CY 2025 Physician Fee Schedule rule seeks a 2.8% payment cut

CMS has proposed the Physician Fee Schedule (PFS) rule for calendar year (CY) 2025, updating several payment policies including a reduction in average payment rates.

The CY 2025 proposed rule looks to pay physicians less compared to CY 2024 as CMS eliminates the temporary increase in physician Medicare physician payments as required by statute. The proposed rate also accounts for a 0.00% overall update, also required by statute, and a relatively small estimated 0.05% adjustment to account for changes in work relative value units (RVUs) for some services.

CMS estimates that the CY 2025 PFS conversion factor will be $32.36, a decrease of $0.93 (or 2.80%) from the current conversion factor of $33.29.

The proposed rule would also create a new, advanced primary care management bundle under the PFS, as well as payment and coding for cardiovascular risk assessment and care management.

However, the federal agency said the proposed rule also seeks to improve payment for and access to behavioral health services, including for opioid treatment programs for new FDA-approved overdose reversal treatments and certain telehealth flexibilities.

Flexibilities granted for telehealth services during the COVID-19 pandemic are slated to expire at the start of 2025. But the CY 2025 PFS proposed rule would allow some flexibilities to continue. For example, the rule would continue to permit certain practitioners to provide virtual direct supervision to auxiliary personnel when required, as well as virtual supervision for a range of services when teaching physicians virtually supervise telehealth services provided by residents in teaching settings.

CMS stated that the telehealth flexibilities permitted to continue are limited without Congressional intervention. Absent Congressional action, restrictions on geography, site of service and practitioner type that existed prior to the COVID-19 pandemic will go back into effect on January 1, 2025. After that date, Medicare beneficiaries will need to be in a rural area and a medical facility to receive non-behavioral health services through telehealth modalities, CMS clarified.

Additionally, CMS proposed to update key value-based care programs, including the Quality Payment Program. The agency proposed six new Merit-Based Incentive Payment System (MIPS) Value Pathways for 2025 in ophthalmology, dermatology, gastroenterology, pulmonology, urology and surgical care.

The rule would also update MIPS scoring methodologies and measure inventories to align with MIPS Value Pathways as CMS aims to transition reporting to the relatively new reporting structure. CMS has released a Request for Information (RFI) on making MIPS Value Pathways participation mandatory by CY 2029.

In addition, CMS is looking to strengthen the Medicare Shared Savings Program through the CY 2025 PFS proposed rule. The proposals include an advance for accountable care organizations (ACOs) with a history of success in the program. These ACOs would be eligible to receive “prepaid” shared savings to invest in staffing, infrastructure and additional services, such as nutrition support, transportation, dental and vision.

The rule would also adopt a health equity benchmark within the Shared Savings Program to incent ACOs in rural and underserved communities to participation. The benchmark would be similar to the one used in CMS Innovation Center’s ACO REACH Model, which CMS said has proven to boost participation.

The CY 2025 PFS proposed rule would also account more for improper payments when reopening ACO shared savings and shared losses calculations. Earlier this month, CMS released a proposed rule to address “significant, anomalous, and highly suspect” billing impacting ACO reconciliation in the program.

The wide-ranging proposed rule would strengthen “the care people with Medicare receive, advancing HHS’s goal of a health care system that not only treats those who are sick but also keeps people well,” HHS Secretary Xavier Becerra said in a statement.

However, physician groups are already pushing against the proposed rule.

"With CMS estimating a fifth consecutive year of Medicare payment reductions—this time by 2.8 percent— it’s evident that Congress must solve this problem,” Bruce A. Scott, MD, president of the American Medical Association, said in a statement. “In addition to the cut, CMS predicts that the Medicare Economic Index (MEI) – the measure of practice cost inflation—will increase by 3.6 percent. 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.”

Steven P. Furr, MD, FAAFP, president of the American Academy of Family Physicians, added, “Family physicians provide high-quality care to our patients and communities, but inadequate, falling Medicare payment rates create barriers to care for beneficiaries and strain physician practices. As a first step, Congress must enact an annual inflationary update to help physician payment rates keep pace with rising practice costs. Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral health care, and other critical preventive services they need.”

CMS will accept comments on the proposed rule through Sept. 9, 2024.