On Nov. 1, CMS finalized its 2025 physician payment rule, which includes a 94 cent (2.83%) conversion factor decrease from 2024.
This is unwelcome news for independent physicians, many of whom have been outspoken about the negative impacts of consistently declining reimbursement rates.
"Physician reimbursement continues to lag behind inflation, and this next set of cuts by CMS will only further rub salt in the wound," Tan Chen, MD, an orthopedic surgeon at Geisinger Health in Wilkes Barre, Pa., told Becker's.
CMS' physician payment has effectively declined 29% since 2001 when adjusted for inflation, according to the American Medical Association.
"There will be, and already has been for so many, a breaking point in which it no longer makes sense to practice medicine," Thomas Loftus, MD, a neurosurgeon at the Austin (Texas) Neurosurgical Institute told Becker's. "We will all become simple hospital or private equity employees with little autonomy. It is very possible that this is simply the way our government plans to take over healthcare without actually saying it out loud. Death by a thousand cuts."
According to Doximity's 2024 "Physician Compensation Report," around 35% of physicians said they were not satisfied with their current compensation, and 62% said their current pay did not reflect their level of expertise and the amount of effort required in their roles.
The results of these frustrations are already visible in the steady decline of small and independent medical practices in the U.S.
From 2012 to 2022, the share of physicians who were self-employed dropped from 53% to 42%. During that time, employed physicians grew from just under 42% to almost 50%, according to a 2023 American Medical Association news release.
The size of private practices also grew over the same time period, as the share of physicians who worked in practices with fewer than 10 physicians dropped nearly 10%, while the share of those working at practices with more than 50 physicians grew 6%.
In addition to driving physicians toward employed positions, as many private insurers follow CMS' lead when it comes to cuts to physician payments, some physicians may choose to cut ties with Medicare entirely.
"Instead of dealing with the growth and expense of healthcare administration, CMS has once again cut those providing the care," David Datta, an orthopedic surgeon in Merrittville, Fla., told Becker's. "At some point physicians will no longer want to deal with the low pay and requirements to participate in Medicare."