Medicare Cuts Ignore Costs of Care Delivery
AMGA today objected to the proposed 2.8% cut in the Medicare conversion factor, warning it would force AMGA member to furlough staff, delay population health initiatives, and eliminate services.
AMGA Members Warn of Staffing Reductions, Service Cuts
Alexandria, VA – AMGA today objected to the proposed 2.8% cut in the Medicare conversion factor, warning it would force AMGA member to furlough staff, delay population health initiatives, and eliminate services.
The Centers for Medicare & Medicaid Services (CMS) proposed 2025 physician fee schedule includes a 2.8% cut in the Medicare conversion factor, despite a projected 3.6% increase in the Medicare Economic Index. This disconnect between Medicare reimbursement and the actual costs to deliver care is unsustainable.
“It simply doesn’t make sense to calculate reimbursement for ambulatory services without an inflationary adjustment,” asked AMGA President and CEO Jerry Penso, MD, MBA. “After five years of cumulative cuts to the conversion factor, health systems and medical groups are at a breaking point. That’s not just rhetoric, you can see in our survey more groups are considering drastic measures that will impact patient care.”
AMGA recently surveyed its membership on what actions these Medicare cuts would force them to take. About 30% percent of respondents said they will be forced to furlough or lay off employees. Also, 40% of these provider groups eliminated services to Medicare patients in 2024, and 55% expect to continue doing so in 2025. About 40% of respondents instituted delays in social drivers of health investments in 2024, and 57% are expected to continue these delays in 2025. The survey is available on the AMGA website.
AMGA expects CMS will finalize this proposed cut in the conversion factor, meaning Congress must act to prevent it from taking effect.
“The current system is not sustainable. Without changes, patient access and workforce challenges will be exacerbated. Congress needs to act quickly to prevent these cuts from being implemented,” Penso added.
To ensure policymakers fully understand the purpose and role of the physician fee schedule, AMGA strongly recommends that CMS consider changing the name of the Medicare Physician Fee Schedule (MPFS) to the Medicare Ambulatory Services Fee Schedule (MASFS). The current name not only fails to accurately represent the scope and purpose of the fee schedule, but also perpetuates misconceptions that influence policy discussions in a way that is not aligned with the realities of modern healthcare delivery. This misrepresentation can lead to skewed policy decisions that do not fully consider the diverse array of healthcare providers impacted by these rates.
Telehealth Flexibilities
Separately, AMGA commends CMS for extending key telehealth flexibilities, including payment parity and the use of any location for patient care, and urges collaboration with Congress to make these changes permanent. AMGA appreciates CMS’ efforts to protect provider privacy by allowing the use of practice locations instead of home addresses for telehealth services and strongly advocates for making this flexibility permanent.
The letter is available on the AMGA website.
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About AMGA
AMGA is a trade association leading the transformation of healthcare in America. Representing multispecialty medical groups and integrated systems of care, we advocate, educate, innovate, and empower our members to deliver the next level of high performance health. AMGA is the national voice promoting awareness of our members’ recognized excellence in the delivery of coordinated, high-quality, high-value care. More than 175,000 physicians practice in our member organizations, delivering care to one in three Americans. For more information, please visit www.amga.org.