Medicare Solidifies Pay Cut, Mixed Bag of Changes for Physicians in 2025
By Phil West

In a final rule that solidifies a nearly 3% Medicare pay cut for physicians in 2025, the Centers for Medicare & Medicaid Services (CMS) also set the trajectory for physician practices over the next year with a mixed bag of changes related to telemedicine, coding and payment, and the Merit-Based Incentive Payment System (MIPS), among others. 

While TMA analyzes what it sees as some isolated, positive changes resulting from CMS’ finalization of the 2025 Medicare Physician Fee Schedule, it is also urging physicians to act now to show their support for House Resolution 10073. The recently introduced legislation would immediately reverse the pay cut and replace it with a modest increase for 2025 as medicine pursues a more comprehensive fix.  

In addition to stopping the impending pay cut, TMA is backing a slate of related federal bills aimed largely at reducing physicians’ administrative burden within Medicare, including standardizing prior authorization and permanently repealing telehealth site restrictions that were codified in the 2025 final fee schedule and that would require congressional action to reverse. 

Despite what TMA Council on Legislation Chair Zeke Silva, MD, describes as “some upsides here and there” in the final rule, “you never want to see those kinds of [payment] reductions coming forward, particularly when physicians are finding themselves in a circumstance where their costs are increasing and their ability to care for patients is being challenged,” he said.  

As TMA prepares a comprehensive CME webinar to help physicians navigate the new rule, here are highlights physicians can expect:  

Pay cut problem

The finalized conversion factor of $32.3465 for physician services, down 2.83% from the 2024 final rates, adds to what American Medical Association research has shown to be a 29% reduction of Medicare physician payment when adjusted for inflation between 2001 and 2024.  

Although medicine’s ultimate goal remains to pass reforms to institute an annual, permanent inflationary payment update tied to the full Medicare Economic Index, HR 10073 provides a stopgap that immediately stops the 2.8% cut, and in its place, proposes a 12-month modest payment increase that aligns with a recommendation made by the Medicare Payment Advisory Commission. 

Telemedicine mixed bag

Unless Congress intervenes, another significant change to the way physicians use telehealth for Medicare patients will occur when CMS reverts back to some pre-COVID restrictions on the use of telemedicine in 2025.  

“The statutory limitations that were in place for Medicare telehealth services prior to the COVID-19 public health emergency will retake effect for most telehealth services,” CMS said in its release.   

These include geographic site restrictions on where patients can receive telehealth services – particularly in their homes. Congress has acted over the years to extend pandemic-related waivers of such restrictions, the latest of which expire at the end of 2024. 

However, patients will still be able to access mental health services via telemedicine in their home as long as there is an in-person visit once every 12 months. The in-person visit requirement has been delayed until Jan. 1, 2025.  

CMS pointed out that it worked “to preserve some important, but limited, flexibilities in our authority, and expand the scope of and access to telehealth services where appropriate.”   

When COVID hit, Congress relaxed Medicare telehealth policies to expand the list of covered and the ways those services could be provided. Congress acted again in 2022 to extend those flexibilities for two years, but those expire at the end of 2024.   

TMA continues to urge Congress to avoid expiration of these crucial extensions and pass the bipartisan CONNECT for Health Act and the Telehealth Modernization Act (Senate Bill 2016/House Resolution 4189) to permanently extend telehealth coverage.  

Coding wins 

In a follow-up to medicine’s concerns over difficulties in using and receiving payment for the new G2211 add-on code, the final rules allow payment for the code when the office/outpatient and evaluation and management base code is issued by the same physician on the same day as a Medicare annual wellness visit, vaccine administration, or any Medicare Part B preventive service. 

CMS also added new coding and payment for advanced primary care management services, behavioral health, cardiovascular risk assessment and management, caregiver training, and post-operative care.  

Also included in the final rule is a summary of the broad request for information CMS recently made on community health Integration services, principal illness navigation services, and a medical drivers of health risk assessment, which Dr. Silva said the agency may use for future rulemaking. 

MIPS reprieve?

TMA also was encouraged to see the final version of the physician fee schedule maintain the MIPS performance threshold of 75 points for all three reporting options for the 2025 performance year.  

“When you think about the measures that physicians have available to them and how limited they are from a scoring perspective, it's a system that just hasn't lived up to expectations,” Dr. Silva cautioned. “It certainly has not done what many of us thought it might do, which is ease the physician transition to alternative payment models. We're just not seeing that dynamic in play, which I think is disappointing.”  

Regarding such transitions, the final rule adds six new MIPS Value Pathways (MVP) options in specialty areas, namely dermatology, gastroenterology, ophthalmology, pulmonology, surgical care, and urology.  

However, despite TMA advocacy, CMS did not relent on what appears to be an expedited course to replace the current MIPS structure with the nascent MVP program, despite ongoing flaws and frustrations with its predecessor. TMA continues to urge CMS to focus on moving physicians to risk-based systems via voluntary, physician-led APMs rather than through MIPS/MVP mandates. 

CME to come

Watch for the release of TMA’s webinar on the 2025 fee schedule, expected to be available by Dec. 1 in Education Center, and read Texas Medicine Today for the latest updates. Topics to be covered include: 

• Knowing your payer contracts (as the conversion factor impacts most fee-for-service payers, including private insurers); 

• Monitoring remittance advice to ensure proper payment; 

• Updating chargemaster files for new relative value units; 

• Checking with your electronic health record vendor that new codes and fees have been added; 

• Exploring applicability of new codes on your practice and patients; and 

• Learning how to get paid for nonmedical drivers of health screenings.  

And make your voice heard now on the payment reduction via a TMA action alert that contains a ready-made message to your congressional representative supporting HR 10073.