Impact of Physician Participation Trends in Medicare

As of 2025, approximately 1% of U.S. physicians have opted out of Medicare entirely, according to data from KFF. Though this figure seems minor, the trend's distribution and underlying causes suggest significant impacts for independent practices and ambulatory surgery centers (ASCs).

A JAMA study analyzing Medicare data from 2013 to 2023 indicates a 6.3% increase in overall physician participation in Medicare. However, physicians from nonmetropolitan areas were more likely to exit the program compared to those in metropolitan regions. Additionally, higher exit rates were observed among physicians in Health Professional Shortage Areas, which already face challenges in maintaining sufficient healthcare capacity.

Led by Christopher Whaley, PhD, at Brown University, the study highlighted gender disparities, with female physicians exiting at a higher rate (3.16%) than males (2.39%). This trend is attributed partly to the overrepresentation of female physicians in primary care, where Medicare reimbursement pressures are particularly intense.

Financial factors prompting physicians to opt out have accumulated over decades. The American Medical Association reports a 33% decline in Medicare reimbursement for physician services from 2001 to 2026, when accounting for inflation. Dr. Taif Mukhdomi, an interventional pain physician in Ohio, notes that Medicare's consistent reductions in office-setting reimbursements have financially disadvantaged physicians, influencing commercial payers' rates as well.

This trend contributes to a rise in practice closures, with Becker’s reporting 23 physician practice closures in 2025 and more projected for 2026. For example, State of Franklin Healthcare Associates closed four primary care clinics in January 2026. This reduction in physician participation often affects patient access, with payer-operated practices representing a growing portion of the Medicare primary care market.

This consolidation creates operational challenges for ASCs reliant on independent surgical specialist referrals. As pressures such as coverage rate reductions and increased administrative tasks intensify, fewer independent physician partnerships are available.

CMS's final rule on the 2026 Hospital Outpatient Prospective Payment System (OPPS) aims for equalizing payment rates across sites, potentially reducing OPPS spending by about $290 million in 2026. Achieving greater site neutrality in payment structures may enable independent groups to compete more effectively with larger systems.

Dr. Brian Curtin, an orthopedic surgeon at OrthoCarolina, suggests that if site-neutral payments become standard, private practices would likely shift suitable cases from hospitals to their ASCs to address financial inefficiencies.

In legislative developments, the Provider Reimbursement Stability Act was introduced by bipartisan lawmakers. Spearheaded by North Carolina's Rep. Greg Murphy, MD, the bill seeks to adjust the budget neutrality threshold, tie it to inflation, limit year-over-year conversion factor variance, and update practice expense calculations. Its passage would mark substantial changes to the physician fee schedule since MACRA.

These topics will be central at Becker’s 32nd Annual Meeting in Chicago, where ASC leaders and healthcare executives will discuss strategies to address growth and reimbursement challenges.