What you need to know about the Medicare reimbursement cuts for 2025

The final Medicare Physician Fee Schedule from CMS for 2025 introduced a 2.83% reduction in the conversion factor, decreasing it from $33.29 in 2024 to $32.35 in 2025. This marks the fifth consecutive year of cuts, intensifying financial pressures on medical practices nationwide.

The reduction is primarily due to statutory budget neutrality requirements and the expiration of a temporary 2.93% payment increase that was in effect for 2024. Despite a projected 3.5% increase in the Medicare Economic Index, which reflects rising practice costs, the PFS conversion factor has been reduced, leading to a disconnect between reimbursement rates and actual operating expenses.

Congressional inaction

Despite advocacy efforts from the Medical Group Management Association, the American Medical Association, and other professional bodies, Congress has not intervened to prevent these cuts. This inaction perpetuates a trend of declining Medicare physician reimbursement that has spanned over two decades, exacerbating financial challenges for health care providers.

The continued reduction in Medicare reimbursement rates poses significant challenges for physicians, particularly those in small or rural practices operating on narrow margins. The discrepancy between rising operational costs and declining reimbursement rates may hinder the ability to invest in new equipment, retain staff, and accept new Medicare patients, potentially impacting patient access to care.

Call to Action

Physicians are encouraged to engage in advocacy efforts, both individually and through professional organizations, to urge Congress to address the ongoing issue of inadequate Medicare reimbursement rates.

Without legislative intervention, the financial sustainability of medical practices and the broader healthcare system may be at risk.

Medical Economics has also written an overview on how to assess whether Medicare is a financially viable option for your practice, and if it isn’t, how you can opt out. The article can be found here.