In a devastating move, Congress did not intervene and stop the 2.8% Medicare Physician Fee Schedule payment cut for 2025. Therefore, the cut took effect on January 1, 2025. When medical practice inflation is factored in, this is in effect a 6.3% payment cut to physicians.   

This cut results from the expiration of a 2.93% temporary Congressional update to the conversion factor at the end of 2024 and a freeze on fee schedule inflation updates until 2026 under the Medicare Access and CHIP Reauthorization Act (MACRA). 

When Congress enacted MACRA in 2015, it only provided payment updates through 2020, inaccurately assuming that all physicians would be in Alternative Payment Models by then. Unfortunately, CMS has since only approved a handful of payment models, leaving most physicians unable to participate in value-based APMs, while at the same time being denied annual inflation updates.

Although there was a bipartisan, bicameral agreement in Congress to stop the Medicare physician payment cut, extend the expiring health care programs and fund the government through 2025, Congressional leaders were forced to scale-back the entire package and they dropped many programs, including the measure to avert the Medicare physician payment cut.   

The year-end legislation eventually adopted by Congress on December 20, 2024, only keeps the government funded through March 14, 2025. The pandemic-era telehealth waivers were extended through March 31, 2025.

Many Congressional leaders in both parties have since vowed to reverse the cuts in the March 14, 2025, legislative package to keep the government funded. But for now, the cuts are in effect and claims are being paid at the lower amount until Congress intervenes. 

California physicians are extremely angry with Congress for allowing the Medicare payment cuts to happen. At a time when physicians are struggling to keep their doors open and millions of Americans are unable to get timely access to care, these cuts will push physicians to retire early, reduce the number of Medicare patients they see or shut their doors entirely – all of which hurts patients. Any future agreement from Congress must stop these cuts to Medicare in their entirety. Anything short of that is a failure to serve America’s seniors.

For More Information: 

• Noridian: Medicare Physician Fee Schedule 
• CMS: Final Medicare Physician Payment Rule 
• AMA: Medicare Physician Fee Schedule Summary