What Else is in the Medicare Proposed Rule for 2025?

What Else Is in the Medicare Proposed Rule for 2025 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 GPCI is comprised of values related to Practice Expenses, Malpractice Insurance, and the cost of labor (the Work value), which act to increase or decrease the standard (national) Medicare payment in order to adjust for differences in the cost of living across the country. Medicare computes a composite of these factors called the Geographic Adjustment Factor (GAF) that allows us to analyze the impact of the GPCI adjustments for each payment locality. The GAF ranges from 0.893 in Arkansas to 1.271 in Alaska, which means practices in Arkansas are paid 10.7% less than the national rate and practices in Alaska are paid 27.1% more than the national rate.

Of the 109 payment localities in the Medicare system, 51 will receive a negative adjustment while 58 will see no adjustment – no locality will have a payment increase due to geographic cost factors. The table below shows those localities where the GAF will be more than 1.0% lower in 2025 than it was in 2024. Localities not listed here will see a decrease of less than 1.0%, or no change to their GAF for 2025.

Locality Name	Locality Number	2024 GAF	2025 GAF	Percent Change
MISSISSIPPI	00	0.923	0.898	-2.7%
ARKANSAS	13	0.916	0.893	-2.5%
REST OF MISSOURI	99	0.935	0.913	-2.4%
IDAHO	00	0.936	0.914	-2.4%
WEST VIRGINIA	16	0.951	0.931	-2.1%
KENTUCKY	00	0.940	0.921	-2.0%
MAINE	99	0.946	0.927	-2.0%
UTAH	09	0.967	0.948	-2.0%
KANSAS	00	0.938	0.920	-1.9%
TENNESSEE	35	0.933	0.916	-1.8%
IOWA	00	0.938	0.921	-1.8%
OKLAHOMA	00	0.942	0.925	-1.8%
LOUISIANA	99	0.945	0.928	-1.8%
MONTANA	01	0.999	0.981	-1.8%
GEORGIA	99	0.952	0.936	-1.7%
NEBRASKA	00	0.933	0.919	-1.5%
INDIANA	00	0.943	0.929	-1.5%
SOUTH CAROLINA	01	0.953	0.939	-1.5%
FLORIDA	99	0.992	0.977	-1.5%
ILLINOIS	99	0.976	0.962	-1.4%
VERMONT	50	0.977	0.963	-1.4%
MICHIGAN	99	0.967	0.954	-1.3%
SOUTH DAKOTA	02	0.974	0.961	-1.3%
WYOMING	21	0.989	0.976	-1.3%
ALABAMA	00	0.923	0.912	-1.2%
NEW MEXICO	05	0.965	0.953	-1.2%
NEW ORLEANS	01	0.977	0.966	-1.1%
OREGON	99	0.979	0.968	-1.1%
NORTH DAKOTA	01	0.980	0.969	-1.1%
FORT LAUDERDALE	03	1.031	1.020	-1.1%
ARIZONA	00	0.983	0.973	-1.0%
MAINE	03	0.991	0.981	-1.0%
EAST ST. LOUIS	12	0.996	0.986	-1.0%

The worst case is for practices in Mississippi where a 2.7% GAF reduction will impact them in addition to the 2.8% cut that all practices nationwide will experience, for a total of a 5.5% cut in the Medicare payment rate for 2025.

It is possible that Congressional action will mitigate some of the of this cut, as it did last year. It took two short-term appropriations bills to stave off similar geographic cuts that kept the GPCI Work Floor at 1.0, the same as it was in 2023. Finally, in March the Consolidated Appropriations Act, 2024 revised the overall cut from 3.37% to 1.77% and further sustained the GPCI Work Floor at 1.0 for the rest of the year. In Mississippi, the 2024 payment rate would have been 8.5% lower than it was in 2023 with no Congressional action, but it became a 4.8% cut rather than 8.5%. There is no guarantee that similar action will take place for 2025.

We will continue to monitor changes in the Medicare payment rate, which also influences commercial payers over the long term, and we will provide a complete review of the Medicare Physician Fee Schedule for 2025 when the final rule is released. Subscribe to this blog for the latest information.

Sandy Coffta is the Vice President of Client Services at Healthcare Administrative Partners.

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