For many orthopedic practices across the U.S., the economics of Medicare are becoming increasingly difficult to sustain.
According to Paul Bruning, president-elect of the American Alliance of Orthopaedic Executives, shrinking Medicare reimbursement and rising operational costs are increasingly forcing independent musculoskeletal practices into difficult decisions about consolidation, staffing and even whether they can continue seeing Medicare patients at all.
“As those margins continue to narrow more and more, some organizations have had to consolidate with larger organizations because of the administrative cost savings they might be able to achieve,” Mr. Bruning said. “Others have joined hospital systems or private equity groups because they simply can’t afford to continue independently.”
Some practices, he said, have already closed altogether. “There have been many that have closed because they’re missing payrolls and they just are not able to keep up with staffing and the costs associated with maintaining a practice,” he said.
The comments come as orthopedic leaders and physician organizations intensify pressure on Congress to reform Medicare physician reimbursement and reduce administrative burdens tied to programs such as the Merit-based Incentive Payment System and prior authorization.
In a recent letter submitted to the House Energy and Commerce Subcommittee on Health, AAOE warned that Medicare physician payment has declined 33% in inflation-adjusted terms since 2001 while staffing, infrastructure, technology and supply costs have continued rising.
Mr. Bruning said the consequences are increasingly visible inside orthopedic and MSK practices nationwide.
The rationale to reconsider Medicare
One of the clearest warning signs, according to Mr. Bruning, is that more orthopedic groups are reconsidering whether they can financially sustain Medicare participation. “We have seen a lot more organizations walk away from Medicare patients,” he said. “Or they limit the number of those patients they see per day because they just can’t afford it.”
That creates a growing access problem as the Medicare population continues expanding.
“The dramatic number of people going onto Medicare every single year, combined with orthopedic groups reducing their ability to see Medicare patients, creates a no-win situation,” he said. Ironically, Mr. Bruning argues, the current reimbursement structure may ultimately increase costs for Medicare itself.
As more independent orthopedic groups reduce Medicare exposure, patients increasingly shift toward hospital outpatient departments, which are reimbursed at higher rates than physician-owned practices for many of the same services. “It actually costs Medicare more for those same patients than if they just paid independent physician groups a little bit more,” he said.
The issue has become even more acute, he said, because recent physician fee schedule adjustments have not kept pace with inflation or rising labor costs. “We’re just asking for inflation,” Mr. Bruning said. “A set standard inflationary adjustment per year so we can keep up with seeing patients and not lose money, not lose staffing and not be forced into consolidation if we don’t wish to be.”
AAOE has urged Congress to tie annual Medicare reimbursement updates to the Medicare Economic Index, arguing that predictable inflationary adjustments would create greater long-term stability for orthopedic practices.
‘The math doesn’t work’
For Mr. Bruning, one of the biggest problems facing orthopedic practices is unpredictability. Every year, physician groups wait to see how reimbursement changes may affect staffing, operations and long-term planning. “If your pay goes down and down and down while your costs go up and up and up, you can’t maintain a business that way,” he said.
To explain the problem, he compared orthopedic practices to restaurants. “You would not see a restaurant maintain the ability to operate if every year, all of their costs went up, but they had to decrease the price of every meal on the menu,” he said. “That’s what’s happening right now.”
Without predictable reimbursement adjustments, he said, many orthopedic leaders increasingly feel pressure to seek the financial stability of hospitals, health systems or private equity-backed organizations. “If you’re in private practice and this is how you feed your family, you need to know there’s stability,” he said.
Why orthopedic leaders say MIPS is failing
Beyond reimbursement cuts themselves, Mr. Bruning believes many orthopedic groups are struggling under the administrative burden created by MIPS and related reporting requirements.
“The challenge with MIPS is it’s really become more about checking boxes than actual quality,” he said.
According to AAOE’s letter to Congress, physicians spend an average of 53 hours annually on MIPS-related tasks while compliance costs physicians roughly $12,800 per year.
For orthopedic and MSK specialists, Mr. Bruning said the burden is compounded by the limited number of specialty-relevant quality measures available under the program. “You have staff going into charts trying to make sure every box is checked correctly,” he said. “That’s not quality. That’s administrative work.”
He questioned whether those reporting requirements meaningfully improve patient outcomes.
“If you look at MIPS, has it actually improved patient outcomes?” he said. “There’s probably no study out there that would clearly say that.”
Instead, he believes future payment reform efforts should focus more heavily on standardized patient-reported outcomes and clinically meaningful quality measures rather than administrative reporting requirements.
“We need to concentrate more on the quality curve,” he said.
The growing backlash against prior authorization
If reimbursement instability is the largest long-term concern for orthopedic practices, Mr. Bruning said prior authorization may be the issue generating the most immediate frustration.
“Prior authorization is the No. 1 angst issue,” he said. “It drives everybody crazy.” He described repeated delays for surgeries that are ultimately approved anyway, often after multiple appeals and peer-to-peer reviews.
In one recent case, he said, a high-volume orthopedic shoulder surgeon was required to justify a shoulder replacement procedure to an emergency medicine physician during a peer-to-peer review process.
“That’s not peer to peer,” Mr. Bruning said. “That’s ridiculous.” The delays, he argued, create additional administrative costs while postponing care and potentially worsening patient outcomes.
“It delays care for patients, causes poorer outcomes and creates enormous administrative burden,” he said.
What orthopedic leaders want Congress to do next
While AAOE supports innovation in value-based care and payment reform, the organization has also warned lawmakers against mandatory alternative payment models that may not fit all orthopedic practice structures.
Mr. Bruning said orthopedic leaders remain concerned that mandatory models could disproportionately burden independent physician groups while favoring hospital-controlled systems.
“The groups that have historically done the best with bundled payments have actually been independent physician practices,” he said. Still, he emphasized that orthopedic leaders are not resisting reform itself.
Mr. Bruning said many orthopedic leaders feel reimbursement policy is increasingly being shaped without enough input from physician practices managing day-to-day operational realities. “We want to be part of the conversation,” Dr. Bruning said. “We want to come to the table and offer thoughts on how we improve patient care, improve quality and remain cost conscious at the same time.”
“We’re not asking for exorbitant amounts,” he said. “We need to have a margin to maintain a mission.”
At the Becker's 23rd Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference, taking place June 11-13 in Chicago, spine surgeons, orthopedic leaders and ASC executives will come together to explore minimally invasive techniques, ASC growth strategies and innovations shaping the future of outpatient spine care. Apply for complimentary registration now.
