CMS finalized a 2.83% physician pay cut in its 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System released on Nov. 1.
Here are five things to know:
1. The physician fee schedule conversion factor for 2025 is $32.35, down from $33.29 in 2024.
2. Updated reimbursement increases are based on a projected hospital market basket percentage increase of 3.4%, and then a 0.5 percentage point productivity adjustment. The final rule is 0.3% up from the proposed rule.
3. The move follows a trend of declining physician pay. CMS cut overall physician pay by 1.25% for 2024, and, overall, physician reimbursement amounts per Medicare patient decreased around 2.3% between 2005 and 2021 when accounting for inflation, according to a new study from the Harvey L. Neiman Health Policy Institute.
4. After the cut was proposed in July, leaders told Becker's about how the move will affect physicians and what steps should be taken in response.
"To further reduce reimbursement would mean less cash flow spread out over time," Donald Olson, MD, pain management specialist in Tillamook, Ore., said. "In today's economy, something would have to give, probably less service and much less availability. In my opinion, a trainwreck."
5. The final rule was met with criticism from several physician advocacy groups, including the American Medical Association and the Medical Group Management Association.
"To put it bluntly, Medicare plans to pay us less while costs go up," AMA President Bruce Scott, MD, said in a Nov. 1 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."