MEDICARE CUTS PHYSICIAN REIMBURSEMENT FOR THE UMPTEENTH YEAR IN A ROW

The Center for Medicare and Medicaid Services (CMS) has once again reduced physician payment for 2025. Next year, physicians will receive 2.9% less from Medicare than they did in 2024. When you add to this the incremental reductions that have occurred every year since the current Resource-based Relative Value System (RBRVS) of payment was implemented in January, 1992, it’s huge. If you’re doing the math, it means that physicians who rely heavily on revenues from Medicare to maintain a practice and make a living, have not had a pay raise in 32 years! 32 years! In fact, since 2001, reimbursement to physicians has declined 29%, adjusted for inflation. Do you know anyone who hasn’t had a pay raise in 32 years? Of course you don’t. They don’t exist. Even unemployed people get a raise now and then. 

The government accomplishes this ruse by annually reducing the conversion factor, the dollar amount multiplied by the RVU (Relative Value Unit) of each physician service. This calculation is done for every physician service or procedure. In 2024, the conversion factor (CF) was $33.29. In 2025, it drops to $32.35, or 2.83% lower ($0.94 less per RVU). Medical practice costs are estimated to increase by 3.5% in 2025. That’s obviously a net negative. “CMS and Congress have once again overlooked the sobering financial realities facing our nation’s medical practices…further increasing the gap between practice expenses and reimbursement rates….Today’s final rule throws the financial viability of physician practices into question and threatens beneficiary access to care…Medicare plans to pay us less as costs go up…that is an unsustainable trend, though one that has been going on for decades.” 

“Adjusted for inflation, Medicare reimbursement to physicians has decreased 29% since 2001.” Physicians’ so-called unions, the American Medical Association (AMA) and the American Academy of Family Physicians (AAFP), to name two, have protested these cuts for years, but nothing has changed. Physicians are portrayed as greedy, rich snobs who make too much money, and public sympathy/understanding of this dilemma has not generated any support from the lay public. But I can tell you, as one whose practice succumbed to the dismal, unreasonable reimbursement from Medicare, it is a serious problem. 

The cost to provide quality care in a family physician setting increases continually. Physician offices operate on small margins already. Quality staff demand higher pay, rent and utilities increase regularly, new equipment is difficult to afford, and vaccines and supplies have been severely affected by inflation. Everything costs more so to cover overhead and pay the physician a realistic salary, incoming revenues have to keep pace. They DO NOT! When expenses exceed revenues, the bottom line is red (a loss). The business cannot continue at a deficit without something giving. I my case it was my salary. I finally had to give in and became a salaried employee of a group. It didn’t change the basic reimbursement issues, but it did provide a larger pool from which my salary could be paid. 

Solutions are discussed but never implemented. The government and CMS don’t give an inch. Reductions will continue until physicians can’t take it any more and cry “uncle.” Congress has to realize they are choking the life out of medical practitioners before any substantive change will occur. The prevailing thought, though, is that quality health care for Americans is very important, but having reasonably compensated, happy healthcare professionals is not. 

Reference: Landi H. Doctors, facing another pay cut in 2025, call for permanent Medicare payment reform. Medscape Medical News 2024 November 2.