Proposed 2025 Medicare Physician Fee Schedule Holds Both Promise and Peril for Physician Groups, Says APG

July 11, 2024

WASHINGTON, DC — A combination of positive proactive measures to advance value-based health care, coupled with negative provisions such as physician fee cuts and elimination of important Medicare telehealth coverage, make the proposed 2025 Medicare Physician Fee Schedule a mixed bag for the nation’s physicians, America’s Physician Groups said today.   “Although we hope that much of what is proposed is implemented as outlined in the proposed rule, we also hope Congress acts before then end of the year to reverse the most deleterious provisions,” Susan Dentzer, APG’s President and CEO, said.

On the plus side, the rule’s following provisions will enhance value-based care, Dentzer said:

  • A new “prepaid shared savings” option for eligible Medicare accountable care organizations with a history of earning shared savings. At least half of these prepaid shared savings would have to be spent on direct beneficiary services not otherwise paid for in Traditional Medicare that can reasonably be expected to improve beneficiaries’ health, such as meals, transportation, dental, vision, hearing, and Part B cost-sharing reductions.
  • Adjustments to ACO’s historical benchmarks that will advance health equity, based on the proportion of assigned beneficiaries who are enrolled in the Medicare Part D low-income subsidy (LIS) or dually eligible for Medicare and Medicaid. These adjustments will boost incentives for ACOs to serve more people from underserved communities and encourage practices already serving such beneficiaries to enter and/or remain in the Medicare Shared Savings Program (MSSP).
  • A new “APP Plus” quality measure set that would take effect for MSSP ACOs in 2025. This new required measure set (beginning in performance year 2025  for all Shared Savings ACOS ) would align appropriately with CMS’s Adult Universal Foundation quality measures as well as those used in other major health programs.
  • A welcome measure to hold MSSP ACOs harmless from the effects of a “significant, anomalous, and highly suspect” billing activity (SAHS), such as the recently discovered Medicare fraud scheme involving urinary catheters. Because potentially fraudulent Medicare claims can boost spending for beneficiaries assigned to an ACO, ACO’s potential shared savings in 2023 and beyond have been threatened. The Centers for Medicare & Medicaid Services will now exclude the suspect billing activity from ACO’s spending and revenue calculations. These additional  proposals would complement an earlier proposed rule on SAHS issued June 29, 2024.
  • Solicitation of public comments on the merits of adding a higher risk-and-reward track to so-called ENHANCED ACOs. This MSSP track allows ACOs to take on the highest level of risk and potential shared savings, sharing both savings and losses with Medicare.  With the similar ACO REACH model ending in 2026, a new ENHANCED track could be attractive to participants that wanted to continue with a similar approach.  But CMS warns that, in contemplating such a track, it would take into account a recently released evaluation of ACO REACH that concluded it resulted in “consistent, significant increases in net spending relative to a comparison group.”

On the negative side, Dentzer pointed to two provisions in the proposed rule that stand out, as follows:

  • Factors specified in law will reduce average Medicare clinician payment rates bynearly 3 percent in 2025 compared to 2024.  Unless Congress mitigates or reverses the scheduled fee cuts, as it did earlier this year, the proposed estimated PFS conversion factor in 2025 will be $32.36, or 2.8 percent below the current level of $33.29.
  • Elimination of Medicare coverage for many telehealth services adopted during the COVID-19 pandemic and extended until the end of this year by Congress. Even though CMS proposes to add some telehealth services on a provisional basis, it also warns that unless Congress acts to extend the flexibilities or make coverage permanent, previous statutory restrictions will go back into effect, and “people with Medicare will need to be in a rural area and a medical facility to receive non-behavioral health services via Medicare telehealth.”

APG will continue to sift through the proposed rule, which is to be published on July 31, and will consult with its members as it devises its comments back to the agency on the rule, due September 9.


About America’s Physician Groups
APG’s approximately 360 physician groups comprise 170,000 physicians, as well as thousands of other clinicians, providing care to nearly 90 million patients, including about 1 in 3 Medicare Advantage enrollees. APG’s motto, ‘Taking Responsibility for America’s Health,’ represents our members’ commitment to clinically integrated, coordinated, value-based health care in which physician groups are accountable for the costs and quality of patient care. Visit us at