Protecting Patient Access to Office-Based Interventional Care
The Issue
Devastating Cuts
It is critical to understand that for many office-based interventionalists – most notably, the healthcare providers in the red box below – the cuts in the 2025 PFS Proposed Rule come on top of significant cumulative cuts since 2006.
Cuts to office-based interventionalists have become so severe that, in 2024, there are 195 procedures across service lines that are paid at rates less than the direct costs associated with those procedures – as calculated by CMS itself. In the 2025 PFS Proposed Rule released in July, this number would grow to 300, a 50% increase. In other words, for 300 services, CMS will not pay clinicians in private practice enough to cover the direct expenses of those services before even considering other costs like physician work and indirect costs (see chart below).
It is important to underscore that all of these services are procedures performed outside of the hospital in the patient-preferred, community-based setting and that these services typically are the lowest cost option available to Medicare beneficiaries. Most of these services also utilize high-technology, high-cost supplies and equipment, the reimbursement for which under the PFS has been significantly eroded by the “direct cost adjustment” since 2007. In other words, since 2007, under the PFS, the immediate discount off total direct costs has increased from 33 percent to 56 percent. It is reasonable to assume that when indirect costs (i.e. overhead) and physician work are included in the total cost of care, that the number of office-based services under the PFS for which reimbursement is less than costs is significantly higher than 300.
This underfunding by the Medicare PFS of critical office-based services is a key catalyst for the growing site-of-service differentials between the hospital outpatient and office-based setting. In 2019, the average payment for these same 300 codes reimbursed 43% more when performed in an outpatient hospital setting compared to an office setting. By 2024, this disparity had ballooned to 124% on average. As reimbursements for high-technology procedures decrease in the office setting, the same services provided in the hospital show significant increases. This dynamic further drives hospital consolidation and reduces the number of specialists in lower cost settings. A 2023 multi-specialty survey of predominantly non-hospital physicians contained the following key findings:
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94% of respondents say that recent changes to the Medicare Physician Fee Schedule are having a negative impact on their practice.
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65% said Medicare changes are having a “very negative” impact on their practice.
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26% of doctors said that they are “likely” or “very likely” to close their practice in the next two years.
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43% of survey respondents said they were likely to retire in the next two years.
According to the American Medical Association, over the last decade the percentage of physician-owned practices has fallen below 50% and there has been a sharp rise in (1) physicians employed by a hospital and (2) physician practices owned by hospitals or health systems. (see “a sharp redistribution of physicians from physician-owned to hospital/health system-owned practices” below).
Given that the reimbursement for medical specialties is, on average, up to $178,000 more in a vertically integrated health system, the incentive is clear for beleaguered PFS providers who may no longer be able to sustain further cuts in the 2025 PFS Proposed Rule to simply close their centers and continue the migration to large health systems (see “Additional Reimbursement” chart below).
Office-Based Center Closures Are Correlated with Health System Consolidation
Post, Brady PhD et al., Hospital-physician integration and Medicare’s site-based outpatient payments, Health Serv Res. 2021; 56:7-15
Taking Action
Our Mission
OBFA’s vision is for a Physician Fee Schedule that provides payment stability for office-based specialists and fundamental reform of the so-called "budget-neutrality" provision.
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