Medicare’s Payment Cuts: What Specialty Providers Need to Prepare

Financial strain on the specialty providers from cardiologists, radiologists, oncologists, and surgeons is at a breaking point. The expenses of operating a medical practice keep rising each year, but the Medicare reimbursement rates continue to drop. 

The Centers of Medicare and Medicaid Services has already implemented regulations that would fix another wave of Medicare payment cuts, and a proactive strategy becomes an urgent need for 2026 and further.

The stakes couldn’t be higher. These ongoing reductions not only influence the profits of practice but also threaten the access to care by patients, particularly in rural and underserved locations. 

In the case of specialty providers, the key to preserving provider income and financial standing is in the ability to comprehend the peculiarities of the recent CMS policy and realize a solid action plan. In this blog, you’ll know what specialty providers must prepare for Medicare’s ongoing payment cuts.

1. Physician Fee Schedule and Key Reimbursement Changes

The financial pressure is intricate as it is found mainly in the modifications to the Medicare Physician Fee Schedule (PFS) each year. The PFS calculates the healthcare reimbursement of the majority of Part B services using three factors: the Relative Value Unit (RVU) of each service, the Geographic Practice Cost Index (GPCI), and the Conversion Factor (CF).

The Conversion Factor is the major cause of the immediate financial pain. Although the cost of inflation and practices included in the 2025 CF increased, as calculated by the Medicare Economic Index, it again changed statutorily in 2025, to a lower price of $32.3465, and this represented a payment reduction of 2.83% compared to the prior year. This decline is disastrous to practices that already face increasing costs.

Key Reimbursement Changes

The Conversion Factor Decline will decrease the value of all single procedure codes that are reimbursed by the PFS and will have an instantaneous effect on all specialty groups.

CMS must legally make the changes to the PFS to be budget-neutral. As they increase payment to one region, such as some primary care or E/M codes, they have to reduce the total CF to pay the price. This is usually disproportionately applied to high-volume procedures prevalent in such fields as cardiology and radiology.

The fee schedule update and telehealth, CMS has taken a step forward to implement permanent coverage on several important policies on telehealth, such as audio-only services and virtual direct supervision. Although the rates can be reduced, maximizing efficient telehealth billing is one of the most important pathways to compensating for a part of the loss of revenue.

2. Impact Analysis: The Effect of These Cuts on Specialty Providers

Although the Medicare payment cut of 2.83% is a headline figure, the bigger impact of those changes to the Relative Value Units of particular codes is the impact on specialty practices. The areas that will be affected most are those that provide technical or procedure-based services.

Specialty	Projected 2025 Impact (Average)	Primary Drivers of Loss
Radiology	High Negative Impact	Cuts to imaging RVUs, high volume of technical procedures.
Cardiology	Moderate to High Negative Impact	Reductions in procedural RVUs (e.g., Cath lab, interventions).
Oncology/Surgery	Variable, potentially High	Cuts to high-cost procedures; impact tied to site-of-service differentials.
Anesthesiology	Moderate Negative Impact	Dependence on facility-based payment, which is under review.

The direct impact is the greatest threat to Provider revenue and financial sustainability. Medical groups are already reporting that they are being coerced to:

• Delay Hiring – More than half of health systems are considering the possibility of postponing hiring of new staff, or new specialists with high dependence on Medicare fee-for-service.

• Curtail Services – There are groups that are dropping some patient services that are not viable in the current reimbursement program.

• Stop Investments – Important long-term projects, e.g., population health or IT infrastructure upgrades, are pushed out of the queue as narrow operational solvency is prioritized.

Related: RPM in 2025: How to Bill Medicare Correctly and Optimize Patient Care

3. Action Plan – Revenue Loss Mitigation Steps

The passive approach is not tenable anymore. Special providers need to be vigorous in the implementation of a three-pronged approach with emphasis on technology, streamlined workflow, and contracting.

A. RCM Optimization and Operational Efficiency

The best remedy to the payment cut would be to make sure that all the billable services are documented and charged appropriately and promptly.

Aggressive Claims Denial Management 

Denials are a significant source of leakage. Introduce a preventable denial policy of zero tolerance. Identify the 5 most common denials and fix the coding/billing processes that resulted in them right away with the help of the analytics.

Optimized Telehealth Billing

As CMS implements more telehealth policies permanently, revisit all the qualifying codes, including new E/M add-ons such as G2211, in longitudinal care, and make all telehealth billing compliant and fully used.

Advanced Cost Accounting 

You cannot control what you do not measure. Granular data can be used to realize the actual cost of high-volume service delivery. This assists in establishing services that should be renegotiated in business agreements.

B. Leverage RPA Automation

Robotic Process Automation has the capacity to counter the increasing administrative burden by performing multiple repetitive and time-intensive tasks without increasing the number of people on the staff.

Prior Authorization Automation – RPA has the capability to automatically file, monitor, and follow up on prior authorization requests, which has become an infamous specialty practice bottleneck.

Automation of the Eligibility and Benefits Verification – Automate the pre-service verification process to authenticate clean claims materialization, minimize front-end denials, and reduce staff burnout.

C. Strategic Contracting and Advocacy

Medicare rates are fixed, but commercial contracts are not.

Data-Driven Payer Negotiation

You have your cost-per-case data; use it to negotiate more favorable rates with commercial payers. The fact that most private payers base their rates on a percentage of the Medicare PFS can give you a strong bargaining advantage since it would underscore the harshness of the cuts to your specialty.

Advocacy and APMs

Engage with specialty societies (e.g., AMA, ACC) that are lobbying to permanently update the Fee schedule based on the inflation rate. Additionally, consider joining Alternative Payment Models (APMs) or other value-based care solutions, since CMS has also started providing slightly increased conversion factors to the qualified APM participants.

Frequently Asked Questions

1. Which medical specialties are most affected by these cuts?

Radiology, cardiology, and surgical fields face the steepest losses due to reduced Relative Value Units (RVUs) for high-volume procedures and lower reimbursement for technical services.

2. How can specialty providers offset revenue losses?

Providers can strengthen revenue by optimizing billing processes, automating prior authorizations, expanding telehealth services, and using advanced analytics for cost management.

3. Can specialty providers negotiate better rates with commercial payers?

Yes. By presenting accurate cost-per-case data, providers can use Medicare’s lower rates as leverage to secure fairer commercial contract terms.

Vozo RCM Service for your Medical Practice

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With Vozo Revenue Cycle Management services, you can reduce the headaches associated with RCM and focus on what matters most is quality patient healthcare delivery.

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