Understanding the 2025 Final Physician Fee Schedule: Essential Updates for Primary Care

The Centers for Medicare and Medicaid Services (CMS) released the final Physician Fee Schedule for 2025 which has some positive changes for the Medicare Shared Savings Program (MSSP) and will once again require Congress to address physician payment cuts.

By Casey Korba, Director of Policy

We expect Congress to address physician payment cuts

While CMS is tasked with calculating the conversion factor, it requires Congress to intervene and address the 2.8% reduction in the Medicare conversion factor. Congress returned on November 12, and we expect them to provide at least a short-term fix before the end of the year to offset this cut, though the fix is not likely to keep up with inflation. Inflation will continue to eat away at any gains to primary care payment, unless Congress permanently changes the way the fee schedule is annually updated. Looking ahead to 2025, advocates and Congressional committees have been laying the groundwork for more permanent solutions and an overhaul of the Medicare Access and CHIP Reauthorization Act (MACRA). We will work with the ACO community to advance solutions that ensure the goal of MACRA - to move the health care system away from fee-for-service (FFS) and towards alternative payment models (APMs) - are realized, and to ensure that primary care is paid fairly.

The finalized Advanced Primary Care Management Services proposal encourages care coordination

Advanced Primary Care Management Services (APCM) takes a bundling approach to the care management codes, such as Principal Care Management, Chronic Care Management and Transitional Care Management, which emphasize longitudinal relationships between the primary care practice and the patient. In the last several years, CMS has introduced many management codes to supplement the traditional primary care Evaluation & Management (E&M) coding. However, given that some clinicians experience difficulty integrating these approaches into their practice, uptake has remained low. The APCM proposal is one strategy that could address this low uptake. APCM offers a new way to get paid for these services, though not every practice will opt to adopt these codes. Some like the predictability of FFS while others are interested in this bundling approach.

CMS finalized MSSP proposal on prepaid savings with a welcome caveat

Prepaid Savings allows mature ACOs to request that CMS advance 50% of their shared savings on a quarterly basis, without interest costs or a reduction in total dollars earned. ACOs can apply to participate in the prepaid shared savings payment option during the annual application cycle, and the initial application cycle to apply for prepaid shared savings will be for a January 1, 2026, start date. CMS finalized the Prepaid Savings proposal with a welcomed one-time exception. Under this caveat, ACOs that renew in 2025 can apply to participate in prepaid shared savings beginning on January 1, 2026.

CMS finalized the Health Equity Benchmark Adjustment with an expanded scope

The Health Equity Benchmark Adjustment aims to help ACOs that have an above average proportion of assigned beneficiaries enrolled in the Medicare Part D Low Income Subsidy (LIS), or are dually eligible for Medicare and Medicaid. This adjustment joins the prior savings adjustment and the regional adjustment. CMS will look at all three adjustments. Of the three, the highest will be the final adjustment to the ACO's benchmark. In the proposed rule, ACOs are required to have a patient population where at least 20% of those assigned beneficiaries have either dual eligibility or LIS status. In the final rule, CMS responded to feedback from Aledade and others that CMS should expand the scope of the policy so more ACOs could benefit. CMS finalized lowering the threshold to 15% of assigned beneficiaries who meet the criteria.

Aledade will continue to advocate for fewer but more meaningful quality measures that focus on outcomes, and less burden in quality reporting

CMS finalized required reporting of two more process measures - breast cancer screening for 2025 and colorectal cancer screening for 2026 (allowing time for new screening guidelines to be implemented). Aledade will continue to reiterate that more does not necessarily equal better in terms of quality reporting. We also will underscore that while focusing on processes is important in clinical operations, for quality measurement, the chief focus should be outcomes.

In other quality news from the final rule, CMS finalized extending the electronic Clinical Quality Measure (eCQM) reporting incentive to continue encouraging ACOs to report quality measures via eCQMs. A finalized Complex Organization Adjustment for all advanced alternative payment entities reporting eCQMs will begin in Performance Year 2025, which will provide additional points to the ACO's final quality score. Since the transition to eCQMs is especially challenging, we are working with the ACO community to ensure that CMS implements a policy that does not adversely impact any independent physician practice.

For the quality reporting wonks among us who like to get into the weeds, CMS also acknowledged feedback from Aledade to allow for the use of mature Quality Reporting Document Architecture-III (QRDA-III) files rather than to require the use of less mature, resource intensive QRDA-I files. The ACO community continues to share that some electronic health record (EHR) systems have struggled to produce a QRDA-I file which makes reporting on eCQM and Medicare CQM an enormous challenge. This also causes their organizations to divert already limited resources to constantly evolving digital quality reporting requirements. In response, CMS acknowledged the feedback regarding the complexity of ACOs using QRDA files. The agency said it will continue to monitor ACO quality reporting and support ACOs through guidance. Additionally, the agency said it would work to better understand concerns and challenges.

The final rule signals more innovations to come in MSSP

Leveraging learnings from other models, including Next Generation ACO and ACO REACH, CMS issued a Request for Information on implementing a higher risk track in MSSP. While other models like REACH allow for ACOs to take 100% risk, ACOs are limited to 75% in MSSP. With REACH ending in 2026, CMS is interested in how it might go about making this an option in the permanent, flagship ACO program. Aledade and many others shared ideas on how to move forward on a full risk track. Aledade also added comments on how to further innovate MSSP and ensure that physicians can continue to thrive in accountable care. With the ACO Primary Care Flex model starting in January, we expect more learnings to be implemented in future proposed rules out of CMS.

For more information, watch our webinar recording on the 2025 Final PFS.