Despite early reports that an end of year stopgap funding bill would lessen the amount of the Medicare care physician reimbursement reduction to 0.3 percent, the final version of the continuing resolution (CR), American Relief Act of 2025 (HR 105450), approved by Congress did not include this adjustment. Therefore, the originally scheduled 2.8 percent cut approved in the 2025 Medicare Physician Fee Schedule (PFS) Final Rule took effect on January 1, 2025.

By failing to address this issue, Congress has, for the fifth consecutive year, allowed physicians’ reimbursement under Medicare to be cut. Inclusive of this current reduction, Medicare rates have fallen 33 percent over the past two decades when adjusted for inflation in practice costs.

The impact of these cuts doesn’t only affect physicians’ Medicare business. As Michigan State Medical Society (MSMS) Chief Executive Officer Tom M. George, MD, stated in MSMS’s comments on the 2025 Medicare PFS proposed rule, “It is also important to note that this negative impact has a broader impact as many states like Michigan use Medicare as the benchmark for reimbursement in other areas such as worker’s compensation, motor vehicle injuries, surprise billing, etc. Therefore, when Medicare payments continue to decline, so do payments in other areas of practice.”

Of note, the final CR includes a temporary extension of telehealth flexibilities through March 31, 2025. They include the following:

• Allowing all Medicare beneficiaries to receive telehealth services from any location, including the beneficiary’s home.
• Extending telehealth services for federally qualified health centers and rural health centers.
• Delaying in-person requirements for mental health telehealth.
• Allowing audio-only telehealth services.

Advocating for Congress to make long-term meaningful reforms to the Medicare payment system has been and will continue to be a top priority in 2025. There are several solutions such as annual inflationary increases that have gained traction with many legislators. It will be critical to broaden this support in the new year and stop the annual payment cuts, financial uncertainties, and end-of-year negotiations for temporary fixes.

Because the American Relief Act of 2025 only provides fiscal year 2025 appropriations to Federal agencies through March 14, 2025, Congress will have to act during the next couple of months to avert a government shutdown. MSMS will be advocating that a reversal of the Medicare cut, long-term payment relief, and a permanent extension of the current telehealth flexibilities be included in the next spending bill.