On November 1, 2024, the Centers for Medicare & Medicaid Services (CMS) released the final rule for the 2025 calendar year (CY), which includes significant updates to the Medicare Physician Fee Schedule (PFS) and the Quality Payment Program (QPP).
The new payment rates and telehealth guidelines took effect on January 1, 2025. The projected 2.83% reduction in payment rates is expected to have a financial impact on physician practices, particularly as operational costs continue to rise.
Independent and small group practices may face heightened challenges, balancing reduced reimbursement with escalating expenses. While the proposed payment reductions raise concerns, physicians who remain proactive and prepare for potential challenges will be in the best position to adapt.
While the key change in the final rule is a 2.83% reduction in Medicare reimbursement rates for physicians, “in accordance with update factors specified in law, finalized average payment rates under the PFS will be reduced by 2.83% in CY 2025 compared to the average payment rates for most of CY 2024. The change to the PFS conversion factor reflects the 0% update required by statute for CY 2025, the expiration of the 2.93% temporary increase in payment amounts for CY 2024 required by statute, and a small budget neutrality adjustment necessary to account for changes in valuation for particular services. This amounts to a finalized CY 2025 PFS conversion factor of $32.35, a decrease of $0.94 (or 2.83%) from the current CY 2024 conversion factor of $33.29.”¹
The U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), will focus on advancing high-quality primary and accountable care and furthering “whole person care,” increasing access to behavioral health, oral health, and caregiver training services, removing barriers to covered preventive services, preserving some telehealth flexibilities and implementation of the inflation reduction act.
Many of the current telehealth flexibilities that were in place during the public health emergency terminated as of December 31, 2024. However, the following will continue:
- Certain practitioners will be able to continue to provide direct supervision of auxiliary personnel via virtual real time audio/video technology through 2025.
- Through March 31, 2025, CMS will continue to permit distant site practitioners to use their currently enrolled practice locations instead of their home addresses when providing telehealth services from their home.
- If a physician is able to utilize two-way interactive technology for telehealth visits but the patient is either not capable of or does not consent to video, the physician may utilize audio only.
To effectively navigate the upcoming changes, physicians may consider the following steps:
- Stay Informed: Monitor ongoing CMS updates and legislative actions that may affect Medicare payment policies.
- Review Practice Finances: Conduct a thorough review of your practice’s revenue cycle, billing practices, and payer mix to ensure maximum reimbursement.
- Prepare for Potential Cuts: Develop a financial contingency plan to mitigate the impact of any potential payment reductions in 2025.
- Monitor QPP Changes: Stay updated on changes to the Quality Payment Program. New performance and reporting requirements may introduce additional financial implications, depending on the measures you select. https://qpp.cms.gov/
For further details, you can review the CMS Fact Sheet on the 2025 Physician Fee Schedule Final Rule: CMS 2025 PFS Final Rule Fact Sheet
Andie Tena is CAP’s Assistant Vice President of Practice Management Services. Questions or comments related to this column should be directed to ATena@CAPphysicians.com.
¹Centers for Medicare & Medicaid Services. Press Release “HHS Finalizes Physician Payment Rule Strengthening Person-Centered Care and Health Quality Measures.” Nov1, 2024. HHS Finalizes Physician Payment Rule Strengthening Person-Centered Care and Health Quality Measures | CMS