The OPPS final rule for 2025

Under the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System final rule, CMS will increase payment rates by a net 2.9% for CY 2025 compared to 2024. This includes a 3.4% market basket update, offset by a 0.5-percentage point productivity adjustment.

According to Modern Healthcare, the 2.9% payment increase is slightly higher than the 2.6% originally proposed by CMS in July.

Under the final rule, hospitals are also required to meet new quality standards for obstetrical care to qualify for Medicare reimbursement. The updated requirements include having obstetrical patients supervised by an RN, midwife, or other practitioner with necessary training; keeping obstetrics equipment easily available; conducting one performance improvement project per year; being ready to provide emergency services; and having written policies for transferring patients.  

"CMS is committed to addressing our nation's maternity care crisis," said CMS Administrator Chiquita Brooks-LaSure in a press release. "Today, we are establishing the first-ever maternal health and safety standards for hospitals."

The final rule also creates a per diem payment method for psychiatric care delivered at hospital outpatient departments and community mental health centers. It also increases payments for non-opioid pain relief and implements several new health equity measures for hospitals, rural emergency hospitals, and ASCs.

"Together, these policies meaningfully impact health disparities by addressing equity and access barriers for underserved communities," said Meena Seshamani, CMS deputy administrator and director of the Center for Medicare. "… This rule takes a significant step forward in reducing disparities and increasing access to care."

However, the American Hospital Association (AHA) has criticized the 2.9% pay increase, as well as certain elements of the new maternity care measures, saying that they will negatively impact access to care.

"The agency's final increase of less than 3% for outpatient hospital services will make the provision of care, investments in the health care workforce, and addressing new challenges, such as cybersecurity threats, more difficult," said Ashley Thompson, AHA's SVP of public policy analysis and development. "These inadequate payments will have a negative impact on patient access to care, especially in rural and underserved communities nationwide."

The MPFS final rule for 2025

Under the Medicare Physician Fee Schedule (MPFS) final rule, CMS will reduce the conversion factor by 2.8% to $32.35 in CY 2025 from $33.29 in CY 2024. This includes a 0.00% conversion factor update under the Medicare Access and CHIP Reauthorization Act, along with a 0.02% budget-neutrality adjustment.

CMS also extended several regulatory telehealth waivers through 2025, including those for reporting enrolled practice addresses instead of home addresses, allowing federally qualified healthcare centers and rural health clinics to bill for telehealth services, and allowing virtual supervision of residents in teaching settings where services are provided virtually.

The agency also finalized several measures related to reporting and returning overpayments for Medicare Parts A and B. In the final rule, CMS finalized circumstances that would suspend the deadline for reporting/returning overpayments, which will allow providers time to investigate and calculate overpayments.

CMS has also adopted six new optional Merit-based Incentive Payment System Value Pathways for reporting in the Quality Payment Program starting in 2025.

"The Medicare physician payment final rule continues our work to strengthen primary care while also supporting preventive care and promoting better access to behavioral health care," said HHS Secretary Xavier Becerra. "In addition, the final rule codifies and builds on guidance to continue our ability to use rebates from drug manufacturers to strengthen Medicare."

However, several healthcare organizations, including the American Medical Association (AMA), the American Academy of Family Physicians, and the Medical Group Management Association (MGMA), have all sharply criticized the final rule.

"To put it bluntly, Medicare plans to pay us less while costs go up. You don't have to be an economist to know that is an unsustainable trend, though one that has been going on for decades," said AMA president Bruce Scott. "For physician practices operating on small margins already, this means it is harder to acquire new equipment, harder to retain staff, harder to take on new Medicare patients and harder to keep the doors open, particularly in rural and underserved areas."

Meanwhile, a bipartisan group of House members has introduced legislation to stop the Medicare payment cuts from going into effect in January. Under the Medicare Patient Access and Practice Stabilization Act, the 2.8% Medicare physician payment cut would be eliminated, and providers would receive a 4.7% payment update in 2025 instead. Both AMA and MGMA have called for the bill to be passed.

The home health and dialysis final rules for 2025

Under the home health prospective payment system final rule, CMS will increase home health payments by 0.5%, or $85 million, in CY 2025 compared to CY 2024. This includes a 3.2% market basket update, offset by 0.5 percentage point productivity adjustment, as well as a 1.8 percentage point behavioral adjustment from the Patient-Driven Groupings Model and a 0.4 percentage point reduction in the fixed-dollar loss ratio for outlier payments.

CMS also finalized a proposal to adopt four new standardized patient assessment data elements related to social determinants of health for the Home Health Quality Reporting Program. These elements will be implemented beginning in the CY 2027 program. In addition, the agency finalized a new Condition of Participation that sets standards for patient acceptance-to-service policies for home health agencies and a new data reporting standard for respiratory illnesses for long-term care facilities.

"A net increase in Medicare spending projected for 2025 does not address the several years of unwarranted rate cuts and the shortfall in recognizing the significant inflationary pressures and cost increases that have been incurred. In no way can CMS defend its actions as 'budget neutral," said Steve Landers, CEO of the National Alliance for Care at Home. "We need help from Congress to end this assault on the Medicare home health benefit," he said.

Under the end-stage renal disease prospective payment system final rule, dialysis providers will receive a 2.7% payment increase in CY 2025, higher than the 2.2% CMS originally proposed in June. The rule also includes a payment bundling plan that includes oral-only drugs for kidney disease patients with high phosphorus levels — something the healthcare industry opposes. (CMS MPFS fact sheet, 11/1; CMS MPFS press release, 11/1; CMS OPPS/ASC fact sheet, 11/1; CMS OPPS/ASC press release, 11/1; AHA News, 11/1 [1]; AHA News, 11/1 [2]; AHA News, 11/1 [3]; Kacik, Modern Healthcare, 11/1; Young, Modern Healthcare, 11/1; Goldman, Axios, 11/4; Early, Modern Healthcare, 11/1; Morse, Healthcare Finance, 10/31)

CMS' Transforming Episode Accountability Model (TEAM) has been touted as "the most significant mandatory bundled payment model we've ever seen." Here's what you need to know about TEAM and what experts are saying about it.