The net inflation adjustment for ASCs was 2.9% in 2024, nearly a full percentage point higher than the average since 2023, according to the VMG Health’s 2025 Healthcare M&A Report.
In 2016, the net inflation adjustment reached its lowest point in the past 10 years at 0.3%. Inflation adjustment peaked in 2023, reaching nearly 4%.
These concerns are particularly amplified for practices that rely more heavily on Medicare patients.
In November 2024, CMS finalized a 2.83% physician pay cut in its 2025 Medicare hospital outpatient prospective payment and ASC payment systems. The physician fee schedule conversion factor for 2025 is $32.35, down from $33.29 in 2024.
The move follows a trend of declining physician pay. CMS cut overall physician pay by 1.25% for 2024, and, overall, physician reimbursement amounts per Medicare patient decreased around 2.3% between 2005 and 2021, when accounting for inflation.
“We’re just having to fight more every day for the same dollar,” Andrew Lovewell, CEO of Columbia (Mo.) Orthopaedic Group. “It’s definitely not sustainable to continue to see Medicare force pay cuts on physicians. I mean, they’re just trying to run the independent and private practice groups out of business. If we’re getting hurt by this year’s 2.8% [cut], and Congress had the opportunity to solve it, they didn’t.”
The Consumer Price Index increase, also known as inflation, hit 2.9% in December 2024, the most recent available data by the Bureau of Labor Statistics. This cuts directly into pay increases for specialties that saw pay increases of 3% or less, which includes cardiology, gastroenterology and urology, among other specialties.
Mr. Lovewell said that the “disparity” between compensation and the cost of running a business has placed physicians and facility managers at the center of conflicts surrounding reimbursement, causing misplaced frustration in healthcare.
“I wouldn’t say we’re the victims, but at the same time, we’re the ones incurring the most cost and most effort to get paid. And we’re not getting a reward for it from the Medicare side,” he added.
However, there are signs of positive momentum for physicians battling inflation. One recent report by consulting firm McKinsey & Co. noted that patient volumes could inch back toward pre-pandemic levels as soon as 2025, and that ASCs in particular could see accelerated growth in patient volume.
Additionally, a bipartisan coalition of 10 House lawmakers introduced legislation Jan. 31 aimed at reversing a 2.83% Medicare physician payment reduction and implementing a 2% increase to help stabilize physician practices and protect patient access to care.
A similar proposal garnered bipartisan, bicameral backing in December, but Congress ultimately failed to act on it before the end of the session.
“The CMS pay cut is a disgrace. As every industry in America is being forced to adjust their pricing due to the out-of-control inflation over the past two to three years, physicians are being hammered,” Thomas Loftus, MD, neurosurgeon at the Austin (Texas) Neurosurgical Institute, told Becker’s. “Not only are we not receiving inflation-adjusted increases in reimbursement, but the government is actually continuing to whittle away at our practice revenue overall.”
