Get our top 5 insights from CMS’s CY 2025 Medicare payment rules for physicians, hospitals, ASCs, and home health, detailing key updates and new reimbursements.
The Centers for Medicare & Medicaid Services (CMS) released the last of its annual Medicare payment rules on November 1, covering calendar year (CY) 2025 reimbursement rates for physicians, hospital outpatient, ambulatory surgical centers (ASCs), and home health (HH).
Per usual, we are already analyzing the thousands of pages of regulations and will release detailed summaries in the coming weeks — but today we give you our top 5 insights.
1. Medicare payment updates
Physicians will see another cut in 2025 under the physician fee schedule (PFS) of 2.93% compared to 2024. The 2025 PFS conversion factor incorporates the 0% overall update required by statute plus expiration of a temporary increase (enacted by Congress), resulting in an estimated CY 2025 PFS conversion factor of $32.35. This is a decrease of $0.94 (or 2.83%) from the current CY 2024 conversion factor of $33.29. Industry groups have already been pushing Congress to step in by the end of the year. (See final CY 2025 PFS rule)
HHs will see a small 0.5% bump, or $85 million aggregate increase, compared to CY 2024. That said, CMS finalized a permanent prospective adjustment of -1.975% for CY 2025 HH payment rates. This is to address budget neutrality requirements when implementing the Patient-Driven Groupings Model. For context, in CY 2023 and CY 2024, CMS applied cuts of 3.925% and 2.890%, respectively, which were only half of the estimated required permanent adjustments. (See final CY 2025 HH rule) Finally, for hospital outpatient prospective payments (OPPS) and ASCs, they will see a 2.9% net update. (See final CY 2025 outpatient hospital/ASC rule)
2. Rural Health Clinics (RHCs) productivity standards eliminated
RHCs are currently subject to productivity standards that can impact their reimbursement rates if standards are not met. Those standards were first established in 1978 and updated in 1982 to help determine the average cost per patient for Medicare payment in RHCs as a cost control mechanism.
Congress acted in 2021 under the Consolidated Appropriations Act (CAA, 2021) to restructure RHC payment limits. In doing so, CMS believes that the productivity standards were outdated and redundant now with the CAA, 2021 provisions.
Therefore, RHCs may be glad to hear CMS removed the productivity standards effective for cost reporting periods beginning on or after January 1, 2025. (See final CY 2025 PFS rule)
3. New payments for advance primary care, digital therapeutics, caregiver training, telehealth
There are multiple new, finalized payments for advanced primary care management services, caregiver training services — several mental health digital therapeutics codes and certain telehealth services have been placed on the permanent telehealth list. (See final CY 2025 PFS rule)
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Waiting for Congress to act Multiple larger scale policy changes, such as an annual positive physician payment update or changing telehealth policies, cannot be done by CMS via these regulations. This is because CMS authority is limited by existing statutory boundaries. Congress must change the law to address these issues. For example, the PFS update is set at 0% by statute. This was done years ago when Congress repealed the sustainable growth rate and enacted the “MACRA” law. In the near term, physicians and industry organizations are advocating Congress mitigate the payment cut by year’s end while working towards a long-term permanent, statutory change. Additionally, telehealth flexibilities and payments have been extended only temporarily (through December 31, 2024). Unless Congress acts, these policies revert to their previous statutory requirements. Again, CMS cannot change these policies via regulations without Congress first changing the law. |
4. Long-term care organizations required reporting on COVID, flu, RSV
Long-term care organizations are required starting January 1, 2025, to electronically report on COVID-19, influenza, and respiratory syncytial virus (RSV) in a standardized format and frequency specified by the federal Department of Health & Human Services. This requirement replaces the current COVID-19 reporting standards for LTC facilities that sunset in December 2024. LTCs will be required to include facility census, resident vaccination status, confirmed resident cases, and hospitalized residents with confirmed cases. (See final CY 2025 HH Rule)
5. New hospital requirements (maternal/obstetrics, emergency services, transfer protocols)
CMS finalizes new requirements for hospitals under health and safety standards, known as conditions of participation (CoPs). CMS finalizes various changes for hospitals, including critical access hospitals (CAHs), related to obstetrical services. These include required equipment, staff training, and quality assessment and performance improvement. For emergency services, hospitals/CAHs will have to meet certain standards on protocols, provisions, and education related to providing all types of emergency services. Lastly, CMS is finalizing revisions for all hospitals related to transfer protocols. (See final CY hospital outpatient/ASC rule)
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