Every number in this calculator comes directly from official Centers for Medicare & Medicaid Services (CMS) data files — the same files used by Medicare contractors to process claims. Below is a plain-English explanation of each component.
CMS Physician Fee Schedule — Official SourceInpatient Hospital Cost
DRG Payment System
When you are admitted to a hospital as an inpatient, Medicare pays the hospital a single fixed amount called a Diagnosis-Related Group (DRG) payment. This bundled payment covers everything: the operating room, the implant, nursing care, anesthesia, and all in-hospital services. You are never billed separately for individual items.
Knee & Hip Replacement: DRG 470
Medicare pays hospital
~$25,000
DRG 470 bundled rate
You pay (Part A deductible)
$1,736
2026 Part A deductible
For outpatient procedures (ASC or HOPD), Medicare uses the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment rates instead of DRG. These are lower fixed amounts per procedure.
Surgeon Fee
Relative Value Units (RVUs) + GPCI Adjustment
Surgeons are paid based on Relative Value Units (RVUs) — a point system that reflects the complexity, time, and risk of each procedure. CMS multiplies the total RVUs by a national Conversion Factor (CF) and then adjusts for local cost differences using Geographic Practice Cost Indices (GPCIs).
Surgeon Fee = [(Work RVU × Work GPCI) + (PE RVU × PE GPCI) + (MP RVU × MP GPCI)] × CF
CF = $32.3465 (2026 national conversion factor)
Work RVU
Physician time and effort
Practice Expense (PE) RVU
Overhead costs (staff, equipment, office)
Malpractice (MP) RVU
Professional liability insurance
GPCI values differ by Medicare locality (there are 112 localities across the US). High-cost areas like Manhattan or San Francisco have higher GPCIs, meaning Medicare pays more there for the same procedure. This calculator uses the exact 2026 GPCI values from the CMS GPCI2026 file for each locality you select.
Anesthesiologist Cost
Anesthesia Base Units + Time Units
Anesthesiologists are paid differently from surgeons. Instead of RVUs, Medicare uses a unit-based system that combines a fixed number of base units (reflecting the complexity of the procedure) with time units (reflecting how long the patient was under anesthesia).
Anesthesia Fee = (Base Units + Time Units) × Locality Conversion Factor
Time Units = Surgery Minutes ÷ 15 (rounded to 1 decimal place)
Knee Replacement
CPT 01402
Hip Replacement
CPT 01214
Cataract Surgery
CPT 00840
Locality-Adjusted Conversion Factor
The $20.50 figure is the national average. CMS publishes separate anesthesia conversion factors for each Medicare locality — ranging from $19.42 (rural areas) to $23.37 (New York suburbs). When you select a specific location, the calculator uses the exact 2026 locality conversion factor from the CMS ANES2026 file.
⚠ Limiting Charge Risk
If your anesthesiologist does not accept Medicare assignment, they may charge up to 15% above the Medicare-approved amount. This extra charge is not covered by Original Medicare. Always ask: "Do you accept Medicare assignment?" before your procedure.
What This Calculator Does Not Include
Surgical complications or readmissions
Implant costs (bundled into facility fee)
Radiologist reading fees (separate Part B bill)
Pathology fees (if tissue samples taken)
Post-op specialist visits (cardiology, etc.)
Part D prescription drugs after discharge
Medicare Advantage plan cost structures
Bilateral procedures (both knees/hips at once)
Official CMS 2026 Data Sources
Physician Fee Schedule RVU values for all CPT codes
Geographic Practice Cost Indices for all 112 Medicare localities
Locality-adjusted anesthesia conversion factors — national non-QPM CF $20.50 (range $19.42–$23.37)
Outpatient facility fees: HOPD and ASC payment rates by APC
Part A deductible $1,736 · Part B deductible $283 · SNF $217/day (Days 21–100)
Important Disclaimer
This tool provides estimates based on publicly available Medicare data. Actual costs may vary by provider, location, and individual clinical circumstances. Patients with Medicare Advantage (Part C) plans will have entirely different cost-sharing structures — consult your plan's Evidence of Coverage document. This tool is not a substitute for professional medical or financial advice.