Since the 2025 proposed Physician Fee Schedule (PFS) went live yesterday, I’ve put together some jumbled thoughts on interesting tidbits from various proposals. What stuck out to you? Feel free to ping me with your thoughts.
Overall, the PFS rate update results in a 2.8% overall hit to professional reimbursement, following a similar trend over recent years.
Here are the fee schedule links for your own viewing pleasure:
The main takeaway here is the same reality we’ve seen for physicians for a number of years. Professional reimbursement continues to get cut pending Congressional intervention on sequestration (relief appears to be likely by the way), which holds second order effects in healthcare for physicians and other players involved in physician services.
And much to the chagrin of physicians everywhere, CMS continues to heavily incentivize practitioners – in their minds, to take on extra admin workloads – into value-based care and other accountable care mechanisms.
What are second order effects of continued cuts to professional reimbursement and added administrative workloads in Medicare?
- Lower topline revenue puts pressure on groups of all sizes, assuredly, but an outsized effect on medical, PE-backed non-proceduralist PPMs. These players cannot exit given the frosty M&A environment with depressed multiples and as a result, are scrambling to actually figure out how to operate their business models. Time is ticking for these players, and investor interest in this realm sits at rock-bottom.
- All physician practices will grovel toward commercial payors, asking for higher reimbursement to stop the bleeding, or stop taking Medicare patients if they can’t take the hit. According to MedPAC, this potential departure Medicare dynamic hasn’t materialized in a meaningful way…yet. But access issues are worth discussing given the current path we’re headed down.
- Increased consolidation and acquisition by strategics – hospital employment, payor employment and/or alignment, newfound aggregation by enablement players where PCPs are in pursuit of earnings repair through entering value-based care arrangements (like I mentioned, what CMS seems to be heavily incentivizing).
- More PCPs exiting to ventures outside of the ‘traditional’ healthcare system including direct primary care or Concierge care, or even exiting the provision of healthcare services completely to perform services-adjacent work (become a founder, get an MBA etc.)
The good news is inflation seems to be slowing a bit, enough to potentially justify an interest rate cut (and there will be political pressure to do so, of course). Slowing inflation means less of a squeeze on expenses, but the pressure is still there, especially when considering topline decay.
Finally, one proposal that stuck out to me from this year was the addition of an ‘Advanced Primary Care’ Management Services payment under a fee for service structure, where professional practices are rewarded with added codes / payment for complying with certain quality reporting and other advanced primary care functions. From the release:
- The proposed APCM services would incorporate elements of several existing care management and communication technology-based services into a bundle of services that reflects the essential elements of the delivery of advanced primary care, including Principal Care Management, Transitional Care Management, and Chronic Care Management. The new APCM codes would be stratified into three levels based on the number of chronic conditions and enrollment as a Qualified Medicare Beneficiary, reflecting both patient medical and social complexity. This new proposed coding and payment makes use of lessons learned from the CMS Innovation Center’s testing of a series of advanced primary care models, such as Comprehensive Primary Care Plus (CPC+) and Primary Care First (PCF), to inform the elements of APCM services and is intended to reduce the administrative burden associated with current coding and billing rules.
- We are proposing that beginning January 1, 2025, physicians and non-physician practitioners (NPPs) who use an advanced primary care model of care delivery could bill for APCM services when they are the continuing focal point for all needed health care services and responsible for all the patient’s primary care services, as described in the proposed service elements of the codes. In addition, we are proposing as a condition of payment for APCM services a performance measurement requirement, which can be satisfied by reporting the Value in Primary Care MIPS Value Pathway (MVP), as it was developed to include quality measures that reflect clinical actions that should be considered the foundation of primary care, and holds practitioners accountable for the total cost and quality of the care they provide. Reporting for the MVP would begin in 2026 based on the 2025 performance year.
- This new coding and payment would better recognize and describe advanced primary care services, encourage primary care practice transformation, help ensure that patients have access to high quality primary care services, and simplify billing and documentation requirements, as compared to existing care management and communication technology-based services codes. The proposed codes also represent a step towards paying for primary care services with hybrid payments (a mix of encounter and population-based payments) to support longitudinal relationships between primary care providers and beneficiaries by paying for care in larger units of service, and also help drive accountable care. Physicians and NPPs in Shared Savings Program ACOs, and some Innovation Center models satisfy requirements for these codes.
Other interesting tidbits from the proposed rule(s) include:
- CMS alleviating some cash flow concern for MSSP participants by providing prepaid shared savings for ACOs with a history of generated savings
- A request for feedback on a potential alternative payment model in the ambulatory specialty care space to “increase the engagement of specialists in value-based care”
- Offering reimbursement for caregivers by establishing new codes for caregiver training and subsequent payment
