MedPAC Votes to Recommend Increase to 2025 Medicare Physician Payments

February 6, 2024 – On January 11th, the Medicare Payment Advisory Commission (MedPAC) voted to recommend to Congress that the CY 2025 Medicare Physician Fee Schedule (PFS) conversion factor should receive a base update “50 percent of the projected increase in the MEI [Medicare Economic Index].”

The MEI [Medicare Economic Index] is a measure of practice cost inflation based on annual changes in physicians’ operating expenses. For 2025, the MEI is projected to be approximately 2.6%.

Therefore, if Congress adopted this recommendation, the CY 2025 PFS conversion factor methodology would receive a base update of 1.3%. Note that other factors, such as budget neutrality adjustments, would continue to apply under current law. However, HRS supports an annual payment update mechanism that will at least begin to account for the costs associated with annual inflation.

The slides used to guide the MedPAC discussion are available online. The position will be formally forwarded to Congress as part of the MedPAC March 2024 Report to Congress.

Available Resources

• MedPAC Presentation: Assessing Payment Adequacy and Updating Payments – Physician and Other Health Professional Services