#FixMedicareNow

The American Physical Therapy Association is calling on the U.S. Congress to enact meaningful reforms to the Medicare Physician Fee Schedule, or MPFS, to improve payment and provide stability for practices. Physical therapy practices, many of which are small businesses, face rising costs for office rent, clinical and administrative staff wages, and professional liability insurance. The unfortunate reality is that these costs are not adequately reflected in current Medicare payment rates.

Congress must take action to fix this unsustainable system so Medicare payments to providers reflect the cost of practice and ensure that Medicare beneficiaries have timely access to care.

In July 2024, the Centers for Medicare & Medicaid Services released the Calendar Year 2025 Medicare Physician Fee Schedule proposed rule, which includes a 2.8% reduction to the MPFS conversion factor. Reductions to the conversion factor impact every clinician providing care to Medicare beneficiaries.

Since 2020, the U.S. Congress has mitigated but not eliminated reductions caused by the triggering of Medicare's budget neutrality adjustment, which statutorily prohibits any net increase in cost to the federal government when adjustments to the MPFS exceed $20 million. This outdated policy is the root of recent cuts to dozens of providers under Medicare and must be reformed.

In recognition of these systemic flaws, APTA-supported bipartisan legislation has been introduced in the U.S. Congress to implement much-needed reforms to fix the broken fee schedule system to ensure payment stability for providers.

Providing an Annual Payment Update

Step one is ensuring that Medicare payments to providers in 2025 and beyond are adjusted each year with an inflationary update. The MPFS is the only payment system within Medicare lacking an annual inflationary update, even though providers — many of whom are small business owners — contend with a wide range of shifting economic factors, such as increasing administrative burdens, staff salaries, building rent, and the purchase of essential technology, when determining their ability to provide care to Medicare patients. The absence of an annual inflationary update, combined with statutory budget neutrality requirements, further compounds the difficulties our members face in managing resources to continue caring for patients in their communities.

Hospitals and other providers receive annual updates tied to inflation; it is critical that providers paid under the MPFS also receive a similar annual update. APTA strongly supports the swift passage of H.R. 2474, the "Strengthening Medicare for Patients and Providers Act," bipartisan APTA-supported legislation that would provide an annual payment update in Medicare tied to the Medicare Economic Index. This reform would provide an annual payment update and provide stability to practices, allowing for long-term planning, investment in practices, and the delivery of high-quality, patient-centered care.

Fixing Budget Neutrality

Cuts to the fee schedule are triggered by a policy known as "budget neutrality," which mandates that any estimated increases of $20 million or more to the Medicare fee schedule — created by upward payment adjustments or the addition of new procedures or services — must automatically be offset by cuts elsewhere.

Reforms to the statutory budget neutrality requirements are another key element to enacting Medicare payment reform. The APTA-supported Provider Reimbursement Stability Act (H.R. 6371) has been introduced to provide statutory changes to the budget neutrality requirement. Among other things, it would raise the current budget neutrality trigger from $20 million to $53 million. This $20 million threshold has not been updated since 1992; thus, increasing the threshold to $53 million would reduce the triggering of automatic, across-the-board Medicare fee schedule cuts. In addition, the legislation would require CMS to update the direct inputs for practice expense relative value units at least every five years; direct inputs include clinical wages, costs of supplies, and prices of equipment, which in the past have been reviewed by CMS only after many years, which resulted in significant payment redistribution.

Enact Medicare Reforms Specific to Outpatient Therapy Providers

APTA is also pushing for reforms that are specific to therapy providers. The "Policy Principles of Outpatient Therapy Reform Under the Medicare Physician Fee Schedule" is a road map developed by APTA, APTA Private Practice, the American Speech-Language-Hearing Association, and the American Occupational Therapy Association recommending five changes specific to outpatient therapy that need to be made for the continued sustainability of Medicare in rehabilitation therapy. The recommendations include everything from abolishing the Multiple Procedure Payment Reduction policy to allowing therapists to privately contract or "opt out" of Medicare to reforms that would allow physical therapists to more fully participate in alternative payment systems, along with changes that would significantly reduce red tape for therapy providers.

Recent Legislation and Advocacy Correspondence

• APTA-supported letter (October 2024) signed by 233 bipartisan members of the U.S. House of Representatives to congressional leadership urging action to fix the fee schedule. (Download PDF)
• September 2024 fee schedule coalition letter. (Download PDF)
• Bipartisan dear colleague letter (February 2024) cosigned by 32 members of Congress to Senate leadership in support of reversing the 2024 Medicare physician payment cuts. (Download PDF)
• Bipartisan dear colleague letter (December 2023) cosigned by 194 members of Congress to House and Senate leadership in support of MACRA reforms. (Download PDF) 
• Broad stakeholder letter (May 2023) in support for H.R. 2474, the Strengthening Medicare for Patients and Providers Act. (Download PDF)