Wilford Gibson, MD, president of the American Academy of Orthopaedic Surgeons and partner at Virginia Beach, Va.-based Atlantic Orthopaedic Specialists, knows how little financial cushion an independent medical practice can have.
During the COVID-19 pandemic, his group’s physician partners stopped taking paychecks temporarily so they could continue paying employees. Even under normal circumstances, he said, independent practices operate with little excess cash.
“We go month to month, really payroll to payroll,” Dr. Gibson told Becker’s.
That is the lens through which he views CMS’ proposed 2027 Medicare Physician Fee Schedule. He worries some of its reductions could push independent orthopedic groups toward decisions that are difficult to reverse: selling to hospitals, taking private equity deals, limiting certain patients, closing rural offices or retiring early.
“This is one of the most dangerous and severe situations I’ve seen in the 30-plus years I’ve been in practice,” he said.
AAOS argues the issue extends beyond physician compensation. The organization believes Medicare payment policy could accelerate consolidation and push care from independent practices into larger systems with different cost structures.
CMS says the proposed rule is intended to advance quality, efficiency and innovation while updating how physician services and practice expenses are valued. The rule could change before taking effect Jan. 1.
This is not a routine Medicare cut
The proposal would reduce Medicare’s conversion factor by 1.19% for qualifying alternative payment model participants and 1.68% for other clinicians compared with 2026, largely because a temporary 2.5% physician payment increase expires at year-end.
But Dr. Gibson is more concerned about changes to individual orthopedic services.
The OrthoForum, an alliance of independent orthopedic practices, estimates proposed changes could reduce physician reimbursement for total hip and knee replacements by approximately 20%.
Dr. Gibson said cuts of that magnitude are difficult to absorb as practices also face rising costs for staff, malpractice coverage, health insurance and technology.
“We essentially never get an inflationary adjustment to keep up with inflation,” he said.
CMS is also proposing changes to its practice expense methodology to rely on more current and auditable cost information. AAOS has asked the agency to pause the new payment values and maintain 2026 levels while physicians and policymakers work toward a longer-term approach.
When payment policy becomes consolidation policy
Dr. Gibson expects deeper Medicare reductions could lead some independent practices to consider hospital employment, private equity offers, reduced payer participation or leaving traditional practice.
He worries that could undermine Medicare savings if more care shifts from physician offices and ASCs into higher-cost settings.
The concern is a paradox: Cutting physician reimbursement may reduce one area of Medicare spending while changing the market in ways that increase costs elsewhere.
AAOS also argues consolidation could leave patients with fewer choices and less access to musculoskeletal care, particularly in rural communities.
Rural access has nowhere to shift
When an independent orthopedic practice disappears in a large metropolitan area, patients may have another option nearby. In rural communities, they may not.
“Some practices in rural areas are going to realize it’s just much too risky to stay open,” Dr. Gibson said.
Patients with fractures, severe arthritis or other musculoskeletal conditions may instead turn to community emergency departments before being transferred elsewhere, assuming another orthopedic surgeon and hospital capacity are available.
“There’s no longer anyone there,” Dr. Gibson said of communities that lose local orthopedic coverage. “They’ll have to be seen in the emergency room, temporized and then referred to other centers.”
He does not predict how many practices would close if the proposal becomes final. His concern is that communities with only one orthopedic access point have little ability to absorb a loss.
A payment rule can change the patient visit
Another proposal would reduce payment when physicians provide a separately identifiable office visit and certain procedures on the same day. The highest-priced service would receive full payment, while other qualifying services generally would be paid at 50%.
CMS says the policy reflects efficiencies when services occur during the same encounter and addresses potential duplicate payment.
Dr. Gibson sees a potential unintended consequence. An older patient with an arthritic knee may need a full examination to rule out hip or spine pathology before receiving an injection during the same visit. If reimbursement falls below the cost of providing the injection, practices could have a financial reason to schedule the procedure for another day.
That means another appointment, another trip and another delay. Dr. Gibson said his practice has calculated the cost of the supplies, medication and staff involved in an injection. At half payment, he said, the economics may no longer work.
Orthopedics has already been asked to lower the bill
Dr. Gibson’s frustration also reflects orthopedics’ participation in Medicare cost-containment efforts. Surgeons have moved appropriate procedures from hospitals into ASCs and participated in bundled payment programs. Practices have also invested in registries, electronic health records and patient-reported outcomes.
“We’ve been saving costs for Medicare through the bundles and through moving people to ASCs,” he said. “And even though we’re saving the money, we’re penalized.”
Dr. Gibson supports value-based care and wants physicians involved in designing longitudinal musculoskeletal models, with opportunities to share in savings when they accept risk and reduce total costs.
His broader argument is that reducing physician reimbursement is not necessarily the same as reducing the total cost of patient care. A surgeon who prevents a hospitalization, keeps an appropriate joint replacement in an ASC or reduces post-acute utilization may generate savings well beyond the professional fee.
‘Put things on pause’
AAOS is not asking CMS to abandon payment reform. It is asking for time.
“Let’s freeze what we have right now,” Dr. Gibson said. “That’s not our long-term solution.”
AAOS wants CMS to maintain 2026 payment values while working toward a more sustainable model. CMS is accepting comments through Sept. 14, and Dr. Gibson said AAOS is coordinating its response with orthopedic subspecialty organizations.
The rule remains proposed, meaning CMS could change payment values or revise individual policies. The closures, acquisitions and access problems Dr. Gibson describes remain warnings, not foregone conclusions.
His concern is that some consequences would be difficult to reverse. A reimbursement cut can change in the next fee schedule. A physician who retires may not return. An independent practice absorbed by a hospital is unlikely to reappear the following year. A rural community that loses its orthopedic surgeon cannot easily replace decades of experience.
After more than 30 years watching orthopedic practices become more efficient, participate in bundles, move surgery outpatient and absorb reimbursement reductions, Dr. Gibson’s concern about 2027 is not whether orthopedics can adjust again. It is what the healthcare system may lose in the adjustment.
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