Proposed physician pay decrease: 'Death by a thousand cuts continues'

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Physician groups are calling on Congress to prevent physicians from receiving a proposed Medicare pay cut of 2.93% in 2025.

"The death by a thousand cuts continues," said AMA president Dr. Bruce A. Scott.

The Centers for Medicare and Medicaid Services said that by factors specified by law, average payment rates under the physician fee schedule (PFS) are proposed to be reduced by 2.93% in 2025, compared to the average amount these services are being paid, for most of 2024. 

The change to the PFS conversion factor incorporates a zero percent overall update required by statute, the expiration of the 2.93% increase in payment for 2024 required by statute and a relatively small estimated .05% adjustment necessary to account for changes in work relative value units (RVUs) for some services. 

This amounts to a proposed 2025 PFS conversion factor of $32.36, a decrease of $0.93 (or 2.80%) from the current 2024 conversion factor of $33.29, in the 2025 Medicare Physician Fee Schedule Proposed Rule.

This contrasts to Medicare increasing reimbursement for hospital outpatient departments by 2.6% next year.

WHY THIS MATTERS

Congress also needs to update payment rates so that they keep pace with rising practice costs and inflation, physician groups said. Budget neutrality policies need to be modernized.

Specifically, many are calling on Congress to pass the bipartisan Strengthening Medicare for Patients and Providers Act to implement an annual inflation-based physician payment update tied to the Medicare Economic Index and to modernize Medicare's budget neutrality policies by enacting the Provider Reimbursement Stability Act.

AAFP (American Academy of Family Physicians) president Dr. Steven P. Furr said, "While the proposed 2025 Medicare physician fee schedule includes some proposals to strengthen primary care, its 2.8% reduction in the Medicare conversion factor once again highlights the urgent need for congressional action to ensure that physician payments keep up with the costs of running a practice. Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral healthcare, and other critical preventive services they need."

MGMA's SVP of Government Affairs Anders Gilberg said, "CMS has again proposed a negative Medicare physician fee schedule update for 2025 with dangerous implications for beneficiary access to care. A 2.8% reduction to the conversion factor would be alarming in the best circumstances, but to propose doing so at a time when 92% of medical groups report increased operating costs and are otherwise struggling to remain financially viable is critically short-sighted."

American Medical Association president Dr. Bruce A. Scott said, "With CMS estimating a fifth consecutive year of Medicare payment reductions – this time by 2.8% – it's evident that Congress must solve this problem. In addition to the cut, CMS predicts that the Medicare Economic Index (MEI) – the measure of practice cost inflation – will increase by 3.6%. Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, physicians are urging Congress to pass a reform package that would permanently strengthen Medicare."

The Medicare Physician Payment Advisory Commission (MedPAC) and the Medicare Trustees have issued warnings about the dangers of repeated Medicare cuts and how they threaten access to care, Scott said.  

"Physician practices cannot continue to absorb rising costs while their payment rates dwindle," Scott said. "As one of the only Medicare providers without an inflationary payment update, physicians have waited patiently for this change. Medicare physician payment declined 29% from 2001 to 2024, adjusted for inflation. The death by a thousand cuts continues."

The Society of Thoracic Surgeons President Dr. Jennifer C. Romano said, "These reductions threaten the quality of patient care and challenge the viability of hospitals, cardiothoracic surgery practices, and the physician workforce."

THE LARGER TREND

The 2025 Medicare Physician Fee Schedule proposed rule issued by the Centers for Medicare and Medicaid Services on July 10 includes changes to the Medicare Shared Savings Program.

As of January 1, the Medicare Shared Savings Program had 480 Accountable Care Organizations (ACOs), with over 634,000 healthcare providers and organizations providing care to over 10.8 million assigned beneficiaries. 

ACOs are now delivering care to nearly 50% of people with traditional Medicare, CMS said. 

Policy changes to the Shared Savings Program finalized in the 2023 and 2024 PFS final rules are expected to grow participation in the program and increase the number of beneficiaries assigned to ACOs by up to four million over the next several years, CMS said. CMS' goal is to have 100% of people with traditional Medicare in a care relationship with accountability for quality and total cost of care by 2030. 

Nineteen newly formed ACOs in the Shared Savings Program are participating in a new payment option beginning in 2024 that is enabling these ACOs to receive more than $20 million in advance investment payments (AIPs) for caring for underserved communities. 

CMS is proposing to establish a new "prepaid shared savings" option for eligible ACOs with a history of earning shared savings. 

A CMS Fact Sheet summarizes the major proposed changes to the Shared Savings Program that are included in the 2025 PFS proposed rule with 30-day comment period closing on July 29.

Clif Gaus, president and CEO of the National Association of ACOs said the organization was pleased with many of the updates to MSSP.
                                                                                                                                       
"Despite these positive changes, we remain concerned that CMS has yet to address significant issues that will cause providers to leave the Shared Savings Program," Gaus said. "In the next two years, a majority of ACOs will enter new agreements and have their benchmarks ratcheted down, ultimately being penalized for past strong performance. Additionally, the change in quality reporting options and requiring reporting on beneficiaries outside of the ACO, will cause ACOs and their providers to make significant investments in technology that will not result in useful quality data. These looming crises deter clinicians from participating in ACOs and hamper progress towards CMS' goal of all payments in an accountable care relationship by 2030."

Soumi Saha, SVP for government affairs at Premier said, "Premier commends the Centers for Medicare and Medicaid Services for its continued focus on bolstering the success and sustainability of accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). Premier is disappointed, however, that CMS proposes to move forward with expanding the number of required quality measures for MSSP ACOs without first addressing the underlying challenges Premier highlighted last year."

Email the writer: SMorse@himss.org