Unpacking 2025 Medicare Changes

Here we go again. CMS has once again proposed cuts in Medicare and Medicaid reimbursement, and the healthcare community is once again rallying to try to stave them off. 

CMS last month released its proposed reimbursement changes for 2025, and there were a few victories for radiology. 

  • CMS finally agreed to pay for CT colonography, and also agreed to unbundle payments for PET radiotracers from the PET scan itself.

But CMS also proposed changes in the Medicare Physician Fee Schedule (MPFS) conversion factor that continue the slow drip of reimbursement reduction for physicians.

  • The agency said the proposal would result in no change for radiology, but a deeper dive reveals that’s not the case. 

For example, the analysts at revenue cycle management firm Healthcare Administrative Partners have reviewed the MPFS changes, calculating that if Congressional adjustments are factored in, the outlook is quite different…

  • Interventional radiology will see a -5.8% reduction in the imaging center global fee and a -1.8% drop in the hospital professional fee, for a combined decline of -4.8%
  • The numbers for radiology and nuclear medicine are -3.8% for imaging centers and -1.8% for hospitals, for combined declines of -2.8%

It may seem like -2.8% isn’t a huge cut, but it continues years of steady declines in Medicare reimbursement (HAP notes that the Medicare physician fee schedule has dropped -10% in the last 10 years).

  • And as anyone in healthcare knows, the costs that healthcare practices face have only gone up over that period.  

There’s always the chance that Congress will come to the rescue, as it did when it passed the Consolidated Appropriations Act of 2024 – indeed, professional medical groups led by the AMA published a letter last week urging lawmakers to reform CMS’ rate-setting system in several ways …

  • Enact an annual payment update tied to inflation
  • Eliminate the requirement that changes in payments be budget-neutral
  • Overhaul the Merit-based Incentive Payment System (MIPS)
  • Make modifications to Alternative Payment Models

The Takeaway

The annual ritual in which CMS proposes sharp cuts in Medicare reimbursement only to have Congress lift them at the last minute is a sort of public policy kabuki dance in which the outcome is practically preordained. Medicare reform is badly needed to end this cycle and put physicians on firmer footing so they can focus on what’s important: caring for patients.

Doctors Work Harder for Less

Medicare reimbursement to physicians per beneficiary has declined over the last 16 years, with radiologists among the biggest losers. That’s according to a new study by the ACR’s Harvey L. Neiman Health Policy Institute, which confirms what many physicians already knew: they are working harder for less money.

It’s no secret that the US government has been struggling to rein in healthcare costs for decades. 

CMS has a number of tools at its disposal for controlling Medicare and Medicaid costs, one of which is the relative value unit (RVU) scale. 

  • RVUs – when multiplied by monetary conversion factors – basically set the amount of money the agency pays physicians per unit of work, with CMS typically reducing the conversion factor when it needs to cut Medicare spending. 

In the new study in the journal Inquiry, Neiman HPI researchers analyzed trends in RVU and conversion factor levels per Medicare beneficiary from 2005 to 2021, analyzing changes to calculate how much work providers have to do to deliver a unit of care. Findings included …

  • Reimbursement per Medicare beneficiary after inflation adjustment fell 2.3% for physicians as a whole
  • Radiology saw one of the biggest declines in MPFS reimbursement per beneficiary, ranking 31st on a list of 39 medical specialties, with a 25% decrease
  • Reimbursement has risen 207% for non-physician practitioners

What’s driving the declines? The Neiman HPI researchers identified the federal government’s budget neutrality rules for Medicare, which stipulate that increases in one area have to be offset by declines elsewhere.

The Takeaway

The new findings confirm what many physicians have suspected – they are not only working harder for less, but non-physician practitioners seem to be getting a bigger piece of the pie. Combined with a recent report showing that radiologist salaries didn’t keep pace with inflation in 2023, it’s not a pretty picture. 

Reimbursement Drives AI Adoption

It’s no secret that insurance reimbursement drives adoption of new medical technology. But a new analysis in NEJM AI shows exactly how reimbursement is affecting the diffusion into clinical practice of perhaps the newest medical technology – artificial intelligence. 

Researchers analyzed a database of over 11B CPT claims from January 2018 to June 2023 to find out how often reimbursement claims are being submitted for the use of the over 500 AI devices that had been approved by the FDA at the time the paper was finalized. 

  • The authors chose to focus on CPT claims rather than claims under the NTAP program for new technologies because CPT codes are used by both public and private payors in inpatient and outpatient settings, while NTAP only applies to Medicare inpatient payments. 

They found 16 medical AI procedures billable under CPT codes; of these, 15 codes were created since 2021 and the median age of a CPT code was about 374 days, indicating the novelty of medical AI.

  • Also, only four of the 16 had more than 1k claims submitted, leading the authors to state “overall utilization of medical AI products is still limited and focused on a few leading procedures,” such as coronary artery disease and diabetic retinopathy.

The top 10 AI products and number of CPT claims submitted are as follows:

  1. HeartFlow Analysis for coronary artery disease (67,306)
  2. LumineticsCore for diabetic retinopathy (15,097)
  3. Cleerly for coronary atherosclerosis (4,459)
  4. Perspectum LiverMultiScan for liver MRI (2,428)
  5. Perspectum CoverScan for multiorgan MRI (591)
  6. Koios DS for breast ultrasound (552)
  7. Anumana for ECG cardiac dysfunction (435)
  8. CADScor for cardiac acoustic waveform recording (331)
  9. Perspectum MRCP for quantitative MR cholangiopancreatography (237)
  10. CompuFlo for epidural infusion (67)

While radiology may rule in terms of the sheer number of FDA-approved AI products (79% in a recent analysis), the list shows that cardiology is king when it comes to paying the bills. 

The Takeaway

Amid the breathless hype around medical AI, the NEJM AI study comes as a bit of a wake-up call, showing how the cold reality of healthcare economics can limit technology diffusion – a finding also indicated in other studies of economic barriers to AI

On the positive side, it shows that a rosy future lies ahead for those AI algorithms – like HeartFlow Analysis – that can make the leap.

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