HAP Radiology Billing and Coding Blog

Absent any last-minute Congressional action, physicians will suffer a 2.83% fee schedule reduction for 2025. This is slightly more of a cut than had been predicted in the Medicare Physician Fee Schedule (MPFS) Proposed Rule that was issued in July. As we reported in our analysis of the Proposed Rule, this reduction in payments continues a trend that has seen the Medicare fee schedule reduced by nearly 10% over the past 10 years.

We covered the major points of the 2025 Medicare Physician Fee Schedule (MPFS) Proposed Rule when it came out in July, but while we’re waiting for the Final Rule to be published later in the year let’s look at another provision in the MPFS that we’ve been watching – the locality-specific payment adjustment known as the Geographic Practice Cost Index (GPCI).

The Centers for Medicare and Medicaid Services (CMS) has issued its proposal for payments in 2025 under the Physician Fee Schedule (PFS), and it contains an across-the-board 2.8% cut from the current 2024 payment rate. This reduction in payments continues a trend that has seen the Medicare fee schedule reduced nearly 10% over the past 10 years. Last year’s proposed rule (for 2024) contained a 3.36% cut that ended up being a 1.77% cut after Congressional intervention in March, and it is possible that similar action will occur again. The Conversion Factor (CF) in the 2025 Proposed Rule is $32.3562, compared with the $33.2875 currently in use.

With passage of the Consolidated Appropriations Act, 2024 (CAA 24), we finally learned the rates physicians will be paid for Medicare services during the remainder of 2024. Effective when it was signed by the President on March 9, 2024 the CAA 24 contained several provisions that benefitted physician reimbursement:

The Centers for Medicare and Medicaid Services (CMS) announced its proposed Medicare Physician Fee Schedule (MPFS) rules for 2024, including provisions for the Quality Payment Program (QPP). While not a done deal until the final rule is issued toward the end of the year, the Proposed Rule gives an indication of where CMS is headed with regard to payment policy. In recent history, even the Final Rule isn’t final because Congress has had to intervene to stave off significant reimbursement reductions. Here are the highlights of the 2024 Proposed Rule.

The Medicare Physician Fee Schedule (MPFS) was lowered for 2023 due to a cut of 2.08% in the Conversion Factor (CF) used to determine payment rates. We reported that the CF could have been reduced as much as 4.47% had Congress not intervened at the last minute to adjust it, along with waiving the 4% PAYGO reduction that was supposed to occur in 2023. The pricing of various procedure codes is also revised annually due to changes in practice expense assumptions, which generally affects the Technical Component (TC) more than the Professional Component (PC). Radiologists will therefore see a different overall result for services in a private office or imaging center than they will for hospital services.

Once again this year, physicians are uncertain about the amount of reimbursement reduction they will suffer from Medicare cuts. If things are left unchanged, Medicare providers will face a reduction of approximately 8.5% across the board, without considering adjustments made to specific procedure codes. In recent years last-minute congressional action has mitigated the effect of certain statutory requirements.

When the 2023 Medicare Physician Fee Schedule (MPFS) was proposed earlier this year it projected a 4.42% cut to the conversion factor (CF), with radiology facing cuts of between 3 – 4% depending on subspecialty. The final rule moves the cut even deeper, with the 2023 CF set 4.47% lower than the 2022 CF.

The calculation of reimbursement under the Medicare Physician Fee Schedule (MPFS) is made up of three components, each of which can be adjusted during the annual rulemaking process. The one most discussed is the Conversion Factor (CF), which is the dollar amount applied to the table of Relative Value Units (RVU) to arrive at the reimbursement rate for each procedure; this is known as the National Medicare Fee. However, there is another factor, the Geographic Practice Cost Index (GPCI), that is applied individually to each payment locality across the country. This resulting fee is what is paid to the practice based on the location where the services are performed. The 2023 MPFS Proposed Rule proposes changes to all three components.

Interventional radiology is among those specialties hit hard by the clinical labor practice expense cuts in the 2022 Medicare Physician Fee Schedule (MPFS). The proposed Physician Fee Schedule for 2022 contained an estimated 9% cut to interventional radiology (IR), due primarily to the revision of the practice expense component of the RVU calculation. The MPFS final rule brought the IR cut down to an estimated 5% after reconsideration of some of the methodology employed in calculating clinical labor costs. However, this is a blended figure that ignores the much larger effect on the global reimbursement for office procedures than on the professional component for hospital-based procedures.