On January 1, 2025, new Medicare Physician Fee Schedule (PFS) updates will take effect, bringing both challenges and opportunities for healthcare practices. While these changes include significant pay cuts, there are also policy updates that could benefit practices focused on primary care and telehealth services. Here’s what you need to know.
The Impact of a 2.8% Pay Cut
Physicians are facing a 2.8% reduction in Medicare reimbursement rates for 2025, despite the rising costs of running a practice. This cut comes as part of the finalized PFS, which lowers the conversion factor to $32.35—a decrease from the 2024 rate of $33.29.
Key Concerns:
- Practices already struggling with rising overhead costs will see further financial strain.
- Independent medical groups, especially in underserved areas, may find it harder to sustain operations.
- Reduced reimbursements may force practices to freeze hiring, delay upgrades, or scale back services.
Proposed Legislative Relief: H.R. 10073
There is hope on the horizon with H.R. 10073, the Medicare Patient Access and Practice Stabilization Act of 2024. This bill, introduced by bipartisan lawmakers, aims to reverse the pay cuts and provide a 4.7% payment update for 2025. If passed, it would help stabilize physician payments and account for the growing costs of delivering care.
Positive Policy Changes to Note
While the reimbursement cuts drew criticism, the PFS update also includes provisions to support practices:
1. Telehealth Flexibilities
CMS finalized permanent coverage for audio-only telehealth services and extended flexibilities for direct supervision and home-based care reporting through 2025. These updates aim to improve access and maintain the progress made during the pandemic.
2. Primary Care Management Services
CMS introduced new coding for advanced primary care management (APCM) services, allowing practices to bill for comprehensive care planning, 24/7 patient access, and management of complex medical and social needs.
3. Shared Savings Program Improvements
Eligible ACOs can now receive advance payments on earned savings, encouraging investments in care infrastructure and patient-focused services like transportation, dental care, and healthy meals.
Cascading Effects on Commercial Plans
Many commercial insurers base their rates on Medicare’s fee schedule. When Medicare rates are cut, commercial payers often follow suit. Practices may need to review their contracts to ensure fair compensation.
How to Navigate These Changes
For practices struggling with the impact of these changes, there are steps you can take:
- Audit Contracts: Compare commercial payer rates against the updated Medicare rates to ensure competitive reimbursement.
- Optimize Telehealth Services: Leverage the permanent telehealth updates to expand patient access and reduce costs.
- Focus on Value-Based Care: Invest in care models that align with Medicare’s shift toward value-based payment systems.
Partner with QMACS
Navigating these changes can be complex, but QMACS is here to help. From payer contract analysis to revenue cycle optimization, we specialize in supporting practices through regulatory and reimbursement challenges.
📞 Contact us today to schedule a consultation and learn how we can help your practice thrive in 2025 and beyond.