Doctors hit with pay cut for 2025 as Congress eyes fix

The Centers for Medicare and Medicaid Services has gone ahead with a 2.9% cut to Medicare physician reimbursements for 2025, setting up a lobbying fight when Congress gets back to Washington after the elections.

CMS published the Medicare Physician Fee Schedule final rule Friday, which retains the payment reduction the agency proposed in July. The American Medical Association and other physician societies are pleading with Congress to stop the cut from taking effect or blunt its impact— as it did for 2024 and prior years.

Related: Doctors hate MIPS. They aren't crazy about the alternative, either

A bipartisan group of House members debuted legislation Tuesday that would block the cut. Although endorsed by the AMA and other healthcare groups, the measure faces competition on Capitol Hill from other approaches developed over the course of the year in the House and Senate, and a demand that additional spending be offset by cuts in other areas.

Congressional leaders have a litany of priorities to tackle in the lame duck session slated to begin Nov. 12, which may include a package of healthcare items including Medicare physician pay. Physicians also seek a permanent replacement for the Merit-based Incentive Payment System, also known as MIPS, which is not on the agenda for the brief return of the 118th Congress this month.

Doctor payments

Undergirding the 2.93% pay cut is the fifth consecutive annual reduction to the "conversion factor" that sets the fees Medicare pays doctors. The conversion factor in 2025 will be 2.83% less than in 2024.

The Medicare physician fee schedule is calculated using three factors: Relative value units, which are based on the cost of procedures; geographic price indices, which adjust RVUs using local cost data; and the conversion factor, which translates those numbers into dollar amounts. The conversion factor has to be recalculated annually based on the previous year’s conversion factor, then adjusted to keep it budget-neutral.

The AMA, the American Academy of Family Physicians, the Medical Group Management Association and others blasted the final rule.

“To put it bluntly, Medicare plans to pay us less while costs go up. You don’t have to be an economist to know that is an unsustainable trend, though one that has been going on for decades,” AMA President Dr. Bruce Scott said in a news release. “For physician practices operating on small margins already, this means it is harder to acquire new equipment, harder to retain staff, harder to take on new Medicare patients and harder to keep the doors open, particularly in rural and underserved areas.”

Telehealth

The final rule extends Medicare coverage of audio-only telehealth visits when patients aren’t able to or prefer not to use video platforms. In addition, the regulation allows telehealth providers to continue reporting their office locations when providing service from their homes.

CMS acknowledged that many telehealth flexibilities Congress authorized during the COVID-19 pandemic will expire at the end of this year unless lawmakers reinstate them.

Expanded coverage

The final rule creates payment codes and regulatory flexibilities for clinicians who treat patients at risk of overdose or death by suicide, including for certain audio-only services for substance use disorder treatments, payment options for new substance use disorder medications and separate payments for safety planning interventions and follow-ups after discharge.

CMS finalized new payment codes for preventive services such as hepatitis B vaccinations and colorectal screenings and institutes a fee schedule for drugs that are considered preventive. The rule also includes provisions authorizing coverage of dental services related to end-stage renal disease.

Accountable care organizations

CMS finalized its proposals to offer high-performing Medicare Shared Savings Program ACOs an advance cut of the savings they generate.

The proposals let ACOs in the Shared Savings Program, which just reported record savings, use their prepaid shared savings to invest in practice improvements or reduce cost-sharing that could further reduce spending.

The National Association of ACOs praised the final rule but urged CMS to address ongoing problems in the Shared Savings Program that it says make the program less attractive to participants.

"Current policies fail to adequately account for prior success, leaving ACOs unable to sustain robust clinical interventions and enhanced benefits for beneficiaries," National Association of ACOs Senior Vice President of Government Affairs Aisha Pittman said in a news release.