2.9% Medicare cut, broadly panned, looms over 2025 as advocates press Congress

Medicare physicians face a 2.93% pay cut in 2025 despite industry-wide criticism of automated statutory reductions, while the AOA and other physician groups build congressional support to eliminate pay instability. 

Released by the Centers for Medicare & Medicaid Services (CMS) on Nov. 1, the calendar year (CY) 2025 Medicare Physician Fee Schedule (PFS) finalized the reimbursement reduction, set to take effect on Jan. 1, 2025, in addition to outlining other policy changes and code updates for the upcoming year.  

⏩ Read the AOA’s 2025 PFS policy recommendations and CMS responses here. 

Average payment rates will be reduced by 2.93% in 2025 as compared to the amount services were paid in 2024, CMS notes, due to statutory requirements that adjustments be “budget neutral.” With the expiration of a temporary 2.93% pay increase in CY 2024 and small changes to services’ work relative value units (RVUs), the CY 2025 PFS conversion factor of $32.35 represents a 2.83% decrease from CY 2024. 

“Doctors of optometry are trapped between the proverbial rock and a hard place as the cost of providing patient care increases and Medicare reimbursement rates remain stagnant,” noted AOA President Steven T. Reed, O.D., following the CMS’ July release of the 2025 PFS proposed rule. 

“The AOA continues to advocate for our patients by urging Congress to find a solution to the problem rather than a patch.” 

Advocates have emphasized that Medicare physician payments have been on a 20-year decline totaling at least 29%, and that reimbursement levels are no longer adequate to cover the cost of care. Even the CY 2025 PFS emphasizes that physicians’ operating costs could increase another 3.6%. 

Congressional opportunities to avert Medicare pay cuts 

While the AOA and other physician groups successfully lobbied Congress to cancel half of the planned cuts for 2024, passing the temporary pay increase, advocates are redoubling efforts to address this latest pay cut in 2025. Should this latest cut take effect, it would mark the fifth-straight year of Medicare pay cuts threatening medical practices. Toward that end, the AOA supports a trio of legislative solutions currently debated on Capitol Hill. 

In April, Rep. Raul Ruiz, D-Calif., introduced H.R. 2474, the Strengthening Medicare for Patients and Providers Act, which would provide a permanent, annual pay update based on an established index of rising practice costs. The bill is based on the same type of updates that hospitals receive and would align with regular increases that hospitals, skilled nursing facilities and others serving Medicare patients now receive. 

In August, Sens. John Boozman, R-Ark., and Peter Welch, D-Vt., introduced S. 4935, the Physician Fee Stabilization Act, along with Sens. Thom Tillis, R-N.C., Angus King, I-Maine, Roger Marshall, R-Kan., and Jeanne Shaheen, D-N.H. The bill would increase Medicare’s budget neutrality threshold to $53 million and continue to increase the threshold automatically every five years to keep pace with the Medicare Economic Index. Currently, the threshold, last updated in 1992, is $20 million. Jointly backed by the AOA and other physician organizations, the Physician Fee Stabilization Act would provide a long-term solution to this recurrent problem. 

The third—and most recent—proposal was introduced by Reps. Greg Murphy, R-N.C., and Jimmy Panetta, D-Calif., in October. The legislation, the Medicare Patient Access and Stabilization Act (H.R. 10073), would nullify the planned 2.8% cut and provide a positive payment update of 1.8%, equal to one-half of CMS’ estimate of the rise in practice-cost expenses in 2025. The promising legislation comes on the heels of a bipartisan majority of the U.S. House signing an AOA-backed letter urging the lower chamber’s leadership to “expeditiously pass legislative fixes” to stop the “harmful” pay cut and give doctors an update “that takes into account the cost of actually delivering care to patients.”  

Both the Medicare Payment Advisory Commission and Medicare Trustees have issued warnings about recurrent pay cuts, supporting plans for permanent pay updates. There is broad acceptance among lawmakers that the current Medicare pay system is broken, and AOA doctors and students are urged to encourage their members of Congress to take action immediately. 

How to support advocates’ fight against Medicare pay cuts 

Congress needs to know that Medicare pay cuts are unacceptable and any efforts to find a workable solution must fully value the care provided by doctors of optometry. Advocates’ immediate action is necessary, and here is how you can get involved: 

• Contact your lawmakers. Use the AOA’s Action Center to familiarize yourself with the AOA’s federal advocacy issues and learn how you can make contact with your legislators. Text “AOA” to 855.465.5124 to join the fight on your mobile device.
• Invest in AOA-PAC. Use your eight-digit, AOA membership ID number and log in from your computer to make an immediate investment* to support your patients and the profession. Or text EYES to 41444.  

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