.
CMS publishes the final 2027 rule. It can adopt the proposal, move toward the RUC's 16.70, or phase the cut in. Medicare law requires a two-year phase-in when a code's total RVUs drop 20% or more; TKA's proposed drop is about 19%, just under that line.
New rates take effect unless Congress intervenes. The 2.5% one-year boost from 2026 expires regardless, which is why the conversion factor falls.
CMS is publishing what every 90-day global would be worth with post-op visits removed, and asked whether to act on empiric surgical time data now or later. Several other common orthopedic codes are already nominated.
The proposed mandatory CJR-X bundle for hip, knee and ankle replacement would begin, making hospitals accountable for 90-day episode cost. TEAM, another mandatory episode model, started in 2026.
Sources 4, 8, 15, 16.