Medicare 2025 payment cuts to doctors are finalized, and physicians are fuming

Doctors likely saw it coming, but the lack of surprise probably doesn’t make it any less frustrating for physicians.

Bruce Scott, MD, president of the American Medical Association, denounced planned Medicare cuts in payments to doctors that are slated to take effect in 2025.

The Centers for Medicare & Medicaid Services announced Friday that a 2.8% reduction in Medicare payments to doctors will take effect in 2025. CMS previously proposed the cut in Medicare payments earlier this year, angering doctors and their numerous advocacy groups.

Healthcare groups representing doctors denounced the payment cuts, saying they follow a series of reductions in Medicare payments for physicians in recent years. Doctors and their advocates are pressing Congress to intervene and avert the cuts in payments.

Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, said CMS and Congress have both been negligent in supporting physicians. The MGMA is imploring Congress to prevent the cuts from taking effect.

“Today's final rule throws the financial viability of physician practices into question and threatens beneficiary access to care,” Gilberg said.

The MGMA is pushing Congress to craft “a more permanent, sustainable solution to the Medicare physician payment system.”

‘An unsustainable trend’

Bruce A. Scott, MD, president of the American Medical Association, juxtaposed the 2.8% cut in Medicare payments with the expected 3.5% increase in the Medicare Economic Index, which tracks the higher costs for physician practices.

“To put it bluntly, Medicare plans to pay us less while costs go up,” Scott said in a statement. “You don’t have to be an economist to know that is an unsustainable trend, though one that has been going on for decades. For physician practices operating on small margins already, this means it is harder to acquire new equipment, harder to retain staff, harder to take on new Medicare patients, and harder to keep the doors open, particularly in rural and underserved areas.”

Scott has said that Medicare payment rates have dropped 29% over the past 20 years, when factoring in the higher costs of running practices.

Jen Brull, MD, president of the American Academy of Family Physicians, noted that the final rule from Medicare does offer some provisions to strengthen primary care.

But she said those positives are undermined by cuts in Medicare payments that make it harder for some practices to stay afloat.

“The consequence of this year’s 2.8% reduction is dire, putting practices at risk, exacerbating physician workforce shortages and preventing patients from accessing primary care,” Brull said.

Healthcare leaders said the continued cuts are also putting more pressure on doctors to stop accepting Medicare patients, which makes it harder for seniors to get the care they need.

Lawmakers have introduced legislation to avert the Medicare cuts for 2025. In addition to blocking the cuts, the legislation would give doctors increases in payments that are equivalent to half the Medicare Economic Index in 2025. U.S. Reps. Greg Murphy, R-N.C., and Jimmy Panetta, D-Calif., are the prime sponsors of the bill (H.R. 10073), but Republicans and Democrats alike have signaled support.

But as healthcare leaders note, there are not many legislative days left in the calendar year. Healthcare advocates are hoping Congress will convene in the “lame duck” session after the election to address the Medicare cuts, and other key healthcare priorities, such as telehealth.

“Sadly, this is the fifth year in a row congressional intervention will be needed to preserve payment,” Brull noted.

Scott also bemoaned what has become an annual tradition, with Medicare imposing cuts and healthcare lobbyists pressing lawmakers in the waning days of the year for relief.“The end-of-year panic over pending Medicare cuts faced by physicians year after year is getting old for patients, physicians and members of Congress,” Scott said in a statement.

Hospital outpatient payments

CMS also finalized 2025 payments to hospitals for outpatient services. And while hospitals will see an increase, health systems say the scheduled boost falls short of what they need.

In its final rule issued Friday, CMS approved an increase of just under 3% for outpatient payments and for ambulatory surgery centers in 2025. Hospitals have long complained that Medicare payments haven’t matched their actual costs of caring for patients and their rising expenses.

Ashley Thompson, senior vice president of public policy analysis and development for the American Hospital Association, said that the payments are insufficient to provide care, invest in their workforce and address emerging issues such as cybersecurity.

“Medicare's sustained and substantial underpayment of hospitals has stretched for almost two decades, and today's final outpatient rule only worsens this chronic problem,” Thompson said in a statement.

She added, “These inadequate payments will have a negative impact on patient access to care, especially in rural and underserved communities nationwide.”

Soumi Saha, senior vice president of government affairs for Premier Inc., said the company is “profoundly disappointed” over CMS’ planned payments to both doctors and hospitals.

“Providers are grappling with rising inflation, labor shortages and the demands of an aging population—challenges CMS fails to adequately address,” Saha said in a statement.