CONSEQUENCES OF CUTTING MEDICARE PHYSICIAN REIMBURSEMENT IN 2025

Every year the Centers for Medicare & Medicaid Services (CMS), rolls out a new proposal of cuts to the Medicare Physician Fee Schedule or (MPFS), and on July 10, 2024, CMS did just that, they rolled out a rather shocking reduction of 2.8% to the MPFS for January 1, 2025 and it has set the healthcare community on fire. The proposed rule amounts to an estimated MPFS conversion factor of $32.36, a decrease of $0.93 (or 2.80%) for 2025, down from the current 2024 conversion factor of $33.29. As of 10/23/24, there are 69 days left until the MPFS is cut by 28%, so it is vital that everyone in the healthcare community understands and gets involved to mitigate this potentially crushing financial blow.

The American Medical Group Association (AMGA) surveyed 64,271 physicians and other clinicians regarding the proposed MPFS cut for 2025 on how they would handle this potential crushing blow to their reimbursement – AMGA President and CEO, Jerry Penso, MD, MBA said that “ Congress must ensure a stable Medicare program that does not continue to cut payments to providers every year,” and that “Over the past four years, we have faced up to 8% cuts in Medicare reimbursement, and this year we again face another reduction of 2.8%. Medicare payment rates have fallen by 29% over the past two decades, when adjusting for the costs of running a practice, threatening patient access and practice viability.”

With a looming potential cut to the conversion factor of 2.8%, medical groups and integrated systems of care are looking at numerous repercussions that will impact patient access to critical healthcare services.

The survey from AMGA members indicated that if these cuts by CMS go through, there will be numerous negative impacts to many medical groups, health systems, and facilities up to and including potential elimination of certain services, employee layoffs, hiring freezes, as well as population health initiatives to the most vulnerable patients.

The potential cuts to the MPFS and conversion factor, would be the fifth year in a row that CMS and Medicaid have issued a disastrously low fee schedule, which undermines the value of services that doctors and other clinicians, provide. The survey from AMGA showed the following:

• Upwards of 70% indicated they will enact hiring freezes and/or delays for 2025

• That’s in addition to 54% that have reported hiring freezes and/or delays this year

• Already, 42% eliminated services due to MPFS/conversion factor and other cuts that happened in 2024

AMGA stated in a recent letter, “While Congress has stepped in the past four years to pass legislation to mitigate portions of these cuts, the fact remains that the MPFS is inherently broken,” and “Continued payment cuts undermine the ability of independent clinical practices — especially in rural and underserved areas — to care for their community, which reduces patient access to care.” “Because healthcare often comprises a large percentage of employment in rural areas, the closure of independent practices not only lessens patient access to care but also jeopardizes the livelihood of rural Americans.”

Takeaways:

• Medical groups are facing a potentially catastrophic 2.8% MPFS cut in 2025, which is on trend with the past 4-years of reductions.

• AMGA’s survey indicates significant detrimental impacts to patient services from cumulative, static Medicare payment cuts.

• AMGA urges Congress to stabilize Medicare payments to ensure continuity of patient care and access to quality care.

• AMGA is supporting a bipartisan group of 233 representatives, that is promoting Medicare reimbursement reform, and stabilization to the MPFS and conversion factor to foster healthcare sustainability.

• Numerous healthcare organizations are looking to seek action to allay the potential negative financial impact of the 2025 cuts. Some have already implemented this in 2024.

Final Thoughts:

Now, more than ever, it is mission-critical to get involved and understand and advocate for physicians, providers, and patients’ overall well-being, from reimbursement to quality of care! For more information on AMGA’s efforts to stop the Medicare reimbursement cuts, visit amga.org/stopthecuts

Happy Coding!

Resources:

• https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-medicare-physician-fee-schedule-proposed-rule

• https://www.medicaleconomics.com/view/consequences-of-cutting-medicare-physician-reimbursement

• https://www.amga.org/getmedia/ee996ffa-d42e-4f8c-82ac-142875103761/2024_Medicare_Cuts_Survey_Results.pdf

• https://www.amga.org/getmedia/7e7fd580-cc55-43e3-986b-41e6e2357e67/2024_Fall_Medicare_Reimbursement_Issue_Brief.pdf

• https://www.amga.org/getmedia/313eebfd-225a-40b9-bbc5-38011e78470e/2024_Stop_the_Cuts_Talking_Points.pdf