CMS proposes cutting physician payments for fifth straight year

Key takeaways:

• CMS proposed reducing its Medicare Physician Fee Schedule conversion factor from $33.29 to $32.36 in 2025.
• However, the proposed rule also aims to strengthen primary care and maintain telehealth flexibilities.

CMS has released its proposed 2025 Medicare Physician Fee Schedule, or PFS, which includes a 2.93% cut in physician payments from the previous year, according to a press release.

The proposed 2025 PFS conversion factor is $32.36, a decrease of $0.93 from the current conversion factor.

AMA President Bruce A. Scott, MD, said the proposed cut highlights the need for Medicare payment reform.

“With CMS estimating a fifth consecutive year of Medicare payment reductions ... it’s evident that Congress must solve this problem,” he said in a statement. “In addition to the cut, CMS predicts that the Medicare Economic Index — the measure of practice-cost inflation — will increase by 3.6%. Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, physicians are urging Congress to pass a reform package that would permanently strengthen Medicare.”

According to the AMA, physician payments have declined 29% from 2001 to 2024, which does not account for the latest proposed reduction.

American Academy of Family Physicians President Steven P. Furr, MD, FAAFP, also called for congressional action, pointing out the payment rates will hinder care for beneficiaries, worsen ongoing workforce shortages and strain physician practices.

“Meaningful Medicare payment reform will help stem workforce shortages, combat consolidation, and meet the needs of a growing and aging population,” he said.

However, Furr noted that AAFP was encouraged by components of the proposed rule that aim to strengthen primary care. According to an HHS press release, CMS proposed establishing a new primary care management bundle that uses “coding describing certain primary care services that would be provided by advanced primary care teams, with adjustments for patient medical and social complexity to promote health equity.”

“These services would be tied to primary care quality measures to improve health outcomes for people with Medicare,” according to the release.

Furr said AAFP is “grateful” for the continued implementation of codes like G2211 “that more accurately reflect the resources needed for family physicians to serve as a comprehensive focal point of longitudinal care for patients.”

According to CMS, the proposed rule would also:

• expand access to caregiver training services, oral health, behavioral health, screening for colorectal cancer, vaccinations for hepatitis B and drugs covered as additional preventive services;
• maintain telehealth flexibilities; and
• continue with the implementation of the Inflation Reduction Act.

Kyle Zebley, senior vice president of the American Telemedicine Association, told Healio that CMS “did what they could within reason in terms of guaranteeing access to telehealth services and remote monitoring services for the average Medicare beneficiary.”

“We think it’s positive,” he said. “However, they are severely restrained in how far they can go because of the fact that Congress hasn’t acted on fundamental flexibilities that are set to expire Dec. 31 of this year.”

References:

• Congress must act on Medicare payment reform as CMS warns of more cuts. https://www.ama-assn.org/press-center/press-releases/congress-must-act-medicare-payment-reform-cms-warns-more-cuts. Published July 10, 2024. Accessed July 11, 2024.
• HHS proposes physician payment rule to drive whole-person care and improve health quality for all individuals with Medicare. https://www.hhs.gov/about/news/2024/07/10/hhs-proposes-physician-payment-rule-drive-whole-person-care-improve-health-quality-all-individuals-medicare.html. Published July 10, 2024. Accessed July 11, 2024.
• 2025 proposed Medicare Physician Fee Schedule highlights urgent need for Medicare payment reform. https://www.aafp.org/news/media-center/statements/2025-proposed-medicare-physician-fee-schedule.html. Published July 10, 2024. Accessed July 11, 2024.