Each year, CMS releases the Calendar Year Medicare Physician Fee Schedule (MPFS) rule that establishes payment rates used to reimburse health care practitioners serving the Medicare population. In 2024, CMS announced a 2.83% reduction to the MPFS conversion factor -marking the fifth consecutive year of cuts. Since 2020, Congress has failed to eliminate these reductions, which stem from the Medicare budget-neutrality adjustment.
Additionally, providers are subject to the financial strain of keeping up with rising inflation rates. In 2025, practices are expected to face a 3.6% increase in medical practice cost inflation, as measured by the Medicare Economic Index (MEI). The MPFS is the only Medicare payment system without an annual inflationary update, despite the burden of maintaining practices among extenuating challenges within the health care system. The absence of an inflationary update, coupled with the recurring payment decreases, places a significant strain on medical practices. This is an unsustainable system that threatens the health care system and the delivery of patient care.
ASE recommends Congress to pass legislation eliminating the annual conversion factor cut to payments in the yearly MPFS to stop the five-year run of cuts. Additionally, Congress and CMS need to work together on solutions that prevent further reductions, such as an annual inflation adjustment to the CF based on the MEI to ensure practices can keep pace with rising health care costs.
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