Introduction
In January 2025, the Centers for Medicare & Medicaid Services (CMS) implemented the fifth consecutive annual cut to its Physician Fee Schedule (PFS), reducing the conversion factor from approximately $33.29 to $32.35, a 2.83% decrease (ascopost.com, cms.gov). This reduction comes amid a 3.5% increase in the Medicare Economic Index (reflecting rising costs for practices), effectively squeezing physician reimbursement during a period of increasing practice expenses (ama-assn.org).
What the 2025 Schedule Includes
CMS’s final rule for 2025 confirms this cut, along with key updates:
- Conversion factor drop: From $33.29 to $32.35, equating to a 2.83% reduction (cms.gov).
- New add-on code G2211: For complex Office/Outpatient Evaluation & Management (E/M) visits when billed alongside preventive services, such as Annual Wellness Visits or vaccines—aimed at acknowledging the extra work involved (cms.gov).
- Telehealth flexibility extensions: Certain telehealth allowances, including audio-only visits, remain temporarily in effect through 2025 (ama-assn.org).
- Increased payments for primary care management: New HCPCS codes recognise advanced primary care (24/7 access, care planning, etc.) and mark CMS’s move towards accountable care (cms.gov).
Impacts on Practices
Although CMS finalised the cut, provider groups are sounding the alarm:
- With rising operating costs, many physicians face reduced margins and staffing pressures (ama-assn.org).
- Specialists in fields like oncology may experience 4% losses from combined cuts in physician conversion factor and RVU/GPCI adjustments (ascopost.com).
- Primary care practices are particularly vulnerable, prompting concern about reduced patient access—especially in underserved communities (ama-assn.org).
Legislative Action & Advocacy
In response, multiple bipartisan legislative efforts have arisen:
- Medicare Patient Access and Practice Stabilization Act (S. 1640/H.R. 879)
- Introduced May 2025 in the Senate and earlier in the House.
- Proposes reversing the 2.83% cut and implementing a 2% positive update from June through December 2025 (ama-assn.org).
- Stronger Legislation Proposal
- Introduced February 2025, aims to halt the cut and provide a 4.7% raise, roughly half of estimated MEI growth (apsmedbill.com).
- Congressional “Doc Fix” Budget Bill
Advocacy groups like the AMA, AAFP, and APTA are strongly urging Congress to approve one of these bills to stabilise pay and preserve patient access .
Tips for Physicians & Practices
While Congress sorts reimbursement, practices should:
- Monitor legislative developments and contact policymakers.
- Optimise billing: Ensure accurate usage of add‑on code G2211 with modifier 25 when paired with preventive services.
- Leverage new primary care codes for care management to diversify revenue.
- Track financial KPIs: analyse how fee schedule changes affect net income and cost per visit.
- Prepare for policy shifts in 2026 that could stabilise or alter reimbursement incentives.
Conclusion
The 2025 PFS brings the latest in a challenging streak for physicians—a 2.83% cut amid rising costs and staffing strains. CMS has introduced compensation-enhancing codes (G2211, APCM), but these offer limited relief. Active legislative efforts to reverse cuts are underway, yet uncertain. Now, more than ever, doctors need to advocate, adapt billing practices, and optimise care-management opportunities to weather financial pressures. The decisions made in Congress this year may determine whether physician reimbursement stabilises or worsens—for individual practices and patient care access.