2025 Medicare Physician Fee Schedule Proposed Rule: Updates to Physician Payment System

On July 10, 2024, the Centers for Medicare & Medicaid Services (CMS) released its Calendar Year (CY) 2025 Medicare Physician Fee Schedule (PFS) proposed rule, which includes proposals related to Medicare physician payment and the Quality Payment Program (QPP). The proposed rule has a 60-day comment period. Final regulations will be issued on or around November 1 and unless otherwise noted, policies will be effective on January 1, 2025.

NANS will be reviewing the proposed rule and submitting comments in advance of the September 9, 2024, deadline.

The rule proposes to cut the conversion factor by 2.8% to $32.36 in CY 2025, as compared to $33.29 in CY 2024. The cut reflects the expiration of the 2.93% statutory payment increase for 2024, a 0% conversion factor update, and a 0.5% budget neutrality adjustment.

Budget neutrality-related cuts have significantly impacted physicians in recent years. In addition to the across-the-board 2.8% reduction proposed this year, previous fee schedules have seen a nearly 2% reduction in 2023 on top of cuts of 0.8% and 3.3% in 2022 and 2021, respectively. This trend, combined with potential reductions sequestration, and the failure to account for significant inflation in practice costs, creates long-term financial instability in the Medicare physician payment system, threatening patient access to Medicare-participating physicians and services.