Lawmakers have unveiled a comprehensive government funding deal that includes a substantial healthcare package — proposing a temporary 2.5% increase to the Medicare physician fee schedule for 2025.
The proposed pay increase would offset the 2.83% pay cut recently finalized by the CMS for 2025. Without intervention, the physician fee schedule conversion factor for 2025 is set to drop from $33.29 in 2024 to $32.35, representing a tangible hit to physician revenues.
Physicians were outraged when CMS finalized the pay cut in its 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System released on Nov. 1.
"The CMS pay cut is a disgrace. As every industry in America is being forced to adjust their pricing due to the out of control inflation over the past 2-3 years, physicians are being hammered," Thomas Loftus, MD, neurosurgeon at the Austin (Texas) Neurosurgical Institute, told Becker's. "Not only are we not receiving inflation-adjusted increases in reimbursement, but the government is actually continuing to whittle away at our practice revenue overall."
This frustration comes amid a broader trend of declining physician pay. In 2024, 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.
Physicians warn that the financial strain could have dire consequences.
"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 Wilkes Barre, Pa.-based Geisinger Health, told Becker's. "These consecutive cuts are simply not sustainable for many practices and will ultimately further drive away Medicaid patients from receiving quality and specialized care."
The funding deal also includes provisions to delay Medicaid disproportionate hospital pay cuts for fiscal year 2025, pushing the implementation date to Jan. 1, 2027. Additionally, it extends certain Medicare telehealth flexibilities until Dec. 31, 2026, a move welcomed by many healthcare providers adapting to a post-pandemic landscape.