Medicare May 2025 Payment Updates: What Physicians Need to Know

Medicare Updates: Medicare physician payments are once again under pressure in 2025. A 2.83% cut to Medicare physician reimbursement occurred earlier this year, tightening margins for already burdened practices. While a new Senate bill, the Medicare Patient Access and Practice Stabilization Act of 2025, aims to provide short-term relief, the future remains uncertain.

This isn’t just a policy update, it’s a direct hit to your bottom line. With payment reductions, shifting coverage policies, and evolving billing requirements, physicians are being forced to do more with less while dealing with increasingly complex reimbursement systems.

A Closer Look at the May 2025 Medicare Updates: What’s Changing 

As of May 2025, physicians are contending with multiple Medicare changes that directly impact medical billing, reimbursement, and patient access. Below is a simplified breakdown of the key updates and what they mean for your practice operations and revenue cycle management.

Payment Cuts: 2.83% Reduction and a Possible Reversal

In January 2025, Medicare implemented a 2.83% cut to physician payments, compounding financial pressures many providers already face. According to the American Medical Association (AMA), Medicare physician payments have dropped by 33% (adjusted for inflation) since 2001. In response, the Medicare Patient Access and Practice Stabilization Act of 2025 (S. 1640) has been introduced in the Senate, proposing:

• Reversal of the 2.83% cut
• A +2% positive payment update from June to December 2025

Medicare Physician Payment Adjustment Timeline 2025

Premium and Deductible Stability (Good News for Patients and Claims)

• Medicare Part B Premium: Stays at $179.80/month
  
• Medicare Part A Inpatient Deductible: Still $1,632 per benefit period
  
• No change in coinsurance rates for hospital or skilled nursing facility stays

Expanded Coverage for Critical Services:

There is an expansion of coverage of critical services like mental health services, telehealth services, and insulin cost caps. 

Mental Health Services

Medicare Part B now covers more behavioral health services, including therapy and counseling. This means new billing codes and documentation requirements that providers need to stay on top of. If your practice offers these services, be sure to review the updated reimbursement rates to understand how these changes affect your revenue potential.

Broader Financial Pressures
While Medicare adjustments are top of mind, Medicaid cuts are also affecting practices across the country—especially those serving underserved populations. These reductions can quietly strain practice operations and long-term sustainability.

Telehealth Flexibilities

Telehealth billing remains active under extended pandemic-era rules, especially for rural areas. Practices must ensure accurate coding to stay compliant.

Insulin Cost Caps

Insulin under Medicare Part D is now more affordable, improving patient adherence. This could impact prescribing patterns and billing for chronic care providers.

Service Area	What’s New in May 2025	Billing Impact
Mental Health	Expanded Part B coverage	New codes, higher demand for MH services
Telehealth	Flexibilities extended for rural areas	More claims submitted remotely
Insulin (Part D)	Costs reduced for patients	Improved adherence, stable visit volumes

Urgent Medicare Deadlines Providers Shouldn’t Miss

Medicare deadlines aren’t just critical for patients they directly impact providers’ revenue and workflows. Two major dates are fast approaching, and missing them can lead to denied reimbursements or coverage gaps that affect your practice:

May 15, 2025

This is the last day for Medicare beneficiaries to enroll in or switch a Medicare Advantage plan for coverage starting July 1. Providers should be aware of this because changes in patient coverage may affect billing requirements, payer contracts, and reimbursement rates.

May 31, 2025

This is the final deadline to submit claims for medical services provided in 2024. If claims aren’t submitted by this date, providers risk losing reimbursement for those services, resulting in unrecoverable revenue loss. 

What Your Patients Should Know About These Changes

With Medicare updates taking effect in May 2025, it’s important that providers proactively communicate with their patients to minimize confusion and billing delays. At CloudRCM, we recommend sharing the following reminders with your Medicare beneficiaries:

• Encourage patients to review their Medicare plan documents.

Plan changes like expanded mental health coverage, ongoing telehealth flexibilities, and capped insulin costs can directly impact service eligibility and patient responsibility.

• Ask patients to update their contact information on Medicare.gov.

Outdated details can result in missed plan notices or billing alerts, complicating coverage verification and claims processing on your end.

• Remind patients to carefully review their Explanation of Benefits (EOBs).

Spotting and reporting billing discrepancies early can help avoid denied claims, incorrect patient balances, or revenue cycle delays.

• Point them to official support channels.

When patients need clarification, direct them to 1-800-MEDICARE or their local State Health Insurance Assistance Program (SHIP) for trusted help, saving your front office time.

Final Thought

As Medicare policies continue to shift, staying up to date isn’t just a matter of compliance; it’s essential for protecting your revenue and maintaining smooth practice operations. The May 2025 updates bring challenges and opportunities, from payment adjustments to expanded service coverage and critical deadlines.

By understanding these changes and communicating clearly with patients, providers can reduce confusion, avoid claim denials, and ensure continuity of care. Keeping a close eye on reimbursement timelines, coding updates, and plan variations will go a long way in maintaining stability through this period of change.

How CloudRCM Can Help

CloudRCM helps providers avoid Medicare changes by managing reimbursement updates, coding adjustments, and deadline compliance. From claims submission compliance to coding updates and denial prevention, we optimize your medical billing so you can focus on patient care—not paperwork.

Source: American Medical Association (AMA)

FAQs:

What is the physician payment adjustment for 2025?

Medicare physician payments are reduced by

What is the new conversion factor?

The 2025 conversion factor is $32.35, down from $33.29. 

Are there new billing codes?

New codes for advanced primary care and caregiver training have been added. 

What changes are there for Medicare Advantage plans?

CMS will annually audit all eligible MA contracts to address overpayments.

How much is estimated to be overbilled annually?

Overbilling by MA plans could reach $17 billion per year.