CMS has finalized its annual payment updates for physicians and outpatient and home health services for 2025.
Eleven takeaways from the trio of final rules published Nov. 1:
Outpatient Prospective Payment System rule
1. CMS finalized a 2.9% pay increase for hospital outpatient and ASC services in 2025, based on a 3.4% market update minus a 0.5% productivity adjustment.
2. The pay increase aligns with CMS' goals of balancing inflationary pressures with productivity improvements in healthcare.
3. CMS raised Medicare pay rates for intensive outpatient and partial hospitalization programs in outpatient settings to improve access for behavioral health services. These programs serve patients with acute mental health needs or substance use disorders, paid on a per diem basis. By expanding support for IOPs and PHPs, CMS aims to address rising mental healthcare needs.
4. CMS introduced new standards for hospitals and critical access hospitals to improve maternal care quality, focusing on safety, staffing and training to address disparities and improve outcomes. The update aims to improve maternal health outcomes, particularly in rural communities.
Click here for more details on the final rule.
5. CMS finalized a 2.83% cut to physician payments in 2025 despite protest from major physician groups.
6. The change to the physician fee schedule conversion factor includes a 0% overall update required by statute, the expiration of the temporary 2.93% increase in payment for 2024 and an estimated 0.02% adjustment necessary to account for changes in work relative value units for certain services.
7. This amounts to a conversion factor of $32.35 in 2025, a decrease of $0.94 (or 2.83%) from the 2024 conversion factor of $33.29.
Click here for more details on the final rule.
Home Health Prospective Payment System rule
8. CMS will increase home health payments by 0.5% ($85 million) in 2025.
9. The pay bump results from a 3.2% market update, offset by a 0.5% productivity cut and a 0.4% reduction for outlier payments.
10. A -1.8% behavioral adjustment — half of the originally proposed -3.6% — will also take effect Jan. 1 as part of the implementation of CMS' new patient driven groupings model. CMS aims to apply the remaining adjustment in the coming years.
11. For quality reporting, CMS will add four new social determinants of health measures in 2027. Additionally, it set new standards for HH agency service policies and requires respiratory illness reporting in long-term care facilities beginning Jan. 1.
Click here for more details on the final rule.