What Orthopaedic Surgeons Need to Know about 2025 CMS Payment Policy Changes

Throughout the year, AAOS has issued formal comments to the Centers for Medicare & Medicaid Services (CMS) on the agency’s proposed Medicare payment policy changes for calendar year (CY) 2025. The comments included letters to the agency on the Medicare Physician Fee Schedule (PFS), Quality Payment Program (QPP), and Medicare Outpatient Prospective Payment System/Ambulatory Surgical Center (OPPS/ASC) proposed rules.

Following the agency’s review of all comments, it issued the final rules in November, which will begin to take effect on or after Jan. 1, 2025.

PFS final rule
The CY 2025 Medicare PFS final rule includes several key changes that will impact the practice of orthopaedics. The final PFS will be reduced by 2.93 percent, setting the CY 2025 PFS conversion factor at $32.35—a $0.94 decrease from the current CY 2024 conversion factor of $33.29. The final CY 2025 conversion factor reflects a 0.02 percent positive budget-neutrality adjustment as required by law; the 0.00 percent update adjustment factor specified under the Medicare Access and CHIP Reauthorization Act of 2015; and the removal of the temporary 2.93 percent payment increase for services furnished from March 9, 2024, through Dec. 31, 2024, as provided in the Consolidated Appropriations Act of 2024. AAOS continues to oppose regulatory changes that further reduce reimbursement under the fee schedule and urges CMS to reconsider the proposed conversion-factor reduction, exploring alternative methods for budget neutrality that do not disproportionately impact physician reimbursement.

Toward that end, AAOS joined more than 100 national medical societies and state medical associations in urging congressional leadership to pass legislation that both eliminates the impending Medicare physician payment cut and provides a positive payment update for 2025. In the letter, addressed to leaders in both chambers of Congress, AAOS and its coalition partners warned, “Without federal legislation that provides a payment increase reflecting rising inflationary pressures, patient access will suffer and the sustainability of physician practices across the country, particularly in rural and underserved communities, will be threatened.” The letter reiterated the importance of passing the Medicare Patient Access and Practice Stabilization Act of 2024 before the conclusion of the 118th Congress, to provide stability for physician practices heading into the new year and allow time for comprehensive reform to the Medicare physician payment system to begin in earnest in the 119th Congress.

Additional PFS changes
CMS finalized a policy to broaden the applicability of the transfer of care modifier 54 for all 90-day global surgical packages. Beginning in CY 2025, the modifier can be used in any case where a practitioner expects to furnish only the surgical procedure portion of the global package, including when there is a formal, documented transfer of care as under current policy or an informal, nondocumented but expected transfer of care. AAOS opposed CMS’ refusal to apply Relative Value Scale Update Committee–recommended work and time increases to global surgical codes. AAOS recommended that CMS adopt these changes to ensure fee schedule relativity. CMS finalized the proposal to apply modifier 54 (Surgical Care Only) for instances when a practitioner performs only the procedure without intending to provide postoperative care. Under this change, for 90-day global codes, modifier 54 would be applied in instances beyond which there is formal, documented transfer of care (as is the case under current policy) to also include when there is an informal, expected transfer of care. CMS will not, however, change the current policy for modifiers 55 and 56.

For CY 2025, CMS is also finalizing a change to allow for general supervision of physical therapy assistants and occupational therapy assistants by physical therapists and occupational therapists in private practice for all applicable services.

QPP final rule
In the QPP final rule, CMS finalized the new surgical care Merit-Based Incentive Payment System (MIPS) Value Pathway (MVP), which will be available beginning in the 2025 performance period. AAOS reiterated concerns about the Surgical Care MVP in its comments on the proposed rule, highlighting the lack of consultation with AAOS and other surgical specialties in its development. AAOS requested that CMS clarify why the MVP excludes certain surgeries with existing MIPS measures and explain the rationale for combining unrelated surgical specialties, as the current inclusion appears arbitrary and disconnected from clinical practice.

AAOS also opposed the prospect of mandatory participation in MVPs due to gaps in applicability to specialists and subspecialists. AAOS requested that CMS maintain the traditional MIPS framework, allowing clinicians to select measures, improvement activities, and strategies most relevant to their specific practices. In response, CMS reiterated its intention to move to full MVP adoption, though a future date has not been set. Broadly, the agency intends to transform MIPS, with the goal of obtaining more meaningful comparable performance data.

AAOS responded to two Requests for Information within the proposed rule, one on “Guiding Principles for Patient-Reported Outcome Measures” and another on “Building the MVP Framework to Improve Ambulatory Specialty Care,” both of which CMS acknowledged and will consider in future rulemaking.

OPPS/ASC final rule
Regarding the OPPS/ASC final rule, CMS finalized a 2.9 percent OPPS payment-rate increase for hospitals meeting quality-reporting requirements. The rule also confirms additional payments for specific nonopioid pain-relief treatments in the hospital outpatient department (HOPD) and ASC settings, effective Jan. 1, 2025, through Dec. 31, 2027.

Following AAOS support, beginning in CY 2025, qualifying nonopioid drugs and devices will receive separate payments in both HOPD and ASC settings. This aligns with AAOS’ long-standing support for nonopioid pain management. AAOS encouraged CMS to clarify whether these payments will apply to specific orthopaedic treatments such as indwelling nerve catheters and cryoneurolysis and to continue exploring alternative strategies to manage chronic pain. Additionally, CMS finalized the removal of the MRI Lumbar Spine for Low Back Pain measures, beginning with the CY 2025 reporting period and impacting the CY 2027 payment determination.

AAOS supported the alignment of Medicare fee-for-service prior authorization review timeframes with Medicare Advantage standards but remained concerned about the overall burden of prior authorization. AAOS is pleased that CMS finalized this policy, which will shorten the standard review timeframe from 10 business days to 7 calendar days but maintain the existing 2-business-day rule for expedited requests. Still, AAOS recommended that CMS streamline the prior authorization process, enhance transparency, and ensure that these requirements are evidence-based and clinically appropriate to avoid delays in patient care.

Looking ahead to 2025, AAOS remains committed to protecting physician reimbursement, improving quality programs, and reducing administrative burden.

Alix Braun, MPH, is a director of regulatory and registry advocacy in the AAOS Office of Government Relations.

Read full summaries of the 2025 CMS payment policy changes

AAOS has compiled summaries of the Centers for Medicare & Medicaid Services’ (CMS’) proposed Medicare payment policy changes for calendar year 2025. Scan the QR codes below to access the summaries.