The Centers for Medicare & Medicaid Services (CMS) has unveiled a proposed rule on July 10, 2024, outlining significant policy adjustments for Medicare payments under the Physician Fee Schedule (PFS) and other Medicare Part B matters, set to take effect on or after January 1, 2025. This proposed rule, open for public comment, is part of a wider government initiative aimed at fostering a more just healthcare ecosystem, enhancing accessibility, quality, affordability, empowerment, and innovation for all Medicare beneficiaries.
Understanding the Physician Fee Schedule
Since its inception in 1992, the PFS has been the framework for Medicare payments for services rendered by physicians and other healthcare professionals. Services compensated under the PFS are delivered across various settings, including physician offices, hospitals, ambulatory surgical centers (ASCs), skilled nursing facilities, hospices, outpatient dialysis facilities, clinical laboratories, and patients’ homes. The PFS also covers technical services provided by various suppliers, often in settings lacking institutional payment structures.
For the majority of services in a physician’s office, Medicare provides a single payment rate to physicians and professionals, encompassing all resources involved in service delivery. Conversely, PFS rates for services in facility settings like hospital outpatient departments (HOPDs) or ASCs, only account for the resources typically utilized by the practitioner during service delivery.
Certain diagnostic tests and a limited set of other PFS services allow for separate payments for professional and technical components. Technical components are often billed by suppliers, such as independent diagnostic testing facilities, while professional components are billed by the physician or practitioner.
Payments are determined by the relative resources needed for each service. Relative Value Units (RVUs) are assigned to each service for work, practice expense, and malpractice expense. These RVUs are converted into payment rates using a conversion factor. Geographic Practice Cost Indices (GPCIs) adjust total RVUs to reflect geographical cost variations. Payment rates also include a statutory overall payment update.
CY 2025 PFS Rate Adjustments and Conversion Factor
Proposed changes for CY 2025 suggest an average reduction of 2.93% in PFS payment rates compared to the average rates paid for most of CY 2024. This adjustment to the PFS conversion factor includes a statutory 0.00% overall update, the expiration of a statutory 2.93% payment increase from CY 2024, and a minor 0.05% adjustment for changes in work RVUs for certain services. The proposed CY 2025 PFS conversion factor is estimated at $32.36, a $0.93 (or 2.80%) decrease from the current CY 2024 factor of $33.29.
Enhancing Ambulatory Specialty Care through Value-Based Models
CMS is seeking input on designing an ambulatory specialty care model that would utilize Merit-based Incentive Payment System (MIPS) Value Pathways (MVPs) to encourage specialist participation in value-based care and enhance coordination between primary and specialty care. The envisioned model would replace MIPS adjustment payments with adjustments based on MVP measures relevant to their specialty and performance relative to peers. Any future model proposal would undergo notice and comment rulemaking.
Introducing Caregiver Training Services (CTS)
For CY 2025, CMS proposes new coding and payment for caregiver training for direct care services and supports. Training topics could include pressure ulcer prevention, wound care, infection control, special diet preparation, and medication administration. New coding and payment are also proposed for caregiver behavior management training for caregivers of individual patients. These proposed CTS could be delivered via telehealth.
Addressing Health-Related Social Needs through New Services
CMS is requesting broad feedback on newly implemented Community Health Integration (CHI) services, Principal Illness Navigation (PIN) services, and Social Determinants of Health (SDOH) Risk Assessment. The aim is to gather insights on policy refinements for future rulemaking, including auxiliary personnel types (like clinical social workers), certification/training requirements beyond current coding and payment, and improving rural utilization. Comments are also requested on how these codes are used with community-based organizations.
Office/Outpatient (O/O) Evaluation and Management (E/M) Visit Coding Updates
In CY 2025, CMS proposes allowing payment for the O/O E/M visit complexity add-on code G2211 when the O/O E/M base code is reported by the same practitioner on the same day as an annual wellness visit (AWV), vaccine administration, or any Medicare Part B preventive service in the office or outpatient setting.
Expanding Telehealth Services under PFS
CMS is proposing to add several services to the Medicare Telehealth Services List provisionally, including pre-initiation demonstration of home International Normalized Ratio (INR) monitoring and caregiver training services. The suspension of frequency limits for subsequent inpatient visits, nursing facility visits, and critical care consultations is proposed to continue through CY 2025.
Alt text: A physician explains test results to a senior patient in an office setting, highlighting the importance of clear communication in healthcare.
Starting January 1, 2025, interactive telecommunications systems may include two-way, real-time audio-only technology for telehealth services at home if the distant physician/practitioner is technically capable of video but the patient is not or does not consent to video.
Through CY 2025, practitioners can continue to use their enrolled practice location, not their home address, when providing telehealth from home.
For services requiring direct physician supervision, CMS proposes permanently adopting a definition of direct supervision allowing for real-time audio and visual interactive telecommunications. This virtual direct supervision is proposed for services incident to a physician’s service by auxiliary personnel under direct supervision, and for which the HCPCS code has a PC/TC indicator of office or outpatient visit for established patients not needing physician presence. For other directly supervised services, “immediate availability” including real-time audio-visual telecommunications is proposed only through December 31, 2025.
Virtual presence of teaching physicians for resident-involved services in all teaching settings, through three-way telehealth visits, is proposed to continue meeting the “presence” requirement through December 31, 2025. CMS also seeks information on expanding services under the primary care exception in future rulemaking.
Advanced Primary Care Management Services (APCM) for Enhanced Care Delivery
Recognizing the importance of primary care, CMS is proposing new coding and payment for APCM services via three new HCPCS G-codes for CY 2025. APCM bundles elements of existing care management and communication technology-based services to reflect essential advanced primary care delivery, including Principal Care Management, Transitional Care Management, and Chronic Care Management. The new APCM codes are tiered into three levels based on chronic conditions and Qualified Medicare Beneficiary enrollment, reflecting patient complexity. These proposals leverage lessons from CMS Innovation Center models like CPC+ and PCF to simplify billing and documentation.
Beginning January 1, 2025, physicians and non-physician practitioners (NPPs) using advanced primary care models can bill for APCM services if they are the central point for all healthcare needs and responsible for all primary care services. APCM payment is conditional on performance measurement, proposed to be met by reporting the Value in Primary Care MIPS Value Pathway (MVP). MVP reporting would start in 2026 based on 2025 performance.
This new coding aims to better recognize advanced primary care, encourage practice transformation, ensure patient access to high-quality primary care, and simplify billing compared to existing codes. The proposed codes move towards hybrid payments (encounter and population-based) to support long-term primary care relationships and accountable care. Shared Savings Program ACOs and some Innovation Center models already meet some requirements for these codes.
CMS seeks comments on additional payment policies for advanced primary care delivery through an Advanced Primary Care Hybrid Payment RFI.
Cardiovascular Risk Assessment and Management Expansion
Building on the Million Hearts® Model’s success in reducing cardiovascular mortality, CMS proposes coding and payment for Atherosclerotic Cardiovascular Disease (ASCVD) risk assessment and management services starting in CY 2025. ASCVD risk assessment would be done with an E/M visit for patients at CVD risk without a CVD diagnosis. Standardized risk assessment tools would include demographics, modifiable risk factors, risk enhancers, and lipid panel data to estimate 10-year ASCVD risk. ASCVD risk management services, including ABCS of CVD risk reduction (aspirin, blood pressure, cholesterol, smoking cessation), are proposed for those at medium or high risk (>15% in 10 years).
Improving Global Surgery Payment Accuracy with Modifier Expansion
For CY 2025, CMS proposes broadening the use of transfer of care modifiers for global surgical packages. The existing modifiers (-54, -55, -56) would be required for all 90-day global surgical packages when a practitioner (or same group practice practitioner) expects to furnish only pre-operative (-56), procedure (-54), or post-operative portions (-55), including formal and informal transfers of care.
Requiring transfer of care modifiers in all such scenarios will give CMS more accurate data on resources used in global surgical packages, informing more accurate Medicare payments. A new add-on code, GPOC1, is proposed for post-operative care services to better reflect the time and resources for post-operative visits by practitioners not involved in the surgery.
Behavioral Health Service Access Enhancements
Aligned with the CMS Behavioral Health Strategy, several actions are proposed to support behavioral health access. Safety planning interventions for patients in crisis, including suicidal ideation or overdose risk, would have separate coding and payment under PFS for CY 2025. An add-on G-code would be billed with E/M or psychotherapy services when safety planning is personally performed. A monthly billing code is proposed for post-discharge follow-up contacts after emergency department crisis encounters, bundling four calls per month.
Alt text: A therapist conducts a telehealth session with a patient, illustrating the growing role of digital healthcare in behavioral health services.
To improve psychotherapy access, Medicare payment is proposed for digital mental health treatment devices used incident to or integral to professional behavioral health services under a treatment plan. Three new HCPCS codes are proposed for these devices. Six new G codes are proposed for practitioners whose covered services are limited to mental illness diagnosis and treatment (Clinical Psychologists, Clinical Social Workers, Marriage and Family Therapists, and Mental Health Counselors), mirroring interprofessional consultation CPT codes for E/M visit billers, to better integrate behavioral health specialty treatment into primary care and other settings.
Comments are sought on coding and payment for Intensive Outpatient Program (IOP) services under PFS in additional settings like Certified Community Behavioral Health Clinics (CCBHCs), and on facilities offering crisis stabilization and non-emergent urgent care.
Opioid Treatment Program (OTP) Telehealth Flexibilities and Payment Updates
CMS proposes several telehealth flexibilities for Opioid Use Disorder (OUD) treatment services by OTPs, contingent on SAMHSA and DEA requirements. Permanent audio-only telehealth for periodic assessments from January 1, 2025, is proposed, along with allowing the OTP intake add-on code via two-way audio-video for methadone initiation (HCPCS code G2076) if an adequate evaluation is possible via telehealth. These flexibilities aim to improve access for populations facing OUD treatment barriers.
Payment increases are proposed for OTP intake activities to include social determinants of health risk assessments, reflecting the effort to identify unmet health-related social needs and the need for harm reduction and recovery support services. This aims to help OTPs address factors increasing premature treatment departure. CMS seeks information on OTP care coordination and referrals to community-based organizations.
Payment is also proposed for new FDA-approved opioid agonist and antagonist medications, including a new add-on code for nalmefene hydrochloride nasal spray (Opvee®) for opioid overdose, and payment for injectable buprenorphine (Brixadi®) via new weekly and existing monthly codes.
CMS clarifies that OTPs must append an OUD diagnosis code on claims for OUD treatment services.
Hospital Inpatient or Observation (I/O) E/M Add-on for Infectious Diseases
For CY 2025, a new HCPCS add-on code is proposed for hospital I/O care complexity related to confirmed or suspected infectious diseases, performed by physicians with infectious disease specialization. Service elements include disease transmission risk assessment and mitigation, public health investigation, analysis, testing, and complex antimicrobial therapy counseling and treatment.
Supervision Policy for Physical Therapists (PTs) and Occupational Therapists (OTs) in Private Practice
CMS proposes a regulatory change for CY 2025 to allow general supervision of physical therapist assistants (PTAs) and occupational therapy assistants (OTAs) by PTs and OTs in private practice for all applicable therapy services. This aims to provide more flexibility and safeguard patient access to necessary therapy, especially in rural and underserved areas, aligning with supervision policies in institutional settings.
Certification of Therapy Plans of Treatment with Physician/NPP Orders
For CY 2025, amendments to certification and recertification regulations are proposed to reduce administrative burden for therapists and physicians/NPPs. An exception to the physician/NPP signature requirement on therapist-established treatment plans is proposed for initial certification if a written order/referral is on file and evidence shows the plan was sent to the physician/NPP within 30 days of the initial evaluation. CMS seeks comments on the need for regulation on the timeframe for physician/NPP changes to therapist-established treatment plans and potential 90-day limits on physician/NPP orders from order date to first treatment/evaluation.
Dental and Oral Health Services Coverage Expansion
CMS proposes amending regulations to expand clinical scenarios for FFS Medicare payment for dental services inextricably linked to covered services to include: (1) dental/oral exams pre-dialysis for ESRD patients, and (2) medically necessary diagnostic and treatment services to eliminate oral/dental infections pre- or during dialysis for ESRD patients. This is based on clinical evidence linking dental/oral health and dialysis for ESRD patients.
Comments are sought on potential connections between dental services and covered services for diabetes, autoimmune diseases with immunosuppressive therapies, sickle cell disease, and hemophilia, as well as evidence on patient populations and specific medical services linked to dental service improvements.
Two billing policy changes are proposed for dental services inextricably linked to covered services: requiring the KX modifier on claims from CY 2025 and requiring a diagnosis code on the 837D dental claims format from January 1, 2025, with potential enforcement discretion for the diagnosis code requirement for a limited time.
Information is requested on services for oral appliances for obstructive sleep apnea treatment, specifically whether they should be classified as durable medical equipment or supplies incident to a physician service when furnished by dentists, and information needed to describe their furnishing under the PFS.
Medicare Part B Drug Policy Updates
Refunds for Discarded Amounts of Single-Dose Drugs: CMS reviews an application for increased applicable percentage for CY 2025 and proposes clarifications on policies for refunds for discarded amounts of certain single-dose drugs under Part B. Clarifications include exclusions for drugs paid under Part B for less than 18 months and defining single-dose containers. The JW modifier would be required if a billing supplier is not administering a drug, but discards amounts during preparation before supplying to the patient. Skin substitutes would remain excluded from the refund policy.
Payment Limit Calculations with Negative or Zero ASP Data: CMS proposes an approach for payment limit calculations when manufacturers report negative or zero ASP data. Generally, negative and zero ASP data would be considered “not available,” with calculations varying based on single or multiple source drug status, whether some or all NDCs for a billing and payment code have negative or zero ASP, and marketing status of all NDCs.
Payment for Radiopharmaceuticals in Physician Offices: To clarify MAC pricing methodologies for radiopharmaceuticals in physician offices, CMS proposes that MACs determine payment limits based on methodologies used on or before November 2003, including invoice-based pricing.
Immunosuppressive Therapy Coverage Modifications: Regulations would be modified to include certain compounded formulations of FDA-approved drugs with immunosuppressive indications, or for use with immunosuppressives, or deemed necessary by a MAC for transplant rejection prevention/treatment, specifically orally or enterally administered formulations. Payment for up to 90-day supply prescriptions and refills of immunosuppressive drugs is also proposed to align with current practice and improve medication adherence.
Blood Clotting Factor Clarifications: CMS proposes clarifying that blood clotting factors must be self-administered to qualify for the furnishing fee, ensuring that double payment of administration fees does not occur for gene therapies for hemophilia, which are typically administered in healthcare settings.
Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) Updates
Care Coordination Services Coding Changes: Starting in 2025, RHCs and FQHCs would report individual CPT and HCPCS codes for care coordination services instead of HCPCS code G0511, and could bill associated add-on codes, improving payment accuracy and beneficiary understanding of services. Adoption of coding and policies for Advanced Primary Care Management services for RHC and FQHC payment is also proposed for 2025, paid at national non-facility PFS amounts in addition to RHC AIR or FQHC PPS. Comments are sought on payment policy transparency for care coordination services.
Telecommunication Services Extension: Direct supervision via interactive audio and video telecommunications and “immediate availability” definitions including real-time audio-visual telecommunications are proposed to extend through December 31, 2025. Temporary payment for non-behavioral health telehealth visits via HCPCS code G2025, including audio-only, is proposed to extend through December 31, 2025. The in-person visit requirement delay for mental health telehealth services in RHCs/FQHCs to beneficiaries’ homes is proposed to extend to January 1, 2026.
Intensive Outpatient Program (IOP) Payment Rate Adjustment: A different payment rate is proposed for four or more IOP services per day in RHCs/FQHCs, aligning with hospital outpatient departments and updated annually.
Preventive Vaccine Cost Payment at Time of Service: RHCs and FQHCs would be allowed to bill and be paid for Part B preventive vaccines and administration at the time of service from July 1, 2025, at Part B preventive vaccine payment rates, reconciled with actual costs on cost reports, to improve payment timeliness.
Dental Services Clarification: CMS clarifies alignment between dental service policies in physician offices and RHCs/FQHCs, considering inextricably linked dental services in RHCs/FQHCs as RHC/FQHC services paid under AIR/PPS, with alignment on operational requirements like the KX modifier.
RHC Productivity Standards Removal: Outdated and redundant RHC productivity standards are proposed for removal.
FQHC Market Basket Rebasing and Revising: The FQHC market basket would be rebased and revised to a 2022 base year, with a proposed 2025 productivity-adjusted market basket update of 3.5%.
RHC and FQHC Conditions for Coverage Updates: Conditions for Coverage would be updated to explicitly require RHCs and FQHCs to provide primary care services, remove hemoglobin and hematocrit (H&H) from required direct laboratory services, and update laboratory test regulations to reflect modern techniques, aiming to increase flexibility, reduce burden, and improve patient access.
Clinical Laboratory Fee Schedule (CLFS) Data Reporting and Payment Reduction Phase-in Revisions: Conforming changes to CLFS regulations are proposed to reflect delayed data reporting requirements for non-ADLT CDLTs and delayed phase-in of payment reductions, with the 15% reduction applying for CYs 2025-2027 and no payment reduction in CY 2024 compared to CY 2023.
Ambulance Fee Schedule Reimbursement for Blood Transfusion Expansion: The definition of advanced life support level two (ALS2) would be modified to include low titer O+ whole blood transfusion (WBT) administration, making ground ambulance transport with WBT an ALS2 transport. Comments are sought on adding alternative blood product treatments like packed red blood cells and plasma to ALS2 procedures.
Medicare Part B Payment for Preventive Services Enhancements: Coverage of hepatitis B vaccinations would be expanded to include individuals not previously vaccinated or with unknown vaccination history, removing the physician’s order requirement for hepatitis B vaccine administration under Part B to facilitate roster billing. Payment for hepatitis B vaccines and administration in RHCs/FQHCs would be at 100% of reasonable cost, separate from AIR/PPS. A fee schedule is proposed for Drugs Covered as Additional Preventive Services (DCAPS drugs) using ASP methodology when available, and alternative mechanisms when not, also applying to RHCs/FQHCs at 100% Medicare payment.
Expand Colorectal Cancer Screening Coverage: Coverage of barium enema as a CRC screening method would be removed, and coverage expanded to include Computed Tomography (CT) Colonography. The “Complete CRC Screening” approach would be expanded to include positive blood-based biomarker tests or non-invasive stool-based tests as part of the screening continuum, with follow-on colonoscopies without beneficiary cost-sharing.
Medicare Prescription Drug Inflation Rebate Program Policy Codification: Policies for the Medicare Part B and Part D Drug Inflation Rebate Programs are proposed to be codified, including methods to remove 340B units from rebate calculations, reconciliation processes, and clarifications on rebate calculations in specific circumstances, like excluding Part B units of single-dose drugs subject to discarded drug refunds.
Electronic Prescribing for Controlled Substances (EPCS) Compliance Date Extension: The date for including LTC facility prescriptions in CMS EPCS Program compliance calculations would be extended from January 1, 2025, to January 1, 2028, with non-compliance actions starting on or after January 1, 2028, aligning with the NCPDP SCRIPT standard version 2023011 implementation for improved pharmacy-LTC facility communication.
This proposed rule represents a comprehensive set of updates to the Medicare Physician Fee Schedule, aiming to modernize payment policies, enhance access to care, and improve the quality and efficiency of healthcare services for Medicare beneficiaries. Healthcare providers are encouraged to review these proposed changes and provide comments to CMS to shape the final rule for 2025 and beyond.
