OGR Wins

AAOS advocacy efforts produced meaningful wins across federal policy, state-level reforms, and private payer accountability. These developments reflect progress on physician payment, prior authorization reform, musculoskeletal research funding, regulatory relief, and insurer practices impacting orthopaedic surgeons and their patients.

Federal

Payment Reform

• Congress enacted a PFS conversion factor patch of a 2.5% increase to the Medicare Physician Fee Schedule conversion factor for 2026.
• Efficiency Adjustment Delay Act introduced. AAOS helped develop bipartisan legislation, the Efficiency Adjustment Delay Act to pause implementation of the CMS efficiency adjustment and require a study of surgical efficiency and the real-world impacts of this policy.
• Fee schedule crisis: AAOS mobilized members to elevate concerns with Congress and CMS regarding the CY2027 Medicare Physician Fee Schedule. The campaign generated 763 letters to Congress, urging lawmakers to engage with CMS to withdraw or revise several of the proposals that would greatly harm orthopaedic surgeons and the Medicare beneficiaries they serve. The campaign has also generated 126 comments to CMS on the fee schedule.

Prior Authorization/Medicare Advantage

• Seniors’ Act Consensus. The AAOS-endorsed Improving Seniors’ Timely Access to Care Act reached a significant milestone of 290 House cosponsors, the threshold required for placement on the House Consensus Calendar which would fast-track the bill for consideration on the House floor. In July, the bill also passed through both the Ways and Means Committee and the Energy and Commerce Committee.
• CMS cracks down on upcoding in Medicare Advantage. CMS finalized new coding proposals for Medicare Advantage (MA) that include excluding diagnosis information from unlinked Chart Review Records — which is diagnosis information not associated with a specific beneficiary encounter — from risk score calculations. This deters MA from egregious downcoding. 

Orthopaedic Research

• Senate Continuing Resolution prohibits Office of Management and Budget (OMB) Proposed Rule implementation. The Senate Appropriations Committee’s continuing resolution would prevent OMB’s proposed changes to the Uniform Guidance from being finalized or taking effect. The House must adopt this provision. 
• NIAMS President’s Budget. The House Appropriations Committee passed funding for the National Institute of Arthritis and Musculoskeletal and Skin Diseases (NIAMS), well above the level proposed in the Administration’s budget request, which sought to cut funding by more than $47 million.
• FY2026 PRORP funding. Congress passed the final Department of Defense (DoD) appropriations for fiscal year (FY) 2026 with exciting news in musculoskeletal care: the Peer Reviewed Orthopaedic Research Program (PRORP) had been awarded $20 million for FY2026 after it was cut to $0 in FY2025.

Physician Owned Hospitals

• A bill was introduced in Congress to lift the ban in rural areas as part of a long-term strategy to build momentum on this issue which has resulted in more bipartisan support.
• CMS finalized a demonstration program allowing physician-led hospitals to opt-in to the TEAM model.

Sarcoma Awareness

• The Senate passed a resolution expressing support for designating July 2026 as National Sarcoma Awareness Month and AAOS engaged in a social media campaign touching on access to care for Sarcoma patients.

Regulatory Reform

• CMS Stops Registry Changes in Response to AAOS Feedback. CMS announced that they will indefinitely delay the implementation of registry changes and use the feedback received to update the process in a manner which improves the research process.

State

Prior Authorization

• Colorado strengthened safeguards for AI use in prior authorization. HB26-1139 requires that AI systems make decisions based on accurate clinical data and individual patient history and requires that adverse determinations be reviewed by a licensed physician or clinician.
• Iowa enacted sweeping prior authorization reforms. HF 2635 was a sweeping prior authorization reform bill that included provisions addressing downcoding, the use of AI to deny claims, and peer-to-peer reviews.
• Alabama established guardrails on use of AI in prior authorization. SB 63 ensures that AI algorithms used in prior authorization use accurate medical data and prohibits AI from being the sole basis for adverse determinations.
• Virginia passed prior authorization and payment reform legislation. HB 484 and HB 481 address a number of key issues with prior authorization in the state. Some key changes include imposing stricter timelines for determinations and payment, prohibiting retroactive denials in most circumstances, establishing guardrails for downcoding, requiring that all adverse prior authorization determinations are made by a licensed physician, and mandating that justification for adverse determinations is provided.
• Washington State passed prior authorization reform legislation. SB 5395 and SB 5845 both make changes to prior authorization within the state, including establishing stricter determination timelines, prohibiting AI from being the sole basis for an adverse determination or modification of care, prohibiting retroactive denial of preauthorized services, and improving transparency within the prior authorization process.
• Nebraska strengthened prior authorization safeguards. LB 77 included several provisions ensuring timely review, preventing AI from being the sole reason for a denial, and ensuring the validity of determinations for at least one year.

Payment

• Illinois passed legislation to address downcoding. SB 3114 was enacted in July 2026. The legislation prohibits downcoding of claims based solely on an AI algorithm, prohibits downcoding of claims based on reported diagnosis codes, requires downcoding decisions to be made by a physician in a similar practice area with experience treating the condition, and requires an insurer to provide justification when a claim is downcoded.
• Louisiana passed legislation addressing payment. SB 465 ensures the timely review of claims, shortens the allowable window for payment recoupment, and requires timely notification of payment recoupment.
• Connecticut established guardrails for payment recoupment. HB 5377 shortens the period that insurers can seek payment recoupment, improves transparency around determinations, and requires a clear appeals process to be available.
• Virginia advanced downcoding protections. SB 164 passed in April, barring the use of AI systems in resolving downcoding disputes and prohibiting insurers from downcoding claims without considering relevant patient data documented by the billing provider.
• South Dakota enacted legislation addressing retroactive denials and payment recoupment. HB 1292 limits the ability of health insurers to recoup payments for preauthorized services, limits retroactive denials of preauthorized services, limits the period of time that insurers can seek payment recoupment, requires justification to be provided at the time of notification for payment recoupment, and prohibits insurers from charging additional fees or interest when seeking payment recoupment.

Medical Liability

• Louisiana created a medical malpractice task force. SR 160 established the Louisiana Medical Malpractice Task Force to study and recommend improvements to the state’s medical review process.
• Rhode Island established a commission to study medical malpractice in the state. SR 3063 created a special legislative commission to examine the impacts of medical malpractice on healthcare providers and costs in the state.
• Virginia advocates protected existing medical liability limits. Advocates successfully opposed SB 536, which would have increased the cap on noneconomic damages from $3 million to $6 million, and SB 99, which would have removed the noneconomic damages cap for cases involving patients under 10 years of age.
• New Mexico sets caps on recoverable damages and limits punitive damages in malpractice cases. In March, New Mexico passed HB 99, a bill that sets caps on recoverable damages for physicians and significantly limits the award of punitive damages in medical malpractice cases.
• Utah enacted medical liability reform protecting physicians’ personal assets. In 2025, Utah passed HB 503, which prohibits collection of a judgment against a physician’s personal income or assets so long as the physician maintains an insurance policy with a $1 million policy limit.

Private Payer Advocacy

• Cigna faced legal accountability under the No Surprises Act. Surgical practices successfully challenged Cigna in July over unpaid arbitration awards after the insurer exceeded the 30-day payment deadline for awards issued under the No Surprises Act.
• UnitedHealthcare announced reductions in prior authorization. UnitedHealthcare stated in June that it will substantially reduce prior authorization requirements for pediatric services, including orthopaedic procedures, by the end of 2026.
• Cigna pauses downcoding policy. In response to pressure from the physician community, Cigna agreed to pause their policy in California for automatically downcoding higher-level E/M visits. AAOS led a letter from the House of Medicine to CMS CCIIO asking the agency to address these problematic downcoding policies being implemented by many private payers in geographies across the country.
• BCBS modifier-25 denials. Several Blue Cross Blue Shield plans rescinded policies that would have improperly reduced or denied payments when E/M codes are reported with modifier-25 in conjunction with minor procedures. The policies were in contradiction to CMS and CPT guidelines.
• Resolved casting and splinting coding issue with LyricAI. Claims editing software, LyricAI, utilized by multiple private payers, was erroneously denying all payments for casting and splinting codes, which was against CMS guidelines. LyricAI corrected the claims processing error, deleted the policy, and updated the content package for claims editing software accordingly.