Takeaways From the Proposed 2025 Medicare Physician Fee Schedule, Part 1

The U.S. Centers for Medicare & Medicaid Services has released the proposed 2025 Medicare Part B Physician Fee Schedule. Unfortunately, as in previous years, the budget-neutral payment system has led to proposed payment cuts threatening all clinical specialties paid under the PFS.

Despite the cuts, there are also several significant policy wins for the profession; the two biggest changes were driven by APTA's regulatory and legislative advocacy efforts. Those efforts will continue as APTA joins the gamut of clinical associations advocating for both temporary legislative relief from the proposed 2025 cuts and long-term policy reform to support stable clinician payment.

Because there are a lot of provisions relevant to the physical therapy profession, we've split our review of the proposal into two parts. In this Part 1 article, we look at payment, promising changes to PTA supervision and certification of plans of care, as well as adjustments to the practice expense element of often-used CPT codes.

Part 2 of our fee schedule takeaways series covers telehealth provisions and the Quality Payment Program, including the Merit-based Incentive Payment System.

Conversion Factor Cut, Again

CMS proposes another decrease in the conversion factor, one of the elements used in calculating final payment amounts for various CPT codes. This time around, the proposed conversion factor is $32.3562, a 2.8% decrease from the $33.7476 conversion factor adopted in 2024.

In comparison, the 2024 final rule called for a reduction to the conversion factor of 3.4%. However, following aggressive advocacy by APTA and several other groups representing health care providers, Congress ultimately lowered it in March to a 1.69% reduction.

These year-after-year cuts are the result of the fee schedule's budget-neutral structure - when certain changes are expected to increase total PFS payments by more than $20 million over the previous year, the conversion factor must be decreased by law so that total spending does not exceed that mark. Dozens of health disciplines, including physical therapy, are impacted. This continued reduction to payment for therapy services underscores the need to overhaul the PFS, and APTA will keep up the fight to advocate for reform.

Update to the KX Modifier

CMS raised the threshold for use of the KX modifier - the modifier indicating that a service meets the criteria for a payment ceiling exception - to $2,410 for PT and speech-language pathologist services combined, and $2,410 for occupational therapy services. The new threshold represents a 3.6% increase. The medical review threshold remains at $3,000 through 2027.

Breakthrough on PTA General Supervision

After years of persistent advocacy to lay out the logic of making PTA supervision for outpatient services consistent with all other settings, CMS has taken heed. The proposed rule includes a change to current policy that requires direct supervision for Medicare Part B outpatient services, even while all other settings require only general supervision. The difference is significant, as under direct supervision the PT must physically be on-site while services are delivered; general supervision requires only that the PT be immediately accessible but not physically in the office or patient's home with the PTA. If the rule is finalized as proposed, private practice PTs who are enrolled as Medicare providers would be allowed to bill for and receive Medicare Part B payment for therapy services furnished by PTAs if they meet the general supervision standard.

In proposing the change, CMS specifically pointed to responses to last year's request for information on PTA supervision - including APTA arguments that an unintended consequence was limited access to therapy services, and the change would allow PTAs the flexibility to better accommodate patients' availability and act to ensure access to necessary therapy services.

Added pressure comes from APTA-backed complementary legislation by way of the EMPOWER Act. Almost identically to the fee schedule proposal, the bipartisan bill would standardize the Medicare Part B supervision requirement of PTAs from direct to general for private practices.

Relief From Burdensome Plan of Care Requirements

In another huge advocacy win, CMS has proposed an exception to the plan of care signature requirement. If finalized, the proposal would allow the physician's signed order or referral to demonstrate initial certification of the PT's plan of care. Under current rules, PTs must send their plan of care to the referring physician and secure a signature within 30 days - with the PT bearing all the responsibility of getting the signature. Otherwise, the PT has to choose between stopping treatment or proceeding with the risk of not being paid by Medicare.

There are a few things to keep in mind with the proposed exception, particularly since the change wouldn't eliminate the requirement entirely. Specifically, the signed and dated referral must be supported by documentation: 1) that the referral is in the patient's medical record, and 2) that the PT sent the plan of care to the referring physician within 30 days of the completed initial evaluation. (Note that CMS didn't propose an exception to the recertification process.)

CMS has asked for comments on two elements of the proposal. First is whether there should be a deadline for making changes to a plan of care - currently there are no time restrictions. In the REDUCE Act, APTA-backed complementary pending legislation that was the basis for these proposed changes, APTA has recommended that referral sources have 10 business days to modify the plan of care; CMS is unsure if that's enough time. Second, CMS seeks comments on whether there should be a time limit on the order or referral when it's intended to serve as the initial certification, specifically asking whether 90 days or a different timeframe is appropriate.

Adjustments to Practice Expense Values for 19 PM&R Codes

Responding to significant APTA advocacy, CMS seeks to increase the practice expense for 16 CPT codes with the Physical Medicine and Rehabilitation family - the codes most often used by PTs. For three PM&R codes, CMS recommends a decrease.

As background, in early 2023, APTA made the case to CMS that these 19 codes are subject to a kind of double jeopardy that unfairly cut values. The association argued that, first, the practice expense value for the codes was undervalued by the RUC practice expense subcommittee of AMA's RUC Health Care Professionals Advisory Committee, which sets the practice expense value typically adopted by CMS. Second, the codes simultaneously were subject to reductions associated with the Multiple Procedure Payment Reduction system. The association asserted that both devaluations were being made for the same ostensible reason - to account for a duplicative practice expense when multiple codes are used on the same day. APTA and the American Occupational Therapy Association told CMS that discounting codes twice for the same rationale didn't make sense.

As a result, in the final 2024 fee schedule rule, CMS directed the RUC HCPAC to re-review earlier practice expense value recommendations. The HCPAC did recommend increases to the clinical labor practice expense in all 19 codes, albeit less than what APTA and AOTA called for. However, the RUC practice expense subcommittee recommended a decrease in equipment minutes for three of the codes. Although APTA and AOTA continue to believe the practice expense for all 19 codes is undervalued, in the proposed rule for 2025 CMS has accepted the subcommittee's recommendations. APTA and AOTA will continue to pursue opportunities to address the practice expense value for these codes and the impact of the reduction by the practice expense subcommittee and MPPR.

Next Steps

APTA is reviewing the rule and will submit comments by the Sept. 9 comment deadline, but member comments also will be critical in supporting the favorable policies while objecting to the payment cuts. Keep an eye out for APTA's member comment tool and template comment letter offerings that will make it easy to make your voice heard. On Aug. 8 at 2:30 p.m. ET, the APTA Regulatory, Legislative, and Payment Updates, August 2024 webinar will feature APTA staff experts discussing the fee schedule and other recent payment news.

While the association will be advocating for the profession around the provisions in the proposal, we will continue to advocate to both CMS and Congress for permanent solutions to fee schedule cuts. Keep up with APTA's advocacy efforts: Sign up for the APTA Advocacy Network, a free, members-only service that sends you special legislative updates and action alerts so you're up to speed and ready to act.

Public link

Please use the above public link if you want to share this noodl on another website.