As orthopedic surgeons brace for another round of Medicare payment cuts, some may be weighing a step few physicians have taken: leaving the program entirely.
CMS’ proposed 2027 physician fee schedule, released July 14, projects a 7% reduction in aggregate allowed charges for orthopedic surgery. The conversion factor itself would fall by 1.68% for most clinicians, largely because a temporary 2.5% payment increase expires at year-end.
However, service-level changes cut deeper: a roughly 20% reduction in work relative value units for total knee, hip and shoulder replacement and a 50% payment reduction for evaluation and management visits performed on the same day as a procedure. The American Academy of Orthopaedic Surgeons warned the proposal would accelerate consolidation.
Meanwhile, AAOS President Wilford Gibson, MD, said deeper cuts could lead some independent practices to consider hospital employment, private equity offers, reduced payer participation or leaving traditional practice. CMS is expected to finalize the rule in early November, with changes taking effect Jan. 1.
Still, opting out remains rare. As of November 2024, 12,244 nonpediatric physicians, or 1.2%, had formally opted out of Medicare, according to a January 2025 article in KFF, a share that has held steady for more than a decade. Psychiatrists had the highest opt-out rate at 8.1%, followed by plastic and reconstructive surgeons at 4.5%.
Some orthopedic surgeons have already stepped back from traditional reimbursement. Marc Pietropaoli, MD, founder and CEO of Skaneateles, N.Y.-based Victory Sports Medicine & Orthopedics, moved his practice away from insurance participation after finding that its only profitable services were the ones insurance didn’t cover. The shift meant cutting his staff from 32 employees to a much smaller team, much of it by eliminating billing, credentialing and denial-management roles.
“I just knew the traditional insurance model was killing us financially, but it was also not good care for patients,” he told Becker’s.
Practice administrators are seeing similar pressure. Paul Bruning, president-elect of the American Alliance of Orthopaedic Executives, told Becker’s earlier this year that shrinking reimbursement and rising costs are forcing independent musculoskeletal practices to reconsider whether they can keep seeing Medicare patients at all. “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.
Here are five things surgeons should know before opting out:
1. It is a two-year commitment that renews automatically. Surgeons opt out by filing an affidavit with their Medicare administrative contractor. Participating physicians must file at least 30 days before the opt-out takes effect. The opt-out lasts two years and renews automatically unless the surgeon cancels it at least 30 days before the period ends.
2. Every Medicare patient must sign a private contract. Opted-out surgeons must sign a private contract with each Medicare patient before providing services. Under the contract, the patient agrees to pay the full cost of care, and neither the surgeon nor the patient can bill Medicare for those services. Surgeons can set their own fees. Failing to follow the rules can void the opt-out and the private contracts for the rest of the two-year period.
3. The opt-out applies to Medicare Advantage patients too. Surgeons cannot opt out selectively. The decision applies to all of a surgeon’s Medicare patients, including those enrolled in Medicare Advantage, which may matter most in markets with high Advantage enrollment.
4. Emergency and urgent care follow different rules. Opted-out surgeons cannot ask a Medicare patient to sign a private contract when the patient needs emergency or urgent care. In those cases, the surgeon may still treat the patient and bill Medicare under specific rules, a consideration for surgeons who take trauma or emergency call.
5. Nonparticipation is a middle path. Surgeons who want more pricing flexibility without leaving Medicare can enroll as non-participating providers. Non-participating physicians who accept assignment are paid 95% of the Medicare-approved amount, while those who decline assignment on a claim can charge patients up to 15% more than the approved amount. Participating providers, by contrast, are paid 5% more than non-participating providers but must accept Medicare’s rates as payment in full. About 98% of physicians billing Medicare are participating providers.
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