CMS proposes 2.9% cut to physician pay for 2025

Doctors would see their Medicare reimbursement fall by 2.9% on average next year if a new CMS payment rule is finalized. 

Regulators blamed statute requiring Medicare’s physician benefit to remain budget neutral for the cuts, which were immediately slammed by physician groups. 

However, it’s unlikely the cuts will go into effect as proposed, as Congress historically steps in to mitigate dramatic decreases to doctor pay. 

The CMS is proposing lowering the conversion factor used to translate the cost of providing medical services into physician payments by 2.8% for next year. 

It’s the fifth straight year that regulators proposed slashing the conversion factor, according to the American Medical Association. Last year, the CMS finalized a 3.4% cut to the conversion factor, which was expected to lower physician payments by 1.25% on average. 

However, Congress has prevented the worst of the reductions from going into effect. Spending legislation passed earlier this year enacted a temporary bump for services from March through December that reduced the cuts by about half. 

In recent years, Washington has relieved on average 60% of the CMS’ proposed cuts. If that trend holds true, physicians could see their reimbursement for 2025 fall by about 1.1% instead of 2.9%. 

Still, associations representing U.S. doctors decried the proposed rule, arguing they’ve been forced to absorb higher costs without commensurate payment updates from the government. 

They’re not the only groups raising the alarm. Recently, a key congressional advisory committee and top health officials in the Biden administration have also flagged that ongoing Medicare cuts are straining providers. 

Regulators’ hands are somewhat tied absent Congress overhauling how Medicare pays physicians. Under current law, the projected cost of all changes to the payment rule, called the physician fee schedule, have to be budget neutral. When Medicare adds reimbursement for more services or the cost of services increases, the CMS has to lower the conversion factor as a result. 

Amid fierce physician lobbying, lawmakers on the Hill have explored reform, including tying physicians’ annual payment update to the Medicare Economic Index, a measure of practice cost inflation. That fix is supported by most major physician groups. However, Congress has yet to arrive at a consensus solution. 

Under the proposed rule, clinical social workers, clinical psychologists and anesthesiologists will see the largest average increase to their payments next year, with 4%, 3% and 2% bumps respectively. 

Diagnostic testing facilities, interventional radiologists and vascular surgeons would see the biggest decreases of all specialties, at 2%. 

The rule also proposes a new set of advanced primary care services allowing providers to bundle existing codes for care management into a mix of encounter- and population-based payments. The new coding, which allows providers to adjust for patients’ health and social needs, is meant to nudge physicians towards providing more value-based care while simplifying billing for primary care services. 

For the first time, the CMS is also proposing allowing eligible accountable care organizations — groups of providers that share financial risk for patient outcomes — access to a quarterly advance on savings they earn from managing patient care effectively. The prepaid savings are meant to encourage ACOs to invest in staffing and infrastructure, the CMS said. 

The rule also proposes additional fines for drugmakers that fail to pay Medicare rebates on time from their drug prices rising faster than inflation, continuing implementation of the Inflation Reduction Act passed in 2022. 

It would also allow Medicare to continue reimbursing providers for telehealth services next year. However, without congressional action, major restrictions on virtual care will go back into effect at the start of 2025. 

The rule also proposes new payments for providers that help patients at high risk of suicide or overdose, digital tools for delivering behavioral health treatments and more drugs to treat opioid use disorder and overdoses.