The proposed rule for Calendar Year (CY) 2025 is just a continuation of CMS’s efforts to modernize payment systems, enhance care coordination, and improve access to healthcare services, all while managing rising costs. As usual, doing so on the backs of providers who are dealing with the ever-increasing cost of providing those services.

The most significant aspect of the CY 2025 PFS Proposed Rule is the adjustment to the Conversion Factor (CF). For 2025, CMS is proposing a CF of 32.3562, reflecting a microscopic increase from the finalized 2024 CF of 32.34. However, this is a bit deceptive and a more complex scenario when viewed in context.

Earlier in 2024, Congress passed legislation to mitigate the effect of a reduction in the CF, resulting in an adjusted CF of 33.2875 for services provided after March 9, 2024, through the end of 2024. Ultimately, the proposed CY 2025 CF is 0.05% higher than the finalized 2024 CF, it effectively results in a 2.93% reduction compared to the adjusted CF currently in effect due to legislative intervention. Which comes out to an actual 2.8% reduction from the original CF finalized for 2024 before Congress’s action. This is a significant across-the-board reduction that will require careful planning and may significantly affect cash flow for certain services.

The proposed CY 2025 PFS rule continues to embrace and expand telehealth as a critical element of healthcare delivery. CMS proposes extending many of the telehealth flexibilities introduced during the COVID-19 Public Health Emergency (PHE). These include keeping certain telehealth codes, allowing services to be delivered from any location, and removing the requirement for patients to be located in rural areas.

CMS is also exploring permanently incorporating several telehealth services into the PFS. This would provide long-term stability for telehealth, recognizing its growing role, particularly for rural and underserved communities.

Evaluation and Management (E/M) services are at the core of the physician-patient interaction, and the CY 2025 PFS Proposed Rule includes changes aimed at simplifying documentation and aligning reimbursement more closely with the complexity of care. These changes are intended to reduce the administrative burden on providers, allowing more time for patient care rather than excessive amounts of unnecessary paperwork.

The proposal also introduces new payment rates for E/M services in settings such as nursing homes and home health. These updates reflect CMS’s continued commitment to incentivizing comprehensive, patient-centered care.

Improving care for patients with chronic conditions is a top priority for CMS. The CY 2025 PFS Proposed Rule includes enhanced reimbursement for chronic care management (CCM) services and new codes that support team-based, interdisciplinary care. This approach aims to improve outcomes for patients with long-term health conditions and reduce costly hospitalizations.

CMS is also proposing updates to the Quality Payment Program (QPP), which includes the Merit-based Incentive Payment System (MIPS) and Advanced Alternative Payment Models (APMs). The proposed changes aim to simplify participation, align quality measures across programs, and “encourage” more providers to take part in value-based care arrangements.

Reducing the administrative load on healthcare professionals by streamlining reporting requirements while supporting high standards of care.

The Proposed CY 2025 PFS Rule presents a Ying and Yang scenario, offering both opportunities and significant challenges for providers. The expansion of telehealth services and improved reimbursement for chronic care management offer new revenue possibilities. The stark reality is that the reduction in the CF will certainly lead to financial constraints, particularly for smaller and rural practices that rely heavily on Medicare reimbursement.

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