As the year – and the Biden Administration – approaches its end, CMS has finalized payment policies for 2025
By Stefanie Rinehart, Vice President;
Michaela Hollis, Vice President;
Kay Moyer, Director of Regulatory Affairs; and
Erika Miller, Partner
Last month, the Centers for Medicare & Medicaid Services (CMS) released a batch of regulations finalizing calendar year (CY) 2025 payment policies for the Medicare Physician Fee Schedule (MPFS), the Outpatient Prospective Payment System (OPPS), and the End Stage Renal Disease (ESRD) Prospective Payment System (PPS). These final rules reflect the Biden administration’s priorities, including improving health outcomes and access to care with a strong emphasis on access for underserved populations.
As we transition to a new administration, some priorities, like improving access to telehealth services and reducing administrative burden, are likely to remain consistent due to their bipartisan appeal. For example, CMS’ Office of Healthcare Experience and Interoperability, which focuses on burden reduction, was established during the first Trump administration. However, other initiatives, such as the strong focus on health equity and diversity, equity, and inclusion (DEI), will see reduced emphasis as the agency’s work aligns with the new administration’s priorities.
The Medicare Physician Fee Schedule Final Rule
The CY 2025 MPFS final rule outlines changes to payment policies for services delivered in the physician office setting. This year’s final rule reflects the Biden administration’s efforts to advance health equity, increase access to care, improve outcomes, and promote value-based care. However, the final rule also highlights ongoing challenges of achieving payment stability for practitioners providing care to Medicare beneficiaries.
Once again, the MPFS conversion factor is set to decrease, and practitioners will see a 2.83% reduction in 2025. The cut is driven by the expiration of the conversion factor increase that Congress passed in March, coupled with a 0% baseline update. CMS recognizes the impacts of payment cuts on patient access to care, especially amid rising inflationary pressures. The agency continues to work within its regulatory authority to mitigate these challenges payment; however, meaningful solutions require Congressional intervention. Specifically, legislation is required to prevent the looming payment cut, secure payment increases, and establish long-term reform. As of the time of this post, we expect Congress to at least partially address the physician payment cuts in the end-of-year package.
The MPFS final rule demonstrates the agency’s commitment to ensuring patients have access care. Most notably, CMS expanded the definition of “telecommunications systems” to secure patient access to audio-only telehealth services meaning telephone visits will continue to be covered if CMS continues to have the authority to cover Medicare telehealth services delivered to patients in their homes. This is a reversal of CMS’ previous position that the agency did not have the authority to cover telephone visits without Congressional action. The agency also finalized policies extending the use of real-time audio/visual telecommunications for direct supervision and teaching physician billing in specific scenarios through 2025. It is important to note that most of the Medicare telehealth flexibilities created during the COVID-19 pandemic will expire at the end of the year without Congressional action. CMS is unable to extend these flexibilities due to its limited statutory authority.
To improve health outcomes, the agency continued to increase its focus on payment policies targeting chronic conditions and underserved communities as well as services tied to social determinants of health. For example, beginning in 2025, the agency established coding and payment for advanced primary care management services. As an alternative to traditional fee-for-service (FFS) payment structures, CMS has been exploring opportunities to integrate features of advanced payment models (APMs) into physician payment. This effort aims to support practices providing comprehensive primary care by recognizing the additional costs associated with delivering these services. Notably, policies like these may carry over into the next administration, creating opportunities for advancing policy changes that align with these priorities.
CMS took steps to expand access to preventive services, including updates to coverage for hepatitis B vaccinations. These changes align with the Centers for Disease Control and Prevention’s (CDC) recommendations to ensure broader public access to essential vaccines. However, as we look ahead to the new administration, there is speculation about how these policies might evolve. Given the perspectives of Trump’s healthcare picks – Robert F. Kennedy Jr. to lead HHS and former Representative Dave Weldon to lead CDC – both of whom have been associated with vaccine skepticism, it is unlikely that we will see policy initiatives like this in the next administration. Similarly, it remains unclear whether existing policies like this could be rolled back.
Additionally, CMS continues to build momentum for value-based care through updates to the Quality Payment Program (QPP), including establishing new Merit-Based Incentive Payment System (MIPS) Value Pathways (MVPs) tailored to specialties and conditions. Building on his first administration’s efforts, a second Trump administration, which we anticipate will continue to be interested in promoting value-based care, could steer the future of these programs toward further simplification and burden reduction. In the meantime, practitioners participating in the QPP should evaluate these new pathways and other changes to maximize performance in these programs.
The Hospital Outpatient Prospective Payment System Final Rule
CMS also released the CY 2025 OPPS and Ambulatory Surgical Center (ASC) Payment System final rule. Staying the course on the Biden administration’s priorities, the rule finalized policies that are intended to address health disparities by removing barriers to care for previously incarcerated individuals, responding to the maternal health crisis by creating new Conditions of Participation requirements that focus on maternal health, and increasing access to care by creating payment pathways in outpatient and ASC settings to allow greater access to non-opioid pain relief. Additionally, consistent with the administration’s priorities on prior authorization and burden reduction, Medicare Administrative Contractors now have updated time requirements for reviewing certain prior authorization requests.
The OPPS rule also addresses payment for innovative gene and cell therapies, like chimeric antigen receptor (CAR) T-cell therapy, used to treat blood cancers and other disorders. CMS will continue to pay for cell and gene therapies separately as opposed to bundling the payment for the product into payment for the service for which those therapies are used. Given the previous Trump administration’s commitment to innovation and support for industry, this policy is likely to remain and others to promote innovation may be implemented during Trump’s second term.
Finally, unlike the MPFS, payment rates for services provided in outpatient facilities, participating in the Medicare program, will increase by 2.9% in 2025. Payment rates in the OPPS and ASC are based on economic factors that includes tying payment changes to the hospital market basket update. The payment updates are required by law. CMS provides yearly payment updates to most Medicare payment programs, inpatient and outpatient prospective payment systems for example, and yet the physicians who practice in those entities are seldom, if ever provided payment updates under the MPFS. It remains unclear as to how a second Trump administration will address Medicare payment for physician services, but we do know that site neutral payment policy may be back in the spotlight. President Trump’s fiscal year 2020 budget highlighted this issue, proposing site-neutral payments for certain services like clinic visits to eliminate payment disparities between hospital outpatient departments and physician offices. Additionally, this issue may be addressed by Congress.
The End Stage Renal Disease Prospective Payment System and Quality Incentive Payment System Final Rule
Finally, CMS released a third major rule – the CY 2025 ESRD Prospective Payment System (PPS) final rule, which sets the payment rates and policies for renal dialysis services to Medicare beneficiaries starting January 1, 2025. The ESRD PPS provides a bundled payment to ESRD facilities that include all renal dialysis services for outpatient dialysis services. Like the other rules, the ESRD PPS focuses on improved access to services and health equity; while it includes provisions on innovation, many stakeholders were disappointed in the lack of adequate support for innovation under the Transitional Add-on Payment Adjustment (TDAPA). During the first Trump administration, the HHS Kidney Initiative launched, and we anticipate that this support will continue in the incoming administration, particularly given the President-Elect’s nominee to lead the Department of Health and Human Services, Robert F. Kennedy, Jr., is committed to reducing the burden of chronic disease in the United States. The kidney community will continue to engage with congressional champions and the administration to improve access to innovative products for patients with kidney disease.
The agency revised the list of ESRD outlier services to include drugs and biological products that were or would have been included in the composite rate prior to the creation of the ESRD PPS. CMS believes that this change will better recognize the cost of providing renal dialysis services under the ESRD PPS. The agency will also include oral-only drugs and biological products in the ESRD PPS bundled payment, which should increase beneficiaries’ access to these drugs.
The rule also includes an expansion of coverage for home dialysis for patients with acute kidney injury (AKI). Both Congress and the administration have supported improved access to home dialysis; the Advancing American Kidney Health Initiative in the first Trump administration included a payment model to incentivize greater use of home dialysis. We expect these efforts to continue in the incoming administration. While this proposed rule focused on reducing disparities in access to home dialysis for patients from minority and low-income populations, the next administration is expected to de-emphasize health equity as it relates to this and similar policies. Stay tuned for more updates on the regulatory landscape as we enter the new year and administration. CRD Associates provides insight and analysis of proposed and final regulations and assists our clients with composing and submitting comments. If you have any questions, about these rules or others, please reach out to us at [email protected].