CMS’s 2025 Final Rule Reduces Conversion Factor by 2.83%

The Centers for Medicare and Medicaid Services (“CMS”) recently issued the Final Rule announcing the 2025 policy changes for Medicare, including Part B issues and payments under the Physician Fee Schedule (“MPFS”), many of which take effect in January. According to the CMS Fact Sheet, “the calendar year (CY) 2025 MPFS final rule is one of several final rules that reflect a broader Administration-wide strategy to create a more equitable health care system that results in better accessibility, quality, affordability, empowerment, and innovation for all Medicare beneficiaries.”

Under the rule, the amount CMS pays for physician services per relative value unit, i.e., the conversion factor (“CF”), will be reduced by 2.83% from $33.2875 in 2024 to $32.3465. The anesthesia CF will decrease by 2.2% from $20.7739 to $20.3178. These cuts continue CMS’s broad revamp of coding and payment policies, which have significantly affected healthcare providers since 2020.

This change to the 2025 MPFS is likely to impact provider compensation and productivity levels. At the organization level, the extent of the impact will be determined by various factors, including the blend of services provided, payer mix, and structure of reimbursement contracts.

BuckheadFMV offers consulting services to help healthcare organizations find answers to questions regarding fair market value and commercial reasonableness.

To determine the impact of the 2025 MFPS changes, it will be important to:

1. Understand budget exposure to these changes at the physician and organizational levels.

2. Consider the new CFs while reviewing contracts, payment rates, and policies to ascertain any required adjustments.

3. Identify potential areas of risk for fair market value and commercial reasonableness compliance.

Contact us with questions about fair market value physician compensation in light of the 2025 MPFS.