Medicare Physician Payment Reform Must Start Now

Years of Medicare physician payment reductions, complicated by a pandemic and inflation, imperil family medicine practices and require swift, coordinated action by CMS and Congress. That’s the essence of detailed guidance the AAFP just shared with CMS on its 2025 Medicare physician fee schedule and Quality Payment Program proposed rule.

Beyond these imperatives, our letter praised several of the agency’s efforts while urging modification of a few key proposals before the rule is finalized in November. We also acknowledged that Medicare’s payment issues — an underfunded fee schedule that underpays physicians (helping to keep family physicians among the country’s lowest-paid specialties) and is artificially constrained by statute — so let me talk about that first.

What Congress Must Do

Unfortunately, the marquee issue is a familiar one: Without congressional intervention, family physicians can again expect a 2.8% Medicare payment reduction in 2025 — an untenable failure that threatens patients’ access to primary care.

The pay cut is owed to a smaller conversion factor (the number multiplied by the relative value of each code in the fee schedule to determine the Medicare payment rate) than this year’s: 32.36. The reason for the lower conversion factor is the artificial constraint I just mentioned: budget neutrality, the stipulation that CMS can’t raise payment in any area of the fee schedule without lowering it somewhere else. Only Congress can change or eliminate this.

Dealing with budget neutrality is one of the necessary reforms to Medicare physician payment we’ve long sought. Another is providing an annual inflationary update to Medicare physician payment, a call we just raised the volume on in a Sept. 9 letter to congressional leaders outlining what we need lawmakers to accomplish by year’s end. Alongside dozens of other medical and specialty groups, we also co-signed a Sept. 10 letter repeating this call to fix Medicare physician payment.

The Big Win: Modifier 25

As AAFP Government Relations Vice President David Tully told you in July, the 2025 proposed rule will do something we’ve called for: allow the G2211 add-on code — a significant win for our advocacy that went into effect this year — to be billed alongside modifier 25 in some evaluation and management visits. Specifically, the codes can be billed together for Medicare annual wellness visits, vaccine administration or Medicare Part B preventive services. Our guidance expressed strong support for this change, a direct response to our advocacy that will help family physicians improve longitudinal patient care to their patients.

What CMS Must Do

Besides finalizing that welcome modifier 25 update, the Academy’s guidance urged CMS to

• finalize the proposal to allow prepaid shared savings for Accountable Care Organizations (with flexibility, about which I’ll explain in a minute),

• finalize new Advanced Primary Care Management codes (again, with modifications that I’ll detail below),

• expand the Primary Care Exception to include level 4 and 5 E/M codes as well as preventive services and patient continuity and integration of care codes, and

• work to reduce family physicians’ administrative and regulatory burdens in traditional Medicare as well as in programs meant to accelerate the move away from fee-for-service medicine.

What You Can Do

Before I go into more detail about what the AAFP told CMS, I want to encourage Academy members to join this Speak Out to support the Strengthening Medicare for Patients and Providers Act — legislation that would, as the AAFP advocates, provide physicians with an annual inflation-based payment update tied to the Medicare Economic Index, helping to offset some budget neutrality pain.

This separate Speak Out campaign marshals support for the Improving Seniors’ Timely Access to Care Act, which would empower CMS to enact two rules it finalized this year to streamline prior authorization in Medicare Advantage. The rulemaking was a key win for our advocacy; we need this legislation to get it over the finish line.

Practice Transformation

Carrying over an AAFP win from last year, the 2025 fee schedule would again keep the Merit-based Incentive Payment System’s performance threshold (the final MIPS score a participant must achieve to avoid a negative payment adjustment) at 75 while CMS awaits more recent data. Specifically, the agency will stick to 2017 performance-period data while continuing to study the usability of 2019 data, rather than post-2020 numbers skewed by the pandemic.

This is good news. It’s also another area of the fee schedule that would benefit from legislation allowing CMS greater flexibility, and we said as much in our guidance.

The proposed rule acknowledges that increasing the threshold will disproportionately hurt small and solo practices, estimating that 46% of solo and 21% of small practices would reap negative payment adjustments in 2027. To prevent this kind of fallout, rulemaking must be freed from current constraints. We’d like to see CMS allowed to set the performance threshold at 60 points and then freeze it for three years, time enough to get it right.

Not good news is the rule’s plan to suddenly remove the Merit-based Incentive Payment System’s Clinical Quality Measure option, especially because it would happen concurrently with the final phase-out of the Web Interface reporting option. We strongly objected to this change, warning that it would hurt ACOs and the patients they serve, and leave vendors unable to support Medicare CQMs at the start of 2025.

Let me zoom out. Much of the conversation under the heading of “moving away from fee-for-service” started with the Medicare Access and CHIP Reauthorization Act, the steadily tinkered-with suite of intended reforms that’s now almost a decade old. MACRA introduced MIPS among the incentives to encourage physicians to adopt alternate payment models.

However, MIPS has introduced administrative burdens and failed to help prepare practices for successful APM participation. It penalizes smaller practices with fewer resources. MIPS needs help. But CMS lacks statutory authority to fix it; Congress must step in.

MIPS does not affect many Academy members, but it’s emblematic of vital fee schedule reforms that can happen only if Congress and CMS work together.

Advanced Primary Care Management

As CMS learns from the models set out by its Innovation Center, including those the AAFP has supported as helpful to escaping fee-for-service medicine, it has written into the 2025 MPFS some proposed coding bundles for Advanced Primary Care Management services — care meant to promote longitudinal clinical relationships. In the Academy’s view, the valuations for these codes in the rule as written aren’t yet what they should be, and we’re asking CMS to adjust these new codes before finalizing them. I referred to this above.

Specifically, we want CMS to work with its Innovation Center to better grasp the real operational costs of undertaking advanced primary care. The finalized codes also should address beneficiary cost-sharing barriers and clarify implementation requirements.

Interoperability

The proposed rule asked for feedback on a new model the CMS Innovation Center is considering, meant to boost the number of specialty care clinicians participating in value-based payment while improving coordination between specialty care and primary care physicians.

Our guidance pointed out that robust data sharing and interoperability are still out of reach for too many clinicians and urged CMS and the Innovation Center to keep that challenge top of mind before attempting to test another new model. It’s better to improve interoperability of health IT systems and data sharing in existing frameworks, we said.

The Academy has heard from many of you about the frustrating administrative complexities that materialize where interoperability was supposed to ease your burdens, so I want to quote at length from this part of our guidance.

“We strongly urge CMS to focus efforts on reforming the current MIPS framework for all clinicians, not a subgroup of specialists, prioritizing program revisions that address barriers to increasing coordination and collaboration between primary care and specialist physicians — most notably doubling down to address the lack of incentives focused on changing the incomplete, inefficient and ineffective data and information sharing that persists across beneficiaries’ physicians of choice.

“Physicians should continue to have the flexibility to choose the reporting option that is most appropriate and feasible for them, and the AAFP is opposed to sunsetting traditional MIPS until such time MIPS Value Pathways or another replacement strategy have been fully vetted by stakeholders and well implemented…. Instead of mandating MVPs, CMS should focus on addressing these foundational issues.”

I’m emphasizing this part of our letter not because a plurality of AAFP members participate in MIPS but because our sensibility on this topic — get X right before imposing Y — is a hallmark of our advocacy to transform practices and build a better payment future for all family physicians serving Medicare beneficiaries, not just those participating in CMMI models.