Surgeons Are Getting a Seat at the Value-Based Table. What About Rehab?

Jul 15, 2026 | Metrics & Performance, News, Patient Engagement, Practice Management

Value Based Rehab

*This article was published on our substack here.

A post crossed my feed this week from an orthopedic surgeon breaking down the CY 2027 Medicare Physician Fee Schedule (PFS) proposed rule. The numbers were brutal: total hip arthroplasty work RVUs down 19.6%, total knee down 16.6%, total shoulder arthroplasty down 19.0%, shoulder hemiarthroplasty down 20.8% — cuts CMS itself says sit below even the reduced recommendations of the AMA/Specialty Society RVS Update Committee (RUC).

His point wasn’t just “the cuts are too big,” though they are. His point was that CMS keeps squeezing the financial incentives on high-value procedures without building the alternative — a real pathway for specialists to align payment with the longitudinal care of the condition instead of the individual visit.

And he closed with something I want every PT and OT in the MSK space to consider: if we want a seat at that table, we have to prove we can think in panels of patients and populations, not just visits and procedures.

That’s exactly the right question for orthopedic surgery. It’s an even more urgent question for us — because right now, we don’t have a seat at the table to lose. We were never invited.

I’ve been circling this same question from the PT/OT side for a while. On Episode 152 of The Better Outcomes Show, I asked directly whether PTs are being forced to see patients at a loss under current reimbursement. On Episode 147, the question was whether value-based care would kill independent practices before it ever finished being built for us. This rule is the next data point in that same argument.

 

What’s actually in the CY 2027 rule

CMS released the CY 2027 PFS proposed rule on July 14. The CMS fact sheet and reporting from AHA News lay out the top-line math: the qualifying-APM conversion factor drops about 1.19% and the non-qualifying conversion factor drops about 1.68%, even though both are getting statutory bumps of 0.75% and 0.25% respectively. The reason is simple — the one-year 2.5% conversion factor increase Congress provided for 2026 expires at the end of this year, and nothing in the proposed rule fully offsets that expiration.

For therapy specifically, the CMS therapy services page confirms what’s not changing: the Multiple Procedure Payment Reduction (MPPR) is still on the books, still cutting practice expense payment on subsequent units in the same visit, still doing exactly what APTA has spent years asking Congress to repeal through the RECOVER Act. The therapy threshold ticks up slightly, which is a technicality, not relief.

None of this is new. PT reimbursement has been cut in five of the last six years. What’s new — and what actually matters for how we think about our position — is what’s happening around those numbers.

The part of the story that isn’t about the cuts

2027 is year one of the Ambulatory Specialty Model (ASM), CMS’s first mandatory, specialist-level accountability model in traditional Medicare. It launches with two condition tracks: heart failure and low back pain. Selected specialists in designated geographic areas face payment adjustments scaling from roughly ±9% to ±12% of Part B revenue based on episode cost and quality performance.

Low back pain. The single condition physical therapy has the strongest evidence base for treating first-line. And the specialties CMS made eligible for that mandatory model are anesthesiology, pain management, interventional pain management, neurosurgery, orthopedic surgery, and physical medicine and rehabilitation — the specialties positioned to inject, image, and operate on the very condition we’re positioned to treat conservatively and, in many cases, prevent from escalating at all. When commenters asked CMS to include physical therapists and other non-physician practitioners in the model, CMS said no, citing limitations in Medicare specialty codes and concerns about comparability.

Read that again next to the surgeon’s complaint. He’s frustrated that CMS is squeezing procedural reimbursement without building a real alternative payment structure around the condition. Fair. But there is a structure being built — ASM, the ACCESS Model, co-management pilots, gainsharing in surgical bundles — and it’s being built entirely around physician specialties. PT and OT aren’t in the room where episode accountability for MSK conditions is being designed, even in the one condition where we’re the guideline-recommended first step.

This is the piece that should worry us more than the conversion factor. A shrinking fee-for-service pie is a survivable problem if there’s a value-based on-ramp being built next to it. For PT and OT, there isn’t one. APTA has been pushing for a viable Advanced APM pathway for therapy for years, and the honest answer is that it still doesn’t exist in a form most practices can actually use. We are simultaneously being told the future is condition-based, population-level accountability, and structurally excluded from the models where that future is being built.

 

Why this happens, mechanically

It’s worth understanding the plumbing here, because it explains why PT/OT keeps absorbing pain that has nothing to do with our own value. The PFS operates under a hard budget-neutrality rule: increases in payment for one service must be offset by decreases elsewhere in the fee schedule, dollar for dollar. KFF’s explainer on Medicare physician payment and Health Affairs Forefront’s analysis of whether the PFS is driving value both point to the same structural critique: RVU-setting has historically leaned on RUC recommendations that skew toward specialty and procedural care, and the fixed budget-neutral pool means conservative, cognitive, movement-based care competes against high-cost technical procedures for the same finite dollars — regardless of which one is actually cheaper for the system downstream.

That’s the mechanism. Surgery gets cut this cycle because CMS identified a site-of-service anomaly in joint replacement globals. Something else absorbs the offset next cycle. PT and OT have been on the losing end of that redistribution more consistently than almost any other provider type, precisely because we have no seat in the rooms — RUC, ASM, ACCESS, Shared Savings Program design — where the redistribution gets decided. I wrote about the human cost of that dynamic years ago in the original Better Outcomes manifesto — the burden of time-based productivity metrics and being asked to extract “units” of treatment from patients rather than manage their outcomes. The CY 2027 rule is the same complaint, wearing a new conversion factor.

Our side of the bargain

The surgeon’s closing line applies to us with more force than it applies to him: if we want a seat at the table, we have to prove we can think in panels of patients and populations, not just visits and procedures.

Orthopedic surgery already has PROM data, registry infrastructure, and bundled payment experience from a decade of CJR and BPCI. We largely don’t. If we want CMS, ACOs, and orthopedic co-management partners to build a track for us into episode-based accountability, the profession has to show up with the same currency surgery is now being asked to show up with: standardized outcome measures, cost-avoidance data tied to actual claims (not QALYs), and evidence that we can manage a population of patients across an episode, not just document units against a plan of care.

That’s not a talking point — it’s the actual gap. The clinical case for PT as first-line MSK care is not in dispute. The data infrastructure to prove it in the terms CMS and payers use to build accountability models mostly isn’t there yet at scale. Closing that gap is the price of admission to the next round of model design, the same way gainsharing and PROM reporting are becoming the price of admission for surgeons under ACCESS.

This is also where I’d point you back to a few conversations already on the show. Episode 153 breaks down how to actually use the data your clinic already gathers to communicate the value of what you do — not as a marketing exercise, but as the raw material for the kind of claims-based, cost-avoidance evidence CMS actually responds to. Episode 150 looks at this from the other side: the value insurers claim to bring to the market, and how that claim holds up against what patients actually experience. And Episode 164 makes the case that services like RTM and virtual care aren’t just billing add-ons — they’re part of the infrastructure of episode-based, condition-level care delivery, if we build them that way instead of bolting them onto fee-for-service as an afterthought.

It’s worth noting this isn’t a new muscle for our profession to build — it’s the same one, at a different scale. I wrote about this at the patient level years ago in Are You Communicating Value to Your Patients?: patients drop out of care not because they don’t need it, but because we never made the case for why it’s worth their time and money over everything else competing for it. CMS is, in effect, the same skeptical patient at scale — unconvinced our services are worth the price unless we make the value explicit and provable. If we can’t consistently win that conversation one patient at a time, we won’t win it with a regulator either. The skill is identical; only the audience and the evidence bar are bigger.

 

What to actually do before September 14

The comment period on the CY 2027 proposed rule is open through September 14, 2026. A few concrete things worth doing before then:

  • Read the CMS fact sheet and, if you have the stomach for it, the Federal Register text from last cycle to understand how the rule is structured before this year’s version is indexed there.
  • Model your own exposure. Pull your top Medicare CPT codes and apply the proposed conversion factor change directly, rather than relying on specialty-wide averages that were built around physician procedures.
  • Comment — specifically. CMS responds more to operational specifics than to general objections. If MPPR, the lack of a therapy APM pathway, or PT’s exclusion from ASM’s low back pain track affects your practice in a concrete way, say so with numbers.
  • Watch the Shared Savings Program provisions, not just the fee schedule. CMS’s own fact sheet on the ACO proposals shows where the value-based infrastructure is actually being built this cycle — and where therapy could plausibly be written in, if the profession shows up during comment periods instead of after final rules are published.

The surgeons are frustrated because CMS is cutting their procedures without finishing the value-based structure meant to replace that revenue. We should be more frustrated — the structure is being finished, and we’re not in it. The fix isn’t just louder comments on the fee schedule. It’s building the outcomes and population-level evidence base that earns a seat before the next model gets designed without us in the room again.

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