On Wednesday, July 10, CMS released the calendar year 2025 Medicare Physician Fee Schedule proposed rule. The same afternoon it released the hospital outpatient (OPPS) proposed rule. The headline number for physicians is a proposed conversion factor of $32.36, down from $33.29 in 2024, a cut of about 2.8%. Hospital outpatient departments, by contrast, are proposed to receive a net 2.6% increase. Comments on both rules are due September 9, and the final rules usually arrive in the first days of November.
We have read the fact sheet and the sections of the rule that touch office-based practices most. The rest of this article is what we think an independent practice needs to know now, what can wait for the final rule, and how to put the cut into a spreadsheet against your own codes rather than reading a national average that does not describe you.
Key takeaways
- The proposed 2025 conversion factor is $32.36, about 2.8% below 2024, because the temporary 2.93% increase Congress provided for 2024 expires and the statutory update is zero.
- The cut is not uniform by code; model your top 25 Medicare codes against the proposed RVUs rather than applying 2.8% to everything.
- Advanced Primary Care Management is a proposed set of three monthly G codes, tiered by patient complexity, with no time documentation and service elements that look like a PCMH.
- Most telehealth flexibilities expire December 31 under statute; CMS can only keep the pieces within its own authority, and it proposes to keep several.
- Nothing is final until November, and Congress has softened the cut in each recent year, but a 2025 budget should assume the proposed number.
The cut, explained
The conversion factor is the dollar amount multiplied by a code's relative value units (RVUs) to produce the Medicare allowed amount. Three things move it for 2025. The 2.93% increase Congress provided for 2024 in the March appropriations law expires at the end of this year. The statutory update under MACRA is 0% for 2025. And there is a small budget neutrality adjustment for the other changes in the rule. The result is $32.36 unless Congress acts, as it did in March of this year, to soften the reduction. We would not build a 2025 budget assuming Congress acts. Model the cut, and treat any relief as upside.
For a practice, the effect is not uniform. Codes whose RVUs are increasing offset some of the cut; codes whose RVUs are flat take the full 2.8%. Pull your top 25 codes by Medicare volume, look up the proposed 2025 RVUs in the rule's Addendum B on the CMS site, and multiply. That is a two-hour job and it tells you more than any summary.
A worked example: the cut on a real code mix
Here is the shape of that spreadsheet for a fictional three-physician internal medicine practice, using national payment amounts before geographic adjustment and assuming the RVUs for these codes are unchanged, which is roughly the case for office visits in the proposal. Your locality will differ, and Addendum B may move some of these RVUs slightly, but the method is the point.
| Code | 2024 Medicare visits | 2024 national payment | Proposed 2025 payment | Annual change |
|---|---|---|---|---|
| 99214 | 4,800 | About $128 | About $124 | Minus $17,000 |
| 99213 | 3,100 | About $89 | About $87 | Minus $7,800 |
| G0439 | 900 | About $118 | About $115 | Minus $3,000 |
| G2211 | 2,600 | About $16 | About $16 | Minus $1,200 |
| 99495 | 220 | About $200 | About $195 | Minus $1,200 |
| Top five total | About $1,082,000 | About $1,052,000 | Minus $30,000, or 2.8% |
Two things come out of the table. The dollar figure is about $30,000 on the top five codes alone, which is roughly one medical assistant's salary, and the practice's first question should be what in the rule offsets it. In this example the answers are the proposal to allow G2211 with an annual wellness visit, which would add the add-on to several hundred more visits, and the new care management codes below. A practice that models the cut and the offsets together usually finds the year is flat to slightly down, not a crisis, provided the offsets are actually billed.
Advanced Primary Care Management: the new codes
CMS proposes three new G codes for Advanced Primary Care Management (APCM), billed monthly per patient and tiered by patient complexity: one for patients with one or no chronic conditions, one for patients with two or more, and one for patients with two or more who are also Qualified Medicare Beneficiaries. The codes bundle elements of chronic care management, principal care management and communication technology-based services into a single monthly payment, and they do not require the practice to document time, which is the part of CCM that most practices find hardest.
What is required is a set of service elements that will look familiar to a PCMH: 24/7 access, a designated care team member, comprehensive care plans, transitions of care management, and performance measurement participation. CMS proposes to tie APCM billing to participation in a quality reporting pathway. Patient consent is required, and the patient's cost sharing applies except in the QMB tier, which is why the practice's financial conversation with patients matters as much as the clinical one. This is proposed, not final, and the details of the service elements and the payment amounts are where comments will concentrate. We think APCM is the most important change in the rule for primary care, and it rewards exactly the infrastructure that PCMH recognition builds.
Telehealth: what CMS can and cannot do
Many of the telehealth flexibilities practices have relied on since 2020 are statutory, and the current extension expires on December 31, 2024. CMS cannot extend them by rule. Absent action by Congress, Medicare telehealth for most services returns to the pre-pandemic geographic and originating site rules on January 1, 2025, which would exclude most patients at home. The proposed rule is explicit about this.
Within its own authority, CMS proposes to keep some things. It proposes to continue allowing distant site practitioners to report their enrolled practice address rather than their home address through 2025. It proposes to permanently allow audio-only technology for telehealth services furnished to a patient at home when the patient cannot or will not use video. And it proposes to extend the "virtual direct supervision" policy, under which a supervising physician can be present by real-time audio and video, through 2025. Watch Congress in the lame-duck session for the rest, and in the meantime count your telehealth visits by patient location, because that is the number that tells you how exposed you are.
Other items worth a line
| Proposal | Who it affects | Our read |
|---|---|---|
| Allow G2211 (visit complexity add-on) with an annual wellness visit or other Part B preventive service on the same day, with modifier 25 | Primary care | Removes a 2024 irritation; model the revenue |
| New codes for caregiver training and for certain digital mental health treatment devices | Behavioral health, primary care | Small dollars, real documentation requirements |
| Medicare Shared Savings Program changes, including a prepaid shared savings option | ACO participants | Read with your ACO |
| Changes to the overpayment rule's identification standard | Everyone | Compliance implications; ask counsel |
| OPPS net 2.6% update | Hospital outpatient departments | Widens the office-to-hospital payment gap again |
What changes in the practice
Nothing until January 1, and nothing final until November. What changes now is planning. Model the cut on your actual code mix. Decide whether APCM is something you would bill, and if so what your care management operation needs to look like by January: who the designated care team member is, how consent is captured, how the care plan lives in the chart, and how you will show performance measurement participation. Look at your telehealth volume and ask what happens to those visits if home is no longer a permitted originating site. And if you have an opinion on any of it, file a comment; CMS reads them, and the docket number is CMS-1807-P.
Questions we hear
Is the 2.8% cut final?
No. It is proposed, and Congress has intervened in each of the last several years. But the proposed conversion factor has become the final conversion factor, before congressional action, in every recent cycle. Plan for it.
Should we start chronic care management now if APCM is coming?
If you have patients who qualify and the staff to do it, yes. CCM revenue in the second half of 2024 is real, and the care plans, consent and care team processes carry directly into APCM if it is finalized. Nothing about starting CCM now is wasted.
Where is the OPPS rule relevant to an independent practice?
Mostly as context. When a hospital outpatient department gets a 2.6% increase and an office gets a 2.8% cut for a similar service, the economics of hospital employment shift again. If you are negotiating with a system, know the numbers. If you want help modeling the rule against your own payer mix, book a call.
What to do this month
- Pull your top 25 codes by Medicare volume with 2024 allowed amounts, and build the spreadsheet in the worked example with the proposed RVUs from Addendum B.
- Count 2024 annual wellness visits where a problem visit was also performed, and estimate the G2211 revenue if the same-day proposal is finalized.
- Count your Medicare patients with two or more chronic conditions and decide whether APCM is a service you could deliver by January.
- Count telehealth visits by patient location and flag the ones that depend on the home as an originating site.
- Read the overpayment rule proposal with counsel if you have any open refund questions.
- Draft a comment on the items that affect you and submit it before September 9 under docket CMS-1807-P.
