Physician Fee Schedule Faces Cuts in CY25

Overall Medicare payments to physicians and clinicians would be cut by a proposal to decrease average base payment rates by 2.93% from calendar year 2024 under a proposed rule released on June 10 by the Biden administration.

In the proposed 2025 Medicare Physician Fee Schedule (RIN 0938-AV33), the multiplier, or “conversion factor” used to determine provider reimbursement in traditional Medicare, would drop from $33.29 this year to $32.36 next year — a 2.8% reduction.

Many specialty providers would be affected. Vascular surgeons, interventional radiologists, and diagnostic testing facilities would see reimbursements decline by 2%, the proposal estimates. Plastic surgeons, orthopedic surgeons, and urologists would face a 1% reduction under the proposal from the Centers for Medicare & Medicaid Services (CMS).

Other providers would fare better. Clinical social workers would see a 4% increase in reimbursements, clinical psychologists would net a 3% increase, and anesthesiologists would see a 2% increase.

The change to the conversion factor “incorporates the zero percent overall update required by statute, the expiration of the 2.93% increase in payment for CY 2024 required by statute, and a small adjustment,” said a press release from the CMS.

A year ago, CMS proposed a 3.37% cut to payments for 2024. CMS implemented the rate decreases due to a statutory requirement that Medicare spending be budget-neutral.

The proposal prompted more calls for Congress to overhaul the way Medicare sets payment rates —which requires that any payment increases be offset by equal cuts elsewhere in the program. When adjusted for inflation, Medicare physician payment has declined 29% from 2001 to 2024, according to the American Medical Association.

Congress stepped in over the past several years to enact some relief for doctors. Most recently, lawmakers passed a 1.68% boost in Medicare payments to doctors as part of a large spending package in March. The boost runs through the rest of the year and the healthcare industry has pushed for a permanent solution.

Additional Proposed Policy Changes

CMS also suggests several initiatives aimed at enhancing payment for and availability of behavioral health care services. This includes a proposal to broaden reimbursement for opioid treatment programs to cover new FDA-approved medications for reversing overdoses, as well as to prolong the flexibility of using telehealth methods by OTPs.

Furthermore, CMS proposes extending specific telehealth exemptions until 2025. These include the exemption allowing providers to report their practice address instead of their home address when delivering services from home, the exemption enabling federally qualified health centers and rural health clinics to bill for telehealth services, and the exemption allowing virtual supervision for residents across all teaching settings when services are provided remotely.

CMS also introduces proposals concerning the Medicare Shared Savings Program. One such proposal aims to address significant, anomalous, and highly suspect (SAHS) billing activities starting from CY 2024 and beyond. Specifically, CMS suggests excluding payment amounts related to identified SAHS billing activities from financial calculations for the respective calendar year, as well as from historical benchmarks utilized for reconciliation purposes.

There will be a 60-day public comment period on the CY 2025 PFS proposed rule. The 60-day comment period closes on September 9, 2024.

Agency: Centers for Medicare & Medicaid Services (CMS), Health and Human Services (HHS)

Action: Proposed Rule

Full Text: Calendar Year 2025 Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; etc. (will be published 7/31/24 but you can find text here)

CMS Press Release: HHS Proposes Physician Payment Rule to Drive Whole-Person Care and Improve Health Quality for All Individuals with Medicare

CMS Fact Sheet: Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule (CMS-1807-P)-Medicare Shared Savings Program Proposals