Doc Groups Blast 2.8% Cut in Medicare Physician Fee Schedule Final Rule

Physician groups are sounding the alarm about a pending 2.8% cut in reimbursement under the Medicare Physician Fee Schedule final rule announced on Friday.

“To put it bluntly, Medicare plans to pay us less while costs go up,” American Medical Association (AMA) President Bruce Scott, MD, said in a statement. “You don’t have to be an economist to know that is an unsustainable trend, though one that has been going on for decades. 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.”

“Now there are only a precious few legislative days left,” he added. “Unless Congress acts during the lame duck, the cuts will go through. Physicians and patients are watching, wondering if Congress is up to the task of fixing this broken reimbursement system. Thankfully, there are signs that lawmakers recognize the gravity of the situation.”

AMGA — formerly the American Medical Group Association — agreed. “Five years of Medicare cuts is going to catch up with us,” Jerry Penso, MD, MBA, the president and CEO of AMGA, said in a statement. “To keep the doors open, AMGA members are going to need to cut staff and reduce access to care for Medicare patients. The only real question is if Congress will come together to prevent this.”

Under the rule, in accordance with current law, “finalized average payment rates under the PFS [Physician Fee Schedule] will be reduced by 2.93% in calendar year 2025 compared to the average payment rates for most of calendar year 2024,” the agency said in a press release. “The change to the PFS conversion factor reflects the 0% update required by statute for calendar year 2025, the expiration of the 2.93% temporary increase in payment amounts for calendar year 2024 required by statute, and a small budget neutrality adjustment necessary to account for changes in valuation for particular services. This amounts to a finalized calendar year 2025 PFS conversion factor of $32.35, a decrease of $0.94 (or 2.83%) from the current calendar year 2024 conversion factor of $33.29.”

There is some movement in Congress toward trying to reverse the cut. On Oct. 11, 233 House members sent a letter to House leaders urging them to reverse the cuts and enact an annual inflationary update for Medicare physician pay. “Increased instability in the healthcare sector due to looming cost hikes impacts the ability of physicians and clinicians to provide the highest quality of care and threatens patient access to affordable healthcare,” read the bipartisan letter, which was spearheaded by Reps. Mariannette Miller-Meeks, MD (R-Iowa), and Jimmy Panetta (D-Calif.). “In lieu of these harmful cuts, which, absent federal legislation, will take effect on January 1, 2025, Congress must pass a bill providing physicians and other clinicians with a payment update that takes into account the cost of actually delivering care to patients.”

Then, on Oct. 29, a bipartisan group of House members introduced a bill that would reverse the cut and give physicians a raise equivalent to half of the increase in the Medicare Economic Index (MEI), a measure of healthcare inflation. “America’s physicians are at a breaking point and access to high-quality, affordable care is at risk for millions of Medicare patients,” Rep. Greg Murphy, MD (R-N.C.), the bill’s chief sponsor, said in a statement. “This bipartisan legislation would stop yet another year of reimbursement cuts, give them a slight inflationary adjustment, and protect Medicare for physicians and patients alike.” That measure, known as the Medicare Patient Access and Practice Stabilization Act, currently has seven co-sponsors.

Although physician groups were unhappy with the cuts in the fee schedule, they did like other parts of the rule. “We are pleased CMS heeded our call to finalize numerous telehealth policies, such as permanently covering audio-only services and extending flexibilities for direct supervision and home address reporting for practitioners,” Anders Gilberg, senior vice president for government affairs at the Medical Group Management Association, said in a statement. (Disclosure: Gilberg is a member of the MedPage Today editorial board.)

Accountable care organizations (ACOs) also applauded parts of the rule. “We welcome such measures as allowing eligible ACOs with a history of success in the Medicare Shared Savings Program, including many of our member groups, to receive advances on their earned shared savings,” Susan Dentzer, president and CEO of America’s Physician Groups, which represents physician-led ACOs, said in a statement. “Also beneficial will be new coding and payment policies for advanced primary care management services that, as CMS noted, will constitute a new pathway to accountable care built into the fee schedule, and will help to increase the number of smaller physician practices committed to value-based care.”

For its part, the American Academy of Family Physicians (AAFP) is “encouraged that CMS continues to make primary care a priority in this year’s final rule,” AAFP president Jen Brull, MD, said in a statement. “We’re grateful that CMS will allow payment for the G2211 code when billed on the same day as other services integral to comprehensive primary care, including an annual wellness visit, vaccine administration, or any Medicare Part B preventive services. This is a meaningful change that helps provide resources family physicians need to serve as a focal point of longitudinal care for patients.”