Medicare Proposes Effective 3% Pay Cut For Docs for 2025

Federal officials on Thursday proposed Medicare rates that effectively would cut physician pay by about 3% in 2025, touching off a fresh round of protests from medical associations.

The 2025 draft base rate, or conversion factor, is slated to drop to $32.36 from the current level of $33.29, the Centers for Medicare and Medicaid Services said.

The American Medical Association (AMA), the American Academy of Family Physicians (AAFP) and other groups on Wednesday reiterated calls on Congress to revise the law on Medicare payment for physicians and move away from short-term tweaks.

This proposed cut is mostly due to because of the 5-year freeze in the physician schedule base rate mandated by the 2015 Medicare Access and CHIP Reauthorization Act (MACRA). Congress designed MACRA with an aim of shifting clinicians toward programs that would peg pay increases to quality measures.

Lawmakers have since had to soften the blow of that freeze, acknowledging flaws in MACRA and inflation’s significant toll on medical practices. Yet lawmakers have made temporary fixes, such as a 2.93% increase in current payment that’s set to expire.

“Previous quick fixes have been insufficient — this situation requires a bold, substantial approach,” Bruce A. Scott, MD, the AMA president, said in a statement. “A Band-Aid goes only so far when the patient is in dire need.”

Scott noted that the Medicare Economic Index — a measure of practice cost inflation — is expected to rise by 3.6% in 2025.

“As a first step, Congress must enact an annual inflationary update to help physician payment rates keep pace with rising practice costs,” said Steven P. Furr, MD, AAFP’s president, in a statement released Wednesday. “Any payment reductions will threaten practices and exacerbate workforce shortages, preventing patients from accessing the primary care, behavioral health care, and other critical preventive services they need.”

Many medical groups, including the AMA, AAFP, and the Medical Group Management Association, are pressing Congress to pass a law that would tie the conversion factor of the physician fee schedule to inflation.

Influential advisory groups also have backed the idea of increasing the conversion factor. For example, the Medicare Payment Advisory Commission in March recommended to Congress that it increase the 2025 conversion factor, suggesting a bump of half of the projected increase in the Medicare Economic Index.

Congress seems unlikely to revamp the physician fee schedule this year, with members spending significant time away from Washington ahead of the November election.

That could make it likely that Congress’ next action on Medicare payment rates would be another short-term tweak — instead of long-lasting change.

Kerry Dooley Young is a freelance journalist based in Washington, DC.