Q&A: Cuts to 2025 physician fee schedule yield ‘catastrophic’ impacts to patient access

Key takeaways:

• Seemal R. Desai, MD, FAAD, president of the AAD, discusses the impact of the 2025 physician fee schedule.
• The fee schedule, administrative burdens and inflation are putting a strain on physicians.

The CMS finalized cuts to the 2025 physician fee schedule for the fifth year in a row, prompting an urgent call-to-action from the American Academy of Dermatology.

HHS, through the CMS, announced the finalization of the 2025 Medicare Physician Fee Schedule.

The final rule was adjusted “to strengthen primary care, expand access to preventive services and further access to whole-person care for services such as behavioral health, oral health and caregiver training,” the CMS press release states. “The final rule reflects the Biden-Harris Administration’s commitment to protecting and expanding Americans’ access to quality and affordable health care.”

Unfortunately, while these cuts lift primary care practices, specialists are floundering.

The American Academy of Dermatology responded to this announcement with its own press release, stating that the finalized cuts to the physician fee schedule are “further hindering patient access to care as practice expenses increase and payments decrease.”

Healio Dermatology spoke with Seemal R. Desai, MD, FAAD, president of the AAD, about why these cuts are being made, how this affects physicians and patients and what dermatologists should do about it.

Healio: So, the CMS has finalized cuts to the physician fee schedule for the fifth year in a row. How does the medical cut on physician services affect patient access?

Desai: That is a fantastic question, and I think the simple answer is that patient access is in a state of crisis because of these continual cuts. I would say that, for me personally as a dermatologist in private practice and as president of the AAD, I feel this day to day in my office. And it is not just in dermatology; it is in so many other specialties too.

The doctor-patient relationship is really at an unsustainable point because physicians cannot continue to sustain their practices and ultimately what this ends up being is a threat in access to patient care.

These continual cuts are exactly what is continuing then to pound onto administrative burdens, like prior authorizations, which we have to do all the time, crazy rising costs related to keeping our staff employed and multiple things in the practice infrastructure that have to be done to maintain an office. And then, of course, to top it off, there is inflation.

There was a really good Definitive Healthcare survey in 2023 that found over 70,000 physicians have left the health care workforce over the last 2 to 3 years. This is because of these unsustainable rising costs in maintaining a practice combined with administrative burdens which ultimately lead to physician burnout. And guess who's at the end of that chain that is the most affected? It is the patients.

So, in my opinion, and in all the work we have done as an organization at the AAD, the failure of this Medicare physician fee schedule to keep up with inflation is the greatest threat to maintaining access to health care for our seniors. It is absolutely catastrophic at this point.

Healio: You said that rising costs and administrative burdens are both contributing to this problem of physicians not being able to sustain their practices. Putting cost aside for the moment, do you think there should be reform on administrative burdens as well?

Desai: I mean, I would like nothing more than to have permanent prior authorization reform and Step Therapy reform in all 50 states. The Merit-based Incentive Payment System and a value-based system that CMS wants us to keep doing every year that has never been shown to improve quality through the quality payment program also needs reform.

Now, when it comes to all of those administrative hurdles, physicians continue to do everything we can to comply, but these burdens are just too onerous. That is something that I always want to stress. As doctors, it is in our best interest to continue to provide the highest quality care for our patients. We inherently want that. But, if you cannot keep the doors open to your practice because you cannot keep affording to pay your staff, then good luck trying to provide quality care when you cannot even keep the office open.

Healio: So, why are these cuts occurring?

Desai: That is a very good question, and I will give you my personal opinion and then some of the work we have done. The biggest part of these continuous cuts is because of statutory budget neutrality requirements. Governmental budget neutrality means that the budget has to be neutral.

The Medicare Physician Fee Schedule, which is the actual program that determines the reimbursement from Medicare to the doctors for providing a biopsy, for taking out skin cancer and all of those things that those fees go toward every year, have to be budget neutral. And so, what has led to making them budget neutral is cuts.

So, if the government projects that net pricing changes for existing services across the fee schedule will increase total Medicare spending by more than $20 million, then the government is required to reduce all Medicare physician services by that excess amount. And they do that by adjusting the Medicare conversion factor because again, you have to be budget neutral.

Healio: How does this affect your personal practice?

Desai: Well, you know, I treat lots of patients with skin of color. That is sort of my expertise. I also treat patients with pigmentary disorders as I am one of the few vitiligo specialists in the country.

Now pigmentary disorders, and all of these other skin conditions, have co-morbid autoimmune phenomenon. Many of these patients have additional autoimmune diseases associated with their vitiligo; one example is thyroid disease. But now, if I need to get a vitiligo patient who I screen for thyroid disease into an endocrinologist to manage their thyroid disease, I cannot find an endocrinologist in Dallas who takes insurance or still takes Medicare for these patients who does not have a very long waiting period. Most have become concierge and cash pay.

That is just one tangible example of how it is affecting patient access even in terms of referrals to other specialists. I have also had to hire one full time and now an additional full-time equivalent. So, I have two staff who all they do all day long is deal with prior authorizations and prescription-related issues for these patients who have systemic diseases.

I cannot tell you how much I have to pay these individuals to keep them to do this work. I mean, they can easily go to other places and make more money and most of them do it because they are loyal and care about health care, but, when I opened my office in 2011, I had one medical assistant and one front office person.

Now, I have to have, not just my medical assistants in the exam rooms who help me with my biopsies and skin cancers, but I have to have two people just sitting at a desk all day handling prior authorizations and prescription-related issues. Those are in addition to the nurses that I need in the rooms with me.

Healio: You mentioned the example about not being able to refer patients due to other specialists not taking Medicare. Are these practices not taking Medicare because of these cuts?

Desai: Yes! A lot of doctors are now not taking Medicare at all because they cannot keep their offices open. So, they are going concierge.

Healio: The AAD has already released an official statement on a call to action concerning these cuts. What else is the AAD doing about this issue?

Desai: This year at the Academy, we have a single federal advocacy focus in our organization where we are solely laser focused at the federal level in our advocacy work on the Medicare Physician Fee Schedule.

I think you also know that when these current cascading cuts started emerging many years ago, and then as part of the 2021 fee schedule, CMS made significant changes to the values for office visits and evaluation and management services.

The increased values for those services were aimed at providing better reimbursement for primary care doctors at the expense of specialists. So that also was just yet another example of that budget neutrality and how they were trying to adjust it.

Because that law requires that such changes to the fee schedule be enacted budget neutrally, that’s why cuts to procedures such as cutting out a melanoma, which can save someone’s life, taking care of a horrible rash so patients do not get hospitalized in the burn unit and all of those services continue to get cut.

So, for us at the Academy, it is a huge call to action to let our members know that they have got to contact their congressmen, congresswomen and senators. We have got to get this bipartisan legislation aimed at halting budget neutrality restrictions and helping with inflationary-based adjustments.

This is a huge part of our advocacy efforts this year at the federal level and it is the entire thing I have been focused on during my presidency.

Healio: Is there anything you would like to add?

Desai: Thank you for taking the time to highlight this crisis because I think we have got to educate patients to know why this is happening. The sad part about this is, we are all going to be patients at some point. So ultimately, no one is immune from the effects of this.

References:

• HHS finalizes physician payment rule strengthening person-centered care and health quality measures. https://www.cms.gov/newsroom/press-releases/hhs-finalizes-physician-payment-rule-strengthening-person-centered-care-and-health-quality-measures. Published Nov. 1, 2024. Accessed Nov. 7, 2024.
• Congress must act now to protect patients’ health care access in the face of consecutive cuts. https://www.aad.org/news/president-statement-final-2025-medicare-physician-fee-schedule. Published Nov. 1, 2024. Accessed Nov. 1, 2024.
• Addressing the healthcarestaffing shortage. https://www.definitivehc.com/sites/default/files/resources/pdfs/Addressing-the-healthcare-staffing-shortage-2023.pdf. Published September 2023. Accessed Nov. 6, 2024.