Medicare payment reductions continue to compress margins for orthopaedic practices, making it more difficult to maintain financial stability. Practices are navigating a regulatory environment where each update to the Medicare Physician Fee Schedule introduces new constraints, limiting flexibility in clinical and operational decision-making. The increased influence of Medicare Advantage plans and the steady movement toward value-based care further complicate reimbursement expectations. As financial pressure builds, many practices are redesigning internal systems, developing new revenue streams, and supporting legislation that targets long-term reform. These responses mark a period of rapid and ongoing transformation for orthopaedic care delivery.
Payment reductions and Medicare Advantage plans are tightening reimbursement
The 2024 Medicare Physician Fee Schedule cut the conversion factor by 3.4 percent. This reduction affects reimbursement for the in-office services that make up a significant portion of most orthopaedic practices. Imaging, evaluation codes, management codes, and minor procedures now generate lower revenue, even as fixed costs continue to rise.
At the same time, Medicare Advantage plans are expanding. They now enroll over half of the Medicare population. These plans often pay less than traditional Medicare, require more prior authorizations, and delay payment processing. If your patient base includes Medicare Advantage enrollees, you’re likely seeing a steady increase in administrative work, reduced reimbursement per case, and growing delays in care delivery.
Operational changes are allowing practices to stay functional
Many practices are rethinking how they manage daily operations. Outsourcing billing, prior authorization, and coding services has helped some groups reduce administrative costs and focus more time on patient care. Joining larger networks or forming partnerships has also become common. These structures allow for shared infrastructure and improved contract negotiations with commercial and Medicare Advantage payers.
You also may already be using EHR platforms optimized for value-based care reporting. These systems can streamline documentation, track performance measures, and minimize penalties from CMS programs such as MIPS. Some practices have revised scheduling templates, increased telemedicine availability, or added mid-level providers to manage low-acuity visits. All of these tactics help maintain access and offset reimbursement losses.
Ancillary services and outpatient surgery are increasing practice revenue
Diversifying income sources is one of the most effective ways to reduce reliance on declining professional fees. Ancillary services like physical therapy and in-office imaging can provide steady revenue and support more complete patient care. If your practice offers these services, you’re likely seeing improvements in continuity, adherence, and per-visit value.
Ambulatory surgery centers are another core part of this strategy. Physician-owned ASCs offer more control over aspects such as costs, staffing, and case selection. CMS continues to approve more procedures for the ASC setting, which gives you flexibility in managing surgical care. For many practices, moving appropriate cases out of the hospital setting has led to faster turnover and fewer cancellations.
Regenerative treatments are also gaining interest. Cash-pay procedures like platelet-rich plasma injections and stem cell therapies are increasingly common. These services require patient education and careful documentation but can strengthen your brand and expand your care offerings. If you’re exploring this area, strong marketing and defined patient selection criteria are essential.
Bundled models and value alignment are gaining attention
While fee-for-service still dominates, many practices are exploring ways to participate in bundled payment models. Total joint replacements are a primary example. Bundled models offer a single payment for the entire episode of care, from preoperative evaluation to post-discharge recovery. If you’re participating, you’ve likely made changes in care coordination, patient selection, and post-acute planning to meet cost and outcome targets.
These models can help you align clinical decisions with reimbursement. When executed well, they allow for predictable revenue and stronger payer relationships. You may be piloting these programs with hospital partners or participating in CMS initiatives like BPCI Advanced. Success requires accurate data and a focus on long-term results rather than visit-based volume.
Advocacy is influencing payment policy and practice viability
While these adjustments help in the short term, long-term solutions require changes at the federal level. The American Academy of Orthopaedic Surgeons continues to advocate for a more sustainable Medicare payment model. Their priorities include eliminating budget neutrality requirements, implementing annual inflation adjustments, and supporting surgical specialties in value-based arrangements.
Other specialty groups, such as the Congress of Neurological Surgeons, are backing bipartisan efforts to stabilize annual updates and reduce volatility in Medicare payment policy. These efforts are gaining support, but meaningful reform remains slow. Participating in these advocacy efforts through email campaigns, legislative visits, or committee involvement can help amplify your voice and protect your future income.
If you haven’t engaged with these efforts, the AAOS Advocacy Action Center offers tools for contacting lawmakers and tracking proposed bills that affect orthopaedic practice. Regular participation ensures decision-makers hear from physicians managing the direct consequences of these payment trends.
Continued adaptation will determine long-term practice health
The ongoing reduction in Medicare reimbursement is forcing orthopaedic practices to make permanent changes. Many practices are redesigning internal systems, building out cash-based services, and investing in outpatient surgical facilities to maintain revenue and improve control.
Even with these strategies in place, the current Medicare structure will continue to present challenges unless there is meaningful reform. The practices that remain viable will be those that combine clinical efficiency with strategic planning and advocacy involvement. You’re already making hard decisions in response to external pressures.
Sources
A Study of Arthroplasty Surgeons Who Opt Out of Medicare
Orthopedics’ underexplored revenue streams
Physician-Led Coalition Urges Balanced Medicaid Reforms that Protect Access, Improve Outcomes
The Rise of Medicare Advantage is Impacting the Fidelity of Traditional Medicare Claims Data
What Orthopaedic Surgeons Need to Know about 2025 CMS Payment Policy Changes
