Healthcare Policy and Industry Updates: Medicare Payment Cuts, Outpatient Facility, Independent Pharmacy Support, AI Regulation, and PA reform

Welcome to your Monday update on the latest healthcare policy and industry developments. Here’s what’s shaping the landscape in Medicare payment reform, outpatient care reimbursement, AI in healthcare, and prior authorisation.

Physicians Demand Medicare Payment Reform Amid 2025 Fee Cut

The Centers for Medicare & Medicaid Services (CMS) is moving forward with a 2.9% cut to physician payments in 2025, despite strong opposition from industry leaders. The finalized 2025 Medicare Physician Fee Schedule includes new policies aimed at enhancing primary care, telehealth access, and behavioral health services. However, the reduction is expected to impact physicians significantly. “There needs to be a systematic reform that makes Medicare payment rational, predictable, and sustainable,” said AMA President Bruce Scott, M.D., echoing the call for more substantial, permanent Medicare payment reform.

CMS Approves 2.9% Payment Increase for Outpatient Facilities and Ambulatory Surgical Centers (ASCs)

CMS has also finalised a 2.9% pay increase for hospital outpatient departments and ASCs, up slightly from the proposed 2.6%. This increase, under the 2025 Outpatient Prospective Payment System (OPPS) rule, will bring an estimated $2.2 billion in additional payments to hospitals. Alongside payment updates, CMS introduced mandates aimed at improving obstetrical services, including quality reporting and maternal health training, particularly for hospitals in rural and underserved areas.

Optum Rx Launches New Programs to Support Independent Pharmacies

Optum Rx has unveiled several initiatives to help independent pharmacies manage costs and meet complex patient needs. The Independent Pharmacy Network offers higher reimbursements for generics and branded drugs, supporting pharmacies that are often key healthcare access points in underserved communities. Additionally, Optum's "Bridge to Healthy Baby" program provides care kits for expectant mothers, a move towards addressing maternal health by connecting patients with local pharmacists.

Regulatory Focus on AI in Utilisation Management and Prior Authorisation

Federal and state agencies have intensified efforts to regulate artificial intelligence in healthcare, particularly within utilisation management (UM) and prior authorisation (PA). As healthcare organisations increasingly integrate AI into these processes, new regulations aim to ensure compliance and minimise the risks associated with automated decision-making in insurance coverage for essential health services. Stakeholders are advised to monitor regulatory updates closely to navigate the evolving compliance landscape.

AMA Pushes for Prior Authorisation Reform in Employer-Sponsored Plans

The AMA is expanding its advocacy on prior authorisation reforms to include employer-sponsored plans regulated under the Employee Retirement Income Security Act (ERISA). The organisation recently submitted recommendations to the Department of Labor’s ERISA Advisory Council, urging changes that would simplify claims, reduce patient delays, and alleviate administrative burdens on physicians. The AMA’s goal is to limit restrictive insurance practices across both public and employer-sponsored plans, ensuring timely and necessary care for patients.

Stay tuned for more updates as these issues continue to unfold and reshape the healthcare industry.