The Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) have rolled out the new Medicare Physician Fee Schedule (PFS) for 2025, with some changes that sound positive but come with real drawbacks. From payment cuts to telehealth restrictions, here’s what this means for physicians and their patients—and why these changes may be more challenging than they appear.
Major Payment Cuts: More Work, Less Pay
- Average Payment Reduction: Medicare payments to physicians will drop by 2.93% in 2025. This decrease is largely due to required budget adjustments, which brings the conversion factor to $32.35—down from $33.29. These cuts impact practices already struggling to keep up with rising operating costs, making it increasingly difficult for providers to deliver quality care.The Reality: A nearly 3% reduction may not sound massive, but it adds up significantly for practices that rely on Medicare patients. With staffing, technology, and general costs on the rise, these cuts mean practices have to work harder to cover expenses, leaving fewer resources to invest in quality improvements and patient care.
Telehealth Rollbacks: Limited Access for Patients
Telehealth, which expanded dramatically during the COVID-19 pandemic, gave patients unprecedented access to healthcare, regardless of location. But as of January 1, 2025, many of these telehealth flexibilities will expire:
- Geographic Restrictions: Starting in 2025, most telehealth services will require patients to be in a rural area or within a medical facility to receive Medicare coverage. This change reverses the progress made in virtual care access, limiting telehealth to patients who are already close to healthcare facilities.
- Loss of Flexibility for Virtual Supervision: While some virtual supervision will remain in place, there will be limitations on where and how telehealth services can be supervised. For instance, teaching physicians will only be able to use telehealth for supervision in certain situations.
- Behavioral Health Exception: Behavioral health telehealth services are allowed to continue in-home, which is essential for patients needing mental health support. But this exception only highlights the loss for other types of care, leaving patients with fewer options to manage chronic conditions or access preventive services from home.
The Reality: This rollback hits patients in urban and underserved areas the hardest. For elderly or chronically ill patients who have limited mobility, telehealth access allowed them to stay on top of their health without the added burden of travel. Now, unless they live in a rural area, their access will be curtailed. For providers, this means fewer options to offer flexible care that meets patient needs, especially when in-person visits may not be feasible.
Support for Primary Care and Preventive Services—But at a Cost
CMS is introducing policies aimed at strengthening primary care and providing a more holistic approach to health. This includes expanded coding and payment for complex care management, which theoretically allows practices to provide more comprehensive, whole-person care.
- Behavioral and Oral Health: New payments for behavioral health, dental services related to specific conditions, and caregiver training sound positive. However, practices will need to navigate new administrative requirements, potentially offsetting the benefit of these expanded services.
- Preventive Health Services: Coverage for Hepatitis B vaccines, colorectal cancer screening, and PrEP for HIV prevention has been expanded to improve preventive care access. While this is beneficial for patient health, the cuts in overall payment make it challenging for practices to balance this coverage with the resources needed to deliver care.
The Reality: CMS is pushing for more services, but the financial support doesn’t match the new requirements. The added administrative tasks, coding changes, and reporting needs can strain practices, especially those already managing tight budgets and limited staff. It’s a case of “doing more with less,” which can affect the sustainability of offering these new services long-term.
Medicare Shared Savings Program Incentives: Mixed Results
The Medicare Shared Savings Program is expanding incentives for Accountable Care Organizations (ACOs), including advances on shared savings and health equity benchmarks to support underserved areas. While these additions are well-intentioned, the requirements for participation can be demanding.
The Reality: Smaller practices or ACOs with limited resources may find the costs of participating in the program outweigh the potential benefits, especially when it comes to staffing and meeting reporting requirements.
Inflation Reduction Act: Drug Rebates May Fall Short
CMS is implementing rebates to keep drug prices in check, but there are concerns about whether drug companies will comply fully. Patients could still see drug prices rise if manufacturers find ways to work around these regulations.
The Reality: The Act’s goal is to curb drug costs, but its success will depend on enforcement. Until we see real-world effects, practices may still need to help patients navigate high out-of-pocket costs for medications.
Bottom Line: The Challenges Ahead for Physicians and Patients
While CMS promotes these changes as steps toward whole-person care, the reduced payments and loss of telehealth access make it challenging for practices to provide flexible, patient-centered care. Physicians and their teams will have to navigate more rules and fewer resources while trying to maintain high standards of care. Patients, especially those in urban areas or with limited mobility, may lose valuable telehealth access, pushing healthcare out of reach for many.
As these rules take effect, staying informed and planning for these changes will be crucial for healthcare providers. It’s essential for physicians to understand how these updates affect their practices and to advocate for policies that truly support sustainable, high-quality care for all patients.
