Medicare physician payments would decline 2.9% in 2025 under a proposed rule the Centers for Medicare and Medicaid Services published Wednesday.
The draft regulation provoked sharp criticism from the American Medical Association and other medical societies, which renewed their calls for Congress to come to their aid. The proposed rule also includes significant policies related to the Medicare Shared Savings Program and telehealth reimbursement.
Underlying the overall doctor pay cut is a reduction in the physician fee schedule's conversion factor, which CMS proposed to reduce by 2.8% next year. That would mark the fifth straight year the conversion factor went down. Congress provided doctors with partial relief from the Medicare reimbursement decrease that took effect Jan. 1.
“The calendar year 2025 physician fee schedule proposed rule supports physicians and other practitioners in delivering care that meets the needs of people with Medicare, including through telehealth flexibilities, strengthened primary, behavioral and oral healthcare, and improved access to caregiver training services," CMS Administrator Chiquita Brooks-LaSure said in a news release.
The Medicare physician fee schedule comprises three main factors: Relative value units based on what procedures cost; geographic price indices, which adjust the relative value units using local cost data; and the conversion factor, which is applied to translate the abstract relative value units into real dollar amounts.
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Medicare annually recalculates the conversion factor based on the previous year’s conversion factor, and then adjusts it so payments remain budget-neutral.
For the last several years, CMS has reduced the conversion factor to maintain budget neutrality as the value of certain office visit codes increased, most recently finalizing a 1.3% cut for doctors for 2024.
“The consecutive years of Medicare cuts demand a comprehensive legislative solution," AMA President Dr. Bruce Scott said in a news release. "Previous quick fixes have been insufficient — this situation requires a bold, substantial approach. A Band-Aid goes only so far when the patient is in dire need."
The proposed pay rates are "critically short-sighted,” Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, said in a news release. “Medicare physician reimbursement is on a dire trajectory and these ongoing cuts continue to undermine the ability of medical practices to keep their doors open and function effectively — the need for comprehensive reform is paramount.”
The American Academy of Family Physicians called on Congress to enact an annual inflationary update to alleviate the year-to-year uncertainty under the current reimbursement system. "Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral healthcare and other critical preventive services they need," President Dr. Steven Furr said in a news release.
Senators launched a bipartisan push in May to conduct their first serious look at doctor pay since Congress and President Barack Obama created the Merit-based Incentive Payment System, also known as MIPS, in 2015. But lawmakers have not agreed on how to finance the increased spending.
Congress is unlikely to take such an ambitious step this year but will counteract the 2025 cut, predicted Rep. Dr. Larry Bucshon (R-Ind.), the vice chair of the Energy and Commerce Committee's health subcommittee. "It won't be a permanent fix, but we'll probably mitigate it," he said Wednesday. Bucshon is a cosponsor of the Strengthening Medicare for Patients and Providers Act of 2023, which would permanently raise Medicare physician payments.
CMS also proposed new reimbursements for an array of providers who treat patients at high risk of suicide or overdose, including a separate payment for safety planning interventions and follow-ups after discharge.
Medicare would begin paying for a host of products and services, such as hepatitis B vaccinations, colorectal screenings and dental services, that are related to end-stage renal disease under the draft regulation. In addition, CMS proposed a fee schedule specifically for prescription drugs that are covered as preventive care.
Under the proposed rule, high-performing providers in Medicare Shared Savings Program accountable care organizations would have access to advance payments based on the savings they accrue. Those providers would be permitted to spend the money on practice improvements such as hiring, adding services or reducing cost-sharing for hearing, vision and dental care that could produce further savings.
The draft regulation includes limited extensions of Medicare reimbursements for telehealth that became available during the COVID-19 public health emergency, such as virtual supervision of medical residents and audio-only appointments. Other pandemic-era flexibilities based on geography, site of service and practitioner type will expire without congressional action, according to CMS.
Michael McAuliff contributed to this story.
