HAP Radiology Billing and Coding Blog

The 2025 conversion factor (CF) that sets the overall rate for the Medicare Physician Fee Schedule (MPFS) was adjusted downward by 2.83% from the 2024 rate, to $32.3465 per Relative Value Unit (RVU) vs. $33.2875 per RVU. Several bills are pending in Congress that would mitigate the scheduled reduction, at least on a temporary basis, or perhaps to make more permanent corrections to the Medicare pricing formula. However, as of this writing none are in active discussion.

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).

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:

We pay a lot of attention to government regulation in healthcare, especially the Medicare Physician Fee Schedule (MPFS) that influences reimbursement not only from Medicare, but also from other payers since many commercial contracts are tied to the MPFS. Although it is the object of most focus, the Centers for Medicare and Medicaid Services (CMS) is not the only agency that regulates healthcare.

The Centers for Medicare and Medicaid Services (CMS) announced its Medicare Physician Fee Schedule (MPFS) Final Rule for 2024, including provisions for both Medicare reimbursement and the Quality Payment Program (QPP).

The Strengthening Medicare for Patients and Providers Act (H.R. 2474) would modify the way the Medicare Physician Fee Schedule (MPFS) is calculated and adjusted each year. The basic system of determining Relative Value Units (RVU) would not change, but the annual adjustment of the Conversion Factor (CF) would more closely reflect the actual economic factors that affect physicians’ practices.

Reimbursement under the Medicare Physician Fee Schedule (MPFS) has been consistently reduced for as many years as most of us can remember. Most recently, the 2023 payment rate was cut another 2.08% from the 2022 level, leaving the fee schedule 7.6% lower than it was in 1998 and 11.0% lower than it was in 2008.

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.

In response to concern expressed across the spectrum of physicians and their representative organizations, the omnibus spending bill titled the Consolidated Appropriations Act, 2023 (CAA23) passed by Congress on December 23 rolled back a Medicare payment cut of 8.5%.  As a result, we estimate that the conversion factor will still be cut 2.08% for 2023. However, as we reported previously, many practices will feel a larger reimbursement reduction due to the annual valuation adjustments within the fee schedule.