For 2025, the Medicare conversion factor dropped about 2.83 percent, from 33.2875 to 32.3465, while the Medicare Economic Index for 2025 rose 3.5 percent, widening the gap between payments and practice costs. CMS’ rule produced an average cut of 2.93 percent that took effect January 1, 2025. Because of budget neutrality requirements, CMS must offset any policy change that increases spending by more than 20 million dollars, often by reducing the conversion factor. The growing gap between rising costs and declining reimbursement places surgeons in a position where every scheduling choice carries both financial and ethical consequences.
Why volume becomes the lever
AAOS notes physicians are the only sector of the Medicare payment system without routine inflationary updates, and that ongoing cuts, combined with budget neutrality, intensify financial pressure on specialty care.
The organization also describes partial congressional relief in 2024 but warns that persistent under-updating continues to drive consolidation pressures that can limit access in rural and low-income communities.
Even with these pressures, most physicians continue to participate in Medicare. MedPAC data summarized by KFF shows about 98 percent of non-pediatric physicians accept Medicare’s standard payment and roughly 1 percent opted out in 2024. The real concern is not whether patients find a physician willing to take Medicare, but whether capacity and scheduling constraints limit timely access.
Rationing by delay is still rationing
AAOS Now reports that delays in orthopaedic care can worsen symptoms, increase disability, raise costs, and convert straightforward operations into more complex procedures with diminished outcomes. Overbooking to compensate may keep the schedule moving but often adds frustration for both patients and surgeons.
When payments contract and fixed costs rise, time becomes the scarcest input. Longer waitlists and tighter visit templates create rationing by queue rather than explicit denials, with the same downstream effect on complexity and cost described above.
The ethical line you navigate
Incentives point toward more throughput when the conversion factor falls and inflation climbs, yet ethical obligations require that decisions about indications, nonoperative trials, postoperative follow-up frequency, and long-term monitoring remain clinically grounded rather than revenue-driven. The 2025 rule’s cut against rising practice expenses heightens that tension.
A practical frame is transparency. Clear scheduling rules and documented thresholds for operative timing can help patients understand the reasons for any delays. Practices that expand APP-run clinics or shorten routine post-op visits, for example, can preserve urgent fracture access, but only if escalation pathways are explicit enough to prevent missed complications.
What to watch next
AMA highlights 2026 proposals that include an “efficiency adjustment” and new practice expense methodologies, both of which could shift the impact across specialties depending on how the conversion factor is finalized. These details directly influence clinic templates and OR block allocation.
Reimbursement formulas set the boundaries for how time and resources are distributed in practice. Careful attention to upcoming changes is necessary to balance financial sustainability with patient access. For a reported look at how payer realities are forcing tough choices in private practice, see Healio’s coverage.
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Disclaimer: This article is intended for informational purposes only and should not be interpreted as legal, financial, or medical advice. Physicians should consult official CMS guidance, relevant professional organizations, and qualified advisors when making decisions regarding reimbursement and patient care.
Sources
Medicare physician payment schedule
Realities of Medicare, Medicaid force tough choices for private practices
Unequal Access to Orthopaedic Care Fuels Push for Healthcare Reform
