For the fifth straight year, physicians are facing a Medicare payment cut unless Congress intervenes. These cuts coincide with ongoing growth in the cost of practicing medicine as the Centers for Medicare and Medicaid Services (CMS) projects that the Medicare Economic Index (MEI) practice expense will increase by 3.6% in 2025.

This cut is mostly due to an expiring 2.93% temporary increase that Congress authorized and a statutory freeze in fee schedule payment updates under the Medicare Access and CHIP Reauthorization Act (MACRA). When enacting MACRA in 2015, Congress froze payment updates in 2025 based on projections that physicians would transition to value-based Alternative Payment Models (APMs). Unfortunately, CMS has failed to approve most APMs and therefore, there are not enough opportunities for physicians to participate.

The California Medical Association (CMA) has been sounding the alarm in Congress that Medicare payment does not cover a physician’s cost to provide care, nor does it keep pace with inflation. Since 2001, physician fees have declined by 29%, adjusted for inflation, while other Medicare providers received 60% increases during the same time. Physician practices cannot continue to absorb increasing costs while payment rates stagnate or are cut.

Both the nonpartisan Medicare Payment Advisory Commission (MedPAC) – which advises Congress on Medicare payment issues – and the Medicare Trustees have issued new warnings about access to care problems for America’s seniors  if the gap continues to grow between what Medicare pays physicians and what it costs to provide high quality care to patients.

A 2022 CMA survey showed that inadequate Medicare rates are forcing 70% of California physicians to limit Medicare patients. Congressional inaction is harming patient access to care.

CMA and the American Medical Association (AMA) are urging Congress to stop the cut and enact a permanent annual inflation update along with other key reforms to the Medicare physician fee schedule, including an overhaul of the Merit-Based Incentive Payment System (MIPS) reporting programs. Visit AMA’s Fix Medicare Now website to join the fight to improve physician financial stability and preserve access to care.

Additional key highlights of the proposed rule are below:

Geographic Practice Expense Changes Successfully Delayed: On a more positive note, CMS has agreed to wait for the results of the AMA Physician Practice Expense Survey before making practice expense changes to the fee schedule. Under a previous plan, CMS proposed to reduce the impact of rent within Medicare payments. CMA strenuously opposed the plan because it would have imposed more than $90 million in payment cuts on California physicians who have some of the highest practice costs in the nation. AMA is analyzing the survey data and intends to share the results with CMS in early 2025.

MIPS Performance Threshold Will Not Increase: As a result of AMA’s strong advocacy, CMS has agreed not to increase the MIPS performance threshold due to significant disruptions caused by the COVID-19 pandemic and the Change Healthcare cyberattack. Research continues to show that MIPS is unduly burdensome, not clinically relevant, and disproportionately harmful to small and rural practices.

CMS MIPS Penalty Predictions: For the 2025 performance year/2027 payment year, CMS estimates that 78% of MIPS eligible clinicians will not receive a penalty. This improvement in scores is mostly due to CMS’ proposal to modify the cost measure scoring. However, 21% of small practices are still likely to be penalized.

Medicare Shared Savings Program Changes: The proposed rule allows Accountable Care Organizations (ACOs) with a history of shared savings to receive savings in advance to invest in enhanced services, care coordination or infrastructure. It also establishes a new health equity upward payment adjustment to ACO benchmarks based on the number of beneficiaries who are dual eligible or enrolled in Medicare Part D Low-Income Subsidy. Given the high volume of dual eligible patients in California, this will be extremely helpful to California physicians.

For more information, see CMA’s 2025 Medicare Physician Fee Schedule Highlights. AMA has also released a detailed summary of the proposal. and AMA will be submitting comments on the rule by September 9, 2024.

For More Information

• CMA: 2025 Medicare Physician Fee Schedule Highlights
• AMA: Detailed summary of 2025 Medicare Physician Fee Schedule Proposed Rule
• CMS: 2025 Medicare Physician Fee Schedule Proposed Rule
• CMS: 2025 Medicare Physician Fee Schedule Proposed Rule Fact Sheet
• CMS: Medicare Shared Savings Program Fact Sheet
• CMS: Quality Payment Program Fact Sheet