Can Lawmakers Shrink Medicare Doc Pay Cuts in Time?

Federal lawmakers are rushing to soften the blow of Medicare’s 2025 effective pay cut for doctors in 2025, introducing a bill that could limit the cut. But they have little time to act.

In 2025, the conversion factor used to calculate payment to doctors and hospitals caring for Medicare patients will drop to $32.35, a nearly 3% decrease from the current level. 

Congress likely will act before the cuts take effect, said Rep. Larry Bucshon, MD (R-IN), who specialized in cardiothoracic surgery before joining Congress. Lawmakers in past years have typically tinkered with the Medicare physician fee schedule at the last minute, tucking in fixes to December legislative packages and spending bills. 

“I’m pretty optimistic that a good portion of the fee cuts will be mitigated and they won’t go through,” Bucshon told Medscape Medical News in an interview.

Bruce A. Scott, MD, president of the American Medical Association (AMA) said in a statement that CMS’ release of the final fee schedule on Friday should trigger serious work on a change to the 2025 Medicare physician fee schedule.

“The fee schedule rule released (Friday) starts the clock — with January 1 looming,” Scott said. “A legislative remedy will require hard work and compromise. The 66 million patients who rely on Medicare are counting on that.”

Both Bucshon and Scott also joined many lawmakers and medical associations in calling on Congress for a larger overhaul of the Medicare physician fee schedule, well beyond whatever temporary adjustment may be made in the months ahead to avoid or soften the 2025 cuts.

The physician fee schedule sets formulas and rules regarding how the largest US buyer of health services pays the almost 1.3 million clinicians who bill Medicare. Of these, 51% are physicians. The physician fee schedule also covers payments for nurse practitioners, physician assistants, physical therapists, and other health professionals.

Last Major Overhaul Unpopular

There’s broad dissatisfaction with Congress’ last major overhaul of the Medicare physician fee schedule. The 2015 Medicare Access and CHIP Reauthorization Act (MACRA) aimed to shift clinicians toward programs tying pay increases to quality measures. But the implementation of that aim through the Merit-based Incentive Payment System is widely considered a disappointment.

MACRA was intended to end the need for annual “doc fixes,” as Congress’ last-minute Medicare adjustments are known. Seventeen such tweaks passed before MACRA took effect. 

But MACRA did not include a broad-based inflation adjuster, and some clinicians’ incomes are lagging as inflation rates — and practice costs — have risen. AMA’s Scott said the Medicare Economic Index, which is a measure used to gauge increases in practice costs for clinicians, is expected to rise by 3.5%.

“To put it bluntly, Medicare plans to pay us less while costs go up. You don’t have to be an economist to know that is an unsustainable trend, though one that has been going on for decades,” Scott said. “For physician practices operating on small margins already, this means it is harder to acquire new equipment, harder to retain staff, harder to take on new Medicare patients, and harder to keep the doors open, particularly in rural and underserved areas.”

​​In a statement, Jen Brull, MD, president of the American Academy of Family Physicians, noted that this likely will be the fifth year in a row that Congress will need to do a patch to prevent cuts in pay to clinicians. 

Bucshon, who will retire from the House in January, said he expects Congress to pass legislation tying Medicare payment rates to inflation — eventually.

“People want to find a way to fix this problem, but also do it in a way that does not cut benefits to anyone, and that’s the key,” Bucshon said. “We’re going to have to find a way to make sure that providers are properly reimbursed.”

Kerry Dooley Young is a freelance journalist based in Washington, DC. Follow her on LinkedIn and Threads.