The 2025 Medicare physician payment schedule has sparked significant concern among healthcare providers, particularly due to the proposed 2.83% cut in reimbursement rates. This marks the fifth consecutive year of reductions, leading to extensive financial strain on physician practices. Despite vocal opposition from the American Medical Association (AMA), these cuts continue to be a reality, exacerbating the challenges faced by doctors in maintaining sustainable, high-quality care. With the increasing costs of delivering care and stagnant or reduced payment rates, physician practices are under immense pressure. AMA President Bruce A. Scott, MD, emphasized that these cuts could hinder the ability of physicians to provide adequate care, particularly to seniors and persons with disabilities who depend heavily on Medicare services.
Financial Strain on Physician Practices
The ongoing decline in Medicare reimbursement rates has created substantial financial challenges for physician practices. The reality of escalating costs associated with providing care juxtaposed against the stagnant or shrinking payment rates means many practices are struggling to keep their doors open. The AMA has been vocal about their concern, with President Bruce A. Scott, MD, highlighting the detrimental impact of these cuts on the delivery of high-quality healthcare, especially to seniors and people with disabilities. This financial strain is not just a theoretical issue but one that has tangible effects on everyday operations in medical practices across the country.
Despite CMS acknowledging the rising costs of delivering care, as indicated by a 3.5% increase in the Medicare Economic Index (MEI), the implementation of cuts continues unabated. This contradiction has prompted the AMA to support the Strengthening Medicare for Patients and Providers Act, a bipartisan bill aimed at providing annual Medicare payment inflationary updates tied to the MEI. Such measures are deemed crucial for addressing the growing disparity between the actual costs of providing care and the reimbursement rates, which are crucial for the sustainability of physician practices.
AMA’s Advocacy and CMS’s Response
The AMA has been actively advocating for changes to the Medicare payment system to ensure it more accurately reflects the actual costs associated with providing care. Fortunately, their efforts have not gone unnoticed, with several significant recommendations adopted by CMS. One of the most notable developments involves CMS delaying the implementation of new Medicare Economic Index weights until the data from the AMA’s Physician Practice Information (PPI) survey has been analyzed. This survey, conducted in collaboration with the Mathematica research firm, aims to provide a comprehensive understanding of physician compensation, practice costs, and patient care hours, effectively highlighting the financial realities faced by healthcare providers.
In addition to this positive development, CMS is also exploring alternative methodologies for measuring practice expenses. By working alongside the Rand Corp., CMS aims to integrate updated PPI data into their new methodologies. The overarching goal is to enhance the accuracy and fairness of Medicare physician payment updates. Moreover, CMS has extended an invitation for suggestions on enhancing the stability and predictability of future updates. Considering elements such as recurring pricing updates for clinical staff, medical supplies, and equipment is critical to achieving this goal, ensuring a more stable and predictable payment framework.
Telehealth Extensions and Policy Changes
Telehealth has emerged as a crucial area of focus, particularly in light of the profound impact of the COVID-19 pandemic. To adapt to these unprecedented times, Congress extended waivers that enabled broader access to telehealth services until March 2025. However, for these flexibilities to be sustained in the long term, further extensions are essential. Recognizing this, CMS has taken definitive action to include audio-only visits in the definition of “telecommunications services” on a permanent basis. This change allows for billing of telehealth services delivered via telephone, accommodating patients who are unable or unwilling to use audio-visual technology. This policy has specific relevance to mental health and substance-use disorder diagnoses and evaluations, as well as monthly assessments for end-stage renal disease.
Several other telehealth-related extensions have been put in place to provide continued support to healthcare providers. This includes the suspension of frequency limits on subsequent hospital and nursing facility telehealth visits, the ability for teaching physicians to provide virtual direct supervision, and the exemption from reporting home addresses for physicians who are delivering telehealth services from their homes. These measures have been adopted by CMS in response to concerns surrounding privacy, safety, and the administrative burden associated with reporting home addresses and altering billing practices.
Updates to Quality Measures and Cancer Screening Coverage
In an effort to better align quality measures and improve screening coverage, CMS has introduced a series of updates. For example, the Medicare Diabetes Prevention Program has seen several improvements based on AMA’s suggestions, notably the inclusion of an online distance-learning component. However, AMA’s ongoing advocacy for further expanding the program to include virtual-only suppliers has yet to be realized. Such an expansion would have significantly increased the program’s accessibility and reach, benefiting more beneficiaries.
Regarding the Merit-based Incentive Payment System (MIPS), CMS has maintained the threshold for financial penalties to account for disruptions caused by both COVID-19 and the Change Healthcare cyberattack. Research indicates that MIPS remains unduly burdensome and largely disconnected from meaningful clinical outcomes, prompting the AMA to call for statutory changes. These changes aim to alleviate the burden, eliminate steep penalties that disproportionately affect small and rural practices, and focus on delivering timely and actionable data. Addressing these concerns is critical in ensuring the system’s effectiveness and fairness.
Equity in Cancer Screening
CMS has taken a significant step to promote equity in cancer screening by broadening coverage for colorectal cancer (CRC) screening. This move is especially crucial for rural patients and communities with high CRC incidence rates, such as Black and Native American populations. According to the National Cancer Institute, CRC incidence rates are markedly higher among Black (41.9 per 100,000) and Native American (39.3 per 100,000) individuals compared to white individuals (37 per 100,000).
By expanding coverage, CMS expects more people to utilize screening services, which should lead to cost savings through more preventive care and earlier detection. This is part of a larger initiative to tackle health disparities and ensure everyone has access to vital preventive healthcare. The aim is not only to boost early detection and improve outcomes but also to remove structural obstacles that have traditionally restricted access for certain groups. Equitable healthcare access, especially in preventive care, remains a top priority.
Furthermore, the 2025 Medicare physician payment schedule presented notable challenges due to consistent cuts. Nevertheless, the AMA championed significant improvements in methodology and policy. Although Congress has not yet fully addressed the negative impacts of payment reductions, CMS’s adoption of AMA’s proposals and continuous exploration of enhanced measurement methodologies shows a promising shift. This shift aims to better align payment systems with the true costs of care, expand telehealth services, and bolster preventive measures. The AMA continues to advocate for Medicare payment system reforms that enable physicians to provide sustainable, high-quality care to their patients.
