Q&A: 2025 Medicare Physician Fee Schedule Proposed Rule
By Lisa Harrison, Beth Mitchell
Quarterly Q&A with the Cencora Office of U.S. Public Policy and Advocacy
Cencora is committed to keeping our customers informed about government and legislative actions that impact community-based specialty practices. In our previous Q&A, we explored the Medicare Access and CHIP Reauthorization Act (MACRA) and efforts to revise the Medicare physician payment system considering the cuts to physician payments by the Centers for Medicare & Medicaid Services (CMS). You can read that article here.
In this edition, Lisa Harrison, SVP & President, Specialty Distribution and Solutions at Cencora, and Beth Mitchell, VP of U.S. Public Policy and Advocacy at Cencora, provide updates on the CMS release of the calendar year 2025 Medicare Physician Fee Schedule Proposed Rule (MPFS).
Important note: It is expected that CMS would issue the Final Rule with comment on or before November 1, 2024. This article was written and submitted for publication before that date and does not reflect any changes that may occur in the interim.
Lisa Harrision (LH):
Beth, thank you for joining me to discuss the recent release of the 2025 Medicare Physician Fee Schedule (MPFS) Proposed Rule from CMS. Do you mind starting us off by quickly reviewing what we saw from CMS in this rule?
Beth Mitchell (BM):
Of course. This past July, CMS issued a proposed rule announcing and soliciting public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2025. The proposed rule was open for a 60-day comment period that closed on September 9, 2024, and the Final Rule with comment is expected to be issued on or before November 1, 2024.Among many things, the proposed rule included1:
- A reduction in average payment rates under the PFS of 2.93% in CY 2025 compared to CY 2024
- Specific to oncology, a decrease in allowed charges3 for radiation oncology services of 1% in non-facility setting and a 2% increase in the facility setting, along with a decrease in allowed charges for hematology/oncology services of 1% in non-facility settings
- Recommendations to codify policies established in the revised guidance for the Medicare Part B Drug Inflation Rebate Program and Medicare Part D Drug Inflation Rebate Program
- Adding six new Merit Based Incentive Payment System (MIPS) Value Pathways (MVPs) related to ophthalmology, dermatology, gastroenterology, pulmonology, urology and surgical care
The full proposed rule is available online for an in-depth look at everything that was included.
LH: Since the release of the proposed rule, how would you assess the general response to what CMS has proposed?
BM: Even prior to the recent release, practice leaders, members of the U.S. Congress, industry publications, and organizations have continued to point to the cumulative effect of reimbursement cuts over multiple years as straining different aspects of the country’s healthcare system4. In May of this year, the American Medical Association (AMA) shared data5 showing Medicare payments to physicians – when adjusted for inflation in practice costs – decreased 29% from 2001 to 2024.
Since the CMS issued the proposed rule, multiple advocacy organizations have joined the AMA in coming out in opposition including the American Academy of Family Physicians, the American College of Physicians, the American Medical Group Association, and the American Society of Clinical Oncology.
Yet, it’s worth noting that in the press release announcing the rule, CMS Administrator Chiquita Brooks-LaSure said, “CMS’ proposals in the proposed physician payment rule would help people with Medicare navigate cancer treatment and have access to more types of behavioral health providers, strengthen primary care, and for the first time, allow Medicare payment for services performed by community health workers.”
LH: It seems that the data and consensus are clear – there are continued concerns around reimbursement cuts and the negative repercussions that are coming about because of them. Are there other conversations happening on Capitol Hill in support of this, and what should practices expect next now that the proposed rule has been shared?
BM: Well, there is a piece of bipartisan legislation which would provide an annual inflationary payment update to the Medicare Physician Fee Schedule conversion factor by tying it to the Medicare Economic Index (MEI) – H.R. 2474, the “Strengthening Medicare for Patients and Providers Act”. This bill was introduced in the U.S. House of Representatives in 2023, and referred to the Committee on Energy and Commerce’s Subcommittee on Health and the Committee on Ways and Means in April.6 The two committees share jurisdiction over this issue, and to move forward, the bill must pass out of both committees. This bill is sponsored by California Democratic Reps. Raul Ruiz, MD, and Ami Bera, MD, along with Republicans Larry Bucshon, MD, of Indiana, and Mariannette Miller-Meeks, MD, of Iowa along with 161 cosponsors, and continues to garner support from other Members of Congress and healthcare industry leaders.
It’s important to note that there is wide support for this bill. Ffor example, the AMA drew attention to this specifically and authored a July 24, 2024 letter7 asking U.S. House and Senate leadership to address the rising inflationary costs associated with running a practice, referencing the CY 2025 proposed rule.The letter is signed by more than 100 organizations and requests that Congress enact an annual, permanent inflationary payment update for Medicare physicians tied to the MEI (as outlined in H.R. 2474), as physicians are currently the only Medicare providers who do not receive such an adjustment.
There is not an exact Senate version of this bill, but the Senate Finance Committee released a white paper in May around payment reform, but that was centered around MACRA reform rather than the short-term fix to repair the cut that the CMS rule made for this year. On the Senate side, there are multiple bills that address larger payment reform, such as S. 4935 introduced by Sens. Boozman and Welch.
It is likely that Congress will try to pass legislation to mitigate the cut CMS made in the proposed rule in an end of the year package, but the main question is how large will the fix be and how much can Congress mitigate the cut?
In the regulatory space, September 9, 2024, was the deadline for the public to submit comments for consideration by CMS on the CY 2025 proposed rule8. Looking ahead, CMS plans to review all comments and decide whether to proceed with the rule as-is, or incorporate more adjustments before issuing a final rule.
LH: It sounds like while there is support in addressing the issues related to reimbursement cuts, there is still progress to be made and many developments to come. Beth, I can’t thank you enough for the time, effort, and commitment that your team continues to give to staying engaged and advocating for our customers every day.
BM: You’re right, Lisa. There’s still work to be done, but the Cencora U.S. Public Policy and Advocacy team will continue to provide proactive perspectives and advocate for policy improvements related to physician reimbursement. We strive to remain a reliable resource for our customers, monitoring and proactively shaping congressional and administrative activity, providing updates on the implications and progress of this policy, and sharing our expertise to shape public policy in support our customers and their patients.
References
1. Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule. CMS.gov. Accessed September 17, 2024. https://www.cms.gov/newsroom/fact-sheets/calendar-year-cy-2025-medicare-physician-fee-schedule-proposed-rule
2. CMS issues CY 2024 physician fee schedule final rule. AHA.org. Accessed September 17, 2024. https://www.aha.org/news/headline/2023-11-02-cms-issues-cy-2024-physician-fee-schedule-final-rule
3. Medicare and Medicaid Programs; CY 2025 Payment Policies Under the Physician Fee Schedule and Other Changes to Part B Payment and Coverage Policies; Medicare Shared Savings Program Requirements; Medicare Prescription Drug Inflation Rebate Program; and Medicare Overpayments. FederalRegister.gov. Accessed September 17, 2024. https://www.federalregister.gov/documents/2024/07/31/2024-14828/medicare-and-medicaid-programs-cy-2025-payment-policies-under-the-physician-fee-schedule-and-other
4. Health Subcommittee Hearing on The Collapse of Private Practice: Examining the Challenges Facing Independent Medicine. United States House Committee on Ways & Means. Accessed September 18, 2024. https://waysandmeans.house.gov/event/health-subcommittee-hearing-on-the-collapse-of-private-practice-examining-the-challenges-facing-independent-medicine/
5. 2024 Medicare updates compared to inflation chart (Cumulative). American Medical Association. Accessed September 18, 2024. https://www.ama-assn.org/system/files/2024-medicare-updates-inflation-chart-cumulative.pdf
6. All Actions: H.R.2474 — 118th Congress (2023-2024). congress.gov. Accessed September 17, 2024. https://www.congress.gov/bill/118th-congress/house-bill/2474/all-actions
7. Dear Speaker Johnson, Majority Leader Schumer, Minority Leader McConnell, and Minority Leader Jeffries. ASCO.org. Accessed September 17, 2024. https://macra.asco.org/
8. Fact Sheet: Calendar Year (CY) 2025 Medicare Physician Fee Schedule Proposed Rule (CMS-1807-P)-Medicare Shared Savings Program Proposals. CMS.gov. Accessed September 18, 2024. https://www.cms.gov/newsroom/fact-sheets/fact-sheet-calendar-year-cy-2025-medicare-physician-fee-schedule-proposed-rule-cms-1807-p-medicare
