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Another Medicare Cut for Physicians? Look to Congress, Not CMS

— Medicare patients and providers deserve better

MedpageToday
A photo of the Capitol building in Washington, DC.
Heller is a pediatric radiologist.

Recently, CMS released its proposed for physicians and other healthcare professionals in 2025. As expected, the Medicare "conversion factor" (CF) -- a multiplier that is used to calculate payment rates for each service or procedure -- is lower than it has been in decades. This means even less reimbursement for many that serve Medicare patients. In fact, the proposed 2025 CF is so low that the last time we saw a lower CF . For context, in 1993 movie tickets cost around $4, Blockbuster Video was huge, and Google was still 5 years away.

How did we get here?

Let's start by taking a look at the steps used by CMS to calculate the proposed CF for next year. For reference, this is Table 126 from the document that CMS released:

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First, CMS takes the current year CF and then removes the financial support that Congress allocated for 2024, which expires at the end of the year. For 2025, most of the reduction in the CF comes from the loss of this support.

Next, CMS adjusts the CF by an amount specified by Congress. Despite years of inflation, , the adjustment for 2025 is 0%, just as it has been every year since 2020. Unlike other fee schedules, there is no standard annual inflation adjustment for Medicare providers.

Finally, CMS applies a "budget neutrality adjustment." Due to a over 30 years ago, the projected cost of the changes that CMS makes can't raise spending by more than $20 million in a year. As a result, CMS must apply a "budget neutrality adjustment" to the CF, reducing the amount.

For 2025, the adjustment is only -0.05%, but . While the rationale for budget neutrality is understandable, in reality it forces irrational action. For example, in 2025, the field of interventional radiology (IR) is again expected to take the largest pay cut. This cut is an unintended consequence of support for other areas of the fee schedule and mandated budget neutrality.

IR physicians specialize in minimally invasive procedures that are often a cost-effective alternative to more invasive procedures, and frequently better for patients. A healthcare policy focused on improving the value of care delivery, which is a , should emphasize investment in such specialties, not disincentivize them with annual pay cuts.

While many online are directing their frustration at CMS, in reality much (though certainly not all) of the challenges with the CF are statutory in nature, meaning they are due to laws passed by Congress and out of the control of CMS. Reviewing the steps in the CF calculation, only Congress can allocate funds to increase the CF and help it keep pace with inflation, and only Congress can adjust the outdated budget neutrality adjustment.

The cost of supplies, rent, and staff have increased since the 1990s. With a stagnant CF, the decades of inflation have taken their toll. In a survey from the , almost 9 in 10 respondents indicated that Medicare reimbursement not keeping pace with inflation was a threat to Medicare beneficiaries' access to care. In fact, when adjusted for inflation, Medicare physician payment has from 2001 to 2024. The inadequate pay rate is also contributing to ongoing problems with .

With a CF so out of touch with reality, Congress must act to protect the Medicare system. The good news is that some in Congress understand this need. This congressional session, bills and were introduced, which attempt to address longstanding concerns with Medicare. More recently, the Senate Finance Committee established a bipartisan working group on the topic, and the committee in May 2024, outlining its concerns and asking questions of stakeholders. This is a thoughtful and reasonable first step toward addressing a complex issue.

Like other healthcare professionals, I am disappointed and frustrated to see another looming cut to Medicare payment. I appreciate the work that CMS is doing but also understand the agency's limits. Let us hope that Congress recognizes the importance of the Medicare system and realizes that action is necessary to protect it. Medicare patients and providers deserve better than a pay rate that is older than Amazon (founded 1994).

is a pediatric radiologist and Senior Vice President for Health Policy at Radiology Partners in Chicago.