Medicare’s proposed 2025 rule for physician payments would add to the financial strain facing practices

Medicare’s proposed update to physician payments for 2025 left advocates saying practices will have an increasingly difficult time making ends meet.

CMS’s newly proposed rule states that payments are set to be reduced by 2.8% from 2024, based on the change to the conversion factor.

The agency explained that it is obligated to implement the rate decrease. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) included a flat rate for all years between 2020 and 2025. In addition, a 2.93% adjustment for 2024, which Congress passed last year to help shore up practices, is expiring.

Congress could make a similar adjustment for 2025, but the probable result would be merely a smaller decrease.

As is the case each year, different specialties would be affected differently as CMS modifies work relative value units (RVUs) and applies a corresponding budget-neutrality adjustment. Projected impacts, relative to the 2024 payment rate, range from increases of 4% for clinical social workers, 3% for clinical psychologists and 2% for anesthesiologists to reductions of 2% for diagnostic testing facilities, interventional radiologists and vascular surgeons.

A 60-day comment period for the rule, which spans 2,248 pages in prepublication form and also includes provisions for MACRA’s Quality Payment Program and the Medicare Shared Savings Program, runs through Sept. 9 at regulations.gov.

Sounding the alarm

The American Medical Association (AMA) noted next year would mark the fifth consecutive in which the physician payment rate decreases, while practice costs are estimated to jump by 3.6% from 2024.

The Medical Group Management Association (MGMA) said the reduction “would be alarming in the best circumstances” and is even more harmful at a time when 92% of medical groups report that their operating expenses have increased year-over-year.

And the American Medical Group Association referred to an August 2023 member survey that indicated nearly half of practices would resort to furloughs or layoffs in 2024 amid continued reimbursement cuts. More than 60% foresaw the need to eliminate services and implement hiring freezes. More than 50% expected to delay delivery system improvements, curtail investments in the social determinants of health and redesign physician compensation.

“It’s evident that Congress must solve this problem,” Bruce Scott, MD, AMA president, said in a written statement, referring to the Medicare physician reimbursement system.

An ideal solution would go beyond the usual single-year adjustment to incorporate a systemic revamp, Scott said. The AMA and MGMA support a 2023 bill that would tie the annual update to the Medicare Economic Index (MEI), which measures price changes for physician services. The MGMA also has voiced support for a bill that would raise the budget neutrality threshold in conjunction with the MEI and incorporate other measures to better tie payments to utilization and costs.

A clarification on overpayments

Since 2016, hospitals and other Medicare participants have faced a 60-day deadline after identifying an overpayment to return the excess amount to CMS.  

In the proposed rule, CMS clarified that the 60-day deadline would be suspended during a six-month period in which the provider (or Medicare Advantage health plan) investigates and calculates an identified overpayment, as long as the investigation takes place in a timely, good-faith manner. A similar accommodation was included in the 2016 regulations, but it was unclear whether proposed revisions to those regulations would maintain the six-month window.

The revisions, which were proposed in late 2022 and have not been finalized, pertain to Medicare Parts A and B, Medicare Advantage and Medicare Part D. Included in the revisions is a degree of leniency in the standard for identifying overpayments, with CMS stating that a participant must either have actual knowledge of an overpayment or recklessly or deliberately ignore the prospect of one.

In other words, simple negligence would not put a participant on the hook for penalties from failure to identify an overpayment, per the 2022 language.

The newly proposed rule would ensure the six-month moratorium remains in place if the 2022 revisions are finalized.

Coding changes proposed

The proposed rule includes the introduction and expansion of codes to help cover additional services.

For example, HCPCS code G2211, the add-on code for complex office/outpatient evaluation and management (E/M) visits, would become billable for annual wellness visits and vaccine administration, as well as for Medicare Part B preventive services.

That change “would support our policy aims, which include paying for previously unaccounted resources inherent in the complexity of all longitudinal primary care office visits,” CMS wrote.

CMS also is incorporating codes related to atherosclerotic cardiovascular disease risk assessment and risk management, as previously included in the Million Hearts model. The assessment would be billable for an E/M visit by patients who have not been diagnosed but are deemed to be at risk. Management services would entail the “ABCS” of cardiovascular disease risk reduction (aspirin, blood pressure management, cholesterol management, smoking cessation).

Behavioral health services would have expanded coding options, including an add-on G-code for patients who are experiencing suicidal ideation or are at risk of suicide or overdose. The code would be billable in conjunction with an E/M visit or psychotherapy service when safety-planning interventions are performed by the billing practitioner. In addition, a code would be available to cover four calls per month for keeping in touch with patients following discharge from the emergency department for a crisis encounter.

New codes also would be available to establish payment for digital mental-health services in association with ongoing treatment under a behavioral-health treatment plan of care. Specifically, there would be three new HCPCS codes and six G-codes for specialties such as clinical psychology, clinical social work, marriage and family therapy, and mental-health counseling.

Arguably the biggest coding update is the addition of three G-codes for advanced primary care management. HFMA will have coverage of this CMS initiative in upcoming days. (Update: That article is available here.)