CMS Proposes 2025 Physician Pay Cuts and New Codes for Social Care

The Centers for Medicare & Medicaid Services (CMS) recently released its proposed Physician Fee Schedule (PFS) rule for calendar year 2025, outlining major changes that could affect how physicians and other clinicians are paid. The proposed rule aims to streamline documentation, reduce administrative waste, and advance value-based care models. But it also includes a proposed 2.8% reduction to the Medicare conversion factor, raising concern for private practices and specialty providers already under financial pressure.

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Conversion Factor Cut Adds Pressure to Physician Pay

The 2025 proposed conversion factor is $32.36, down from $33.29 in 2024. This 2.8% cut would apply to most services billed under Medicare Part B. CMS attributes the reduction to budget neutrality requirements, even while acknowledging the burden it may place on small and independent practices.

Clinician advocacy groups have already raised concerns about how the cut could impact access to care, staffing, and the long-term sustainability of practices.

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CMS Proposes New Codes for Caregiver Training and Principal Illness Navigation

To support patients with complex care needs, CMS is introducing new HCPCS codes aimed at improving care coordination:

• Principal Illness Navigation (PIN): Codes would reimburse for time spent helping patients with serious or high-risk conditions understand their care options and access resources.
• Community Health Integration (CHI): Designed to support community-based services like housing or food assistance, when tied to a clinical diagnosis.
• Social Determinants of Health Risk Assessment: A new code would pay for screening patients for non-clinical risks like food insecurity, transportation barriers, and housing instability.

CMS also plans to pay for caregiver training services to help family members support patients at home. These new codes are part of a broader effort to support whole-person care without overburdening providers with documentation.

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Evaluation and Management (E/M) Flexibility

CMS wants to simplify documentation and reduce burden by expanding flexibility in how E/M services are reported. The proposed rule continues CMS’s work to align coding and payment with time spent and medical decision-making, rather than requiring outdated documentation methods.

This change could help physicians spend less time on paperwork and more time with patients, particularly in primary care and chronic care management.

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Telehealth Coverage Extended Again

The proposed rule would extend several pandemic-era telehealth flexibilities through at least the end of 2025. These include:

• Allowing telehealth visits to be billed as if they were in-person
• Maintaining audio-only services in certain cases
• Continuing use of provider home addresses as the originating site

CMS is signaling that it sees telehealth as a permanent part of the care delivery landscape. However, these flexibilities are still considered temporary and will be re-evaluated in future rules.

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Updates to the MIPS Program and Quality Reporting

CMS is continuing to revise the Merit-based Incentive Payment System (MIPS) and its Alternative Payment Models (APMs). Key proposed updates include:

• Refining quality measure benchmarks
• Reducing duplicative reporting

• Expanding options for participation in value-based care arrangements

The goal is to make it easier for practices to participate in value-based models without sacrificing revenue or overwhelming administrative workload.

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What This Means for Your Practice

If finalized, the 2025 PFS rule will bring new billing opportunities for addressing social needs and supporting caregivers, but the proposed pay cut could make it harder to invest in these services. Practice leaders should start reviewing workflows and billing systems now to prepare for new codes and documentation changes.

More on the proposed changes can be found in the CMS Press Release.