CMS finalizes CY 2025 Medicare physician fee schedule rule

CMS issued the the calendar year 2025 Medicare physician fee schedule final rule with the goal of strengthening primary care and increasing access to preventive services.

Under the physician fee schedule (PFS), average payment rates will reduce the conversion factor by 2.83% in 2025 compared to 2024 rates, resting at $32.35 in 2025 compared to $33.29 in 2024.

The PFS final rule eliminates the temporary 2.93% increase in Medicare physician payments as required by the statute in CY 2024, and the conversion factor reflects the 0% update required by the statute for CY 2025.

Altogether, the finalized PFS conversion factor decreased by $0.94 from the current conversion factor.

“The Medicare physician payment final rule continues our work to strengthen primary care while also supporting preventive care and promoting better access to behavioral health care," said HHS Secretary Xavier Becerra in a press release.

"In addition, the final rule codifies and builds on guidance to continue our ability to use rebates from drug manufacturers to strengthen Medicare."

CMS said it would continue to strengthen Medicare's permanent accountable care organization (ACO) program, known as the Medicare Shared Savings Program. CMS will now allow eligible ACOs with a successful history in the program to receive an advance on their shared savings.

CMS also plans to adopt a health equity benchmark adjustment to incentivize further participation in the Shared Savings Program, specifically by ACOs that serve Medicare and Medicaid beneficiaries in rural and underserved communities.

What's more, CMS is actively finalizing a new method for adjustments to mitigate the effects of "significant, anomalous and highly suspect" billing activity in CY 2024 and subsequent years on annual ACO financial reconciliation.

In reaction to the final rule, the National Association of ACOs (NAACOS) said it remains concerned about "unresolved issues" that threaten ACO participation in the Shared Savings Program.

"Historically successful ACOs are faced with increasingly reduced financial targets over time. Current policies fail to adequately account for prior success, leaving ACOs unable to sustain robust clinical interventions and enhanced benefits for beneficiaries," Aisha Pittman, senior vice president of government affairs at NAACOS said in a written statement.

"Additionally, new quality reporting requirements will necessitate costly technology investments without producing actionable quality data. These challenges discourage clinician participation in ACOs and hinder progress toward CMS' goal of all Medicare payments in an accountable care relationship by 2030."

The American Academy of Family Physicians (AAFP) took issue with what it considers to be inadequate Medicare payment rates that have created barriers to care for patients and endangered physician practices.

"Sadly, this is the fifth year in a row congressional intervention will be needed to preserve payment," Jen Brull, M.D., FAAFP, president of AAFP, said in a written statement.

"The consequence of this year’s 2.8% reduction is dire, putting practices at risk, exacerbating physician workforce shortages and preventing patients from accessing primary care."

Although the AAFP expressed discontent with the conversion factor reduction, Burr said that the AAFP was grateful that CMS finalized the new Advanced Primary Care Management codes for 2025 and that CMS continues to prioritize primary care.

Under the final rule, CMS also extended several regulatory telehealth waivers through 2025, including a waiver that allows virtual supervision for residents in teaching settings when services are provided virtually and a waiver for Federally Qualified Healthcare Centers and rural health facilities to bill for telehealth services.

Without congressional action, the statutory limitations that were in place for Medicare telehealth services prior to the COVID-19 pandemic will once again take effect beginning Jan. 1, 2025.

Overall, CMS described its efforts under the PFS final rule as one more step toward creating a more equitable healthcare system.

Jill McKeon has covered healthcare cybersecurity and privacy news since 2021.