Medicare reimbursement for 2025 is lowest since 1993
On 1 July, I retired from my 37-year faculty gig. Among other things, this meant shifting from private insurance to Medicare. I haven’t yet used my Medicare coverage, but my wife, who retired two years ago as a faculty at a different university, has had no difficulties with her transition to Medicare. So far.
The Medicare Conversion Factor (the multiplier used to calculate payment rates for each service or procedure) for 2025 will be the lowest since 1993. How did that happen?
“First, CMS takes the current year CF and then removes the financial support that Congress allocated for 2024, which expires at the end of the year. For 2025, most of the reduction in the CF comes from the loss of this support.
“Next, CMS adjusts the CF by an amount specified by Congress. Despite years of inflation, by law, the adjustment for 2025 is 0%, just as it has been every year since 2020. Unlike other fee schedules, there is no standard annual inflation adjustment for Medicare providers.
“Finally, CMS applies a “budget neutrality adjustment.” Due to a law Congress passed over 30 years ago, the projected cost of the changes that CMS makes can’t raise spending by more than $20 million in a year. As a result, CMS must apply a “budget neutrality adjustment” to the CF, reducing the amount.”
Point the finger at Congress:
“ . . . in reality, much (though certainly not all) of the challenges with the CF are statutory in nature, meaning they are due to laws passed by Congress and out of the control of CMS. Reviewing the steps in the CF calculation, only Congress can allocate funds to increase the CF and help it keep pace with inflation, and only Congress can adjust the outdated budget neutrality adjustment.”
This is not sustainable and will certainly affect access to health care for Medicare beneficiaries in the future. I realize that the author of the linked article is not a disinterested party, but rather than ad hominems, how do we solve this problem? All the other industrialized nations on the planet seem to be able to deliver healthcare to all their citizens at half the cost. Of course, most of their domestically trained physicians aren’t saddled with enormous tuition debt.
Blame Congress for Medicare reimbursement rates
The Medicare Conversion Factor (the multiplier used to calculate payment rates for each service or procedure) for 2025 will be the lowest since 1993. How did that happen?
“First, CMS takes the current year CF and then removes the financial support that Congress allocated for 2024, which expires at the end of the year. For 2025, most of the reduction in the CF comes from the loss of this support.
“Next, CMS adjusts the CF by an amount specified by Congress. Despite years of inflation, by law, the adjustment for 2025 is 0%, just as it has been every year since 2020. Unlike other fee schedules, there is no standard annual inflation adjustment for Medicare providers.
“Finally, CMS applies a “budget neutrality adjustment.” Due to a law Congress passed over 30 years ago, the projected cost of the changes that CMS makes can’t raise spending by more than $20 million in a year. As a result, CMS must apply a “budget neutrality adjustment” to the CF, reducing the amount.”
Point the finger at Congress:
“ . . . in reality, much (though certainly not all) of the challenges with the CF are statutory in nature, meaning they are due to laws passed by Congress and out of the control of CMS. Reviewing the steps in the CF calculation, only Congress can allocate funds to increase the CF and help it keep pace with inflation, and only Congress can adjust the outdated budget neutrality adjustment.”
This is not sustainable and will certainly affect access to health care for Medicare beneficiaries in the future. I realize that the author of the linked article is not a disinterested party, but rather than ad hominems, how do we solve this problem? All the other industrialized nations on the planet seem to be able to deliver healthcare to all their citizens at half the cost. Of course, most of their domestically trained physicians aren’t saddled with enormous tuition debt.
Blame Congress for Medicare reimbursement rates
Joel:
I do not know how they calculate such. It was low in 2024. In March 2024, they raised it to the current $33.2875. This was to correct a 3. 37% cut. Yes it is supposed to drop to $32.3562.
They did do this using CR 13743.
All medical professionals who can bill office and outpatient (O/O) evaluation and management (E/M) visits (CPT codes 99202-99205, 99211-99215), regardless of specialty, may use the code with O/O E/M visits of any level. We don’t restrict G2211 to medical professionals based on specialties.
CR 13473 updates guidance on the O/O E/M visit complexity add-on code G2211. Starting January 1, 2024, CMS will change the status of G2211. We’ll assign it an “active” status indicator to make it separately payable as an additional payment to the payment of O/O E/M visit primary service codes to better account for the additional resources of visits associated with the visit.
When To Bill G2211 Think about the relationship between you and the patient when deciding to bill G2211. Bill G2211 if:
• You’re the continuing focal point for all needed services, like a primary care practitioner
• You’re giving ongoing care for a single, serious condition or a complex condition, like sickle cell disease or HIV.
If this is about Medicare, there are very few who do not have some special issue. For example: ITP and Open Heart surgery to see if I had one.
@Bill,
I posted the link, so you can find their calculations from that. Your table doesn’t include 2025 projections, which was the topic of my post. But looking at your table, the % change from 2020 to present has been net negative, which is consistent with the link I quoted from. Not sure what point you’re trying to make here.
Joel:
My point being to provide a history of reductions and increases so others can see each year of reductions or increases. Also show the potential 2025 number, not show in the chart, but shown in a statement.
Noted in the chart was an increase after a reduction in 2024 which still resulted in a reduction.
CR 13473 updates guidance on the O/O E/M visit complexity add-on code G2211. G2211 allows doctor to charge additional specifically if the patient has old and new issues. Which I also have. However, I have stopped some doctors from adding codes which specify something I do not have. That is a side issue and not germane to the topic.
In the end, I thought maybe the additional info may be of interest.
Bill
the Conversion factor is multiplied by what? to determine what? “payment rate” means what?