As we dive into 2025, healthcare professionals across the country are preparing for another wave of policy updates from the Centers for Medicare & Medicaid Services (CMS). These annual changes are more than just bureaucratic adjustments—they impact every aspect of revenue cycle management (RCM), including billing, coding, documentation, reimbursement, compliance, and are especially critical for Policy Updates for medical billers to understand and implement effectively.
Whether you’re managing a small private practice or part of a large healthcare network, keeping up with CMS changes, including crucial Policy Updates for medical billers, is crucial to maintaining financial health and regulatory compliance. In this in-depth newsletter, we’ll break down the key updates in CMS policies for 2025, discuss how they affect billing workflows, and offer practical strategies to ensure a smooth transition—highlighting exactly What Billers Need to Know to stay ahead in a changing landscape.
Overview of the CMS 2025 Policy Update Cycle
Each year, CMS releases a series of proposed and final rules that govern how Medicare and Medicaid programs operate. These rules are typically published in:
- The Physician Fee Schedule (PFS) Final Rule
- The Outpatient Prospective Payment System (OPPS) Final Rule
- Inpatient Prospective Payment System (IPPS) Final Rule
- Quality Payment Program (QPP) Final Rule
- Medicare Advantage (MA) and Part D Final Rule
In 2025, CMS has emphasized transparency, equity, value-based care, and digital transformation—continuing the trend from recent years. Understanding these focus areas, along with staying abreast of Policy Updates for medical billers, will help billers prioritize where to update processes, documentation, and compliance checks.
Key Updates in the 2025 Physician Fee Schedule (PFS)
The PFS dictates how Medicare pays physicians and other healthcare providers. For 2025, there are several important changes:
Conversion Factor Reduction
CMS has slightly reduced the conversion factor for 2025 from $33.89 to $32.94, a move that will impact reimbursement for most providers. Though small, this drop may have significant implications depending on service volume and specialty.
What Billers Should Do:
Review your practice’s top-billed CPT codes and recalculate reimbursement rates to anticipate revenue fluctuations, updating forecasting models accordingly.
Evaluation and Management (E/M) Services Changes
CMS continues to refine E/M documentation and coding requirements. In 2025:
- Time-based coding is being simplified for certain settings.
- Critical care and prolonged services codes have updated definitions and documentation rules.
- CMS encourages use of medical decision-making (MDM) criteria where appropriate.
Tip:
Coordinate with clinicians to ensure that documentation supports selected E/M levels. Train billing staff on recognizing documentation that meets time-based or MDM criteria.
Telehealth Policy Extensions
CMS has extended many telehealth flexibilities through the end of 2025, including:
- Expanded list of eligible services
- Allowance for telehealth in urban areas and patient homes
- Continued use of audio-only services for behavioral health
However, post-2025, permanent policies may look different.
Reminder:
Stay vigilant about place-of-service (POS) codes and modifier requirements for telehealth claims to avoid denials.
Quality Payment Program (QPP) Changes for MIPS Participants
For billers in practices participating in the Merit-based Incentive Payment System (MIPS), 2025 brings several noteworthy changes.
Higher Performance Threshold
The performance threshold for MIPS has increased again, making it harder for providers to avoid penalties. The 2025 threshold is now 80 points, up from 75.
New MIPS Value Pathways (MVPs)
CMS is rapidly transitioning to MVPs as the future of MIPS. In 2025:
- 10 new MVPs have been introduced, bringing the total to 20.
- MVPs offer condition- or specialty-specific tracks that align quality reporting with clinical relevance.
eCQMs and Digital Quality Measures
The move toward fully digital quality reporting is accelerating. CMS is phasing out traditional submission methods in favor of electronic Clinical Quality Measures (eCQMs) and FHIR-based digital measures.
What This Means for Billers:
The medical billing teams must collaborate with quality and IT departments to ensure EHRs are capturing and transmitting accurate data for performance scoring.
Medicare Advantage (MA) and Part D: Star Ratings and Risk Adjustment
CMS continues refining how Medicare Advantage plans are scored and reimbursed. This impacts providers through:
New Risk Adjustment Model (V28)
CMS is transitioning to V28 of the CMS-HCC Risk Adjustment Model in 2025. This model:
- Uses ICD-10 codes differently, with increased scrutiny on coding specificity
- Drops certain HCCs used in prior models
- Places more emphasis on encounter accuracy
Impact on Billers:
Accurate diagnosis coding is more critical than ever. Encourage providers to document conditions thoroughly and consistently. Invest in CDI (Clinical Documentation Improvement) tools if possible.
Stricter Audit Standards
CMS is increasing RADV (Risk Adjustment Data Validation) audits to reduce improper payments. Fines and claw backs could result from overcoding or lack of supporting documentation.
Prior Authorization Reforms: CMS Final Rule on Electronic PA
One of the most welcomed 2025 CMS changes is in prior authorization (PA):
- CMS mandates electronic prior authorization via the FHIR standard for certain services.
- Payers must respond to PA requests within 72 hours (urgent) or 7 calendar days (standard).
- Implementation deadline for payers is January 2026, but providers should begin preparing now.
Medical Billers’ Role:
Coordinate with front-desk and intake staff to adopt FHIR-enabled systems. Map current PA workflows and identify bottlenecks that could delay billing.
Bundled Payment and APM Innovations
CMS is doubling down on alternative payment models (APMs). The ACO REACH Model and new bundled payment initiatives are gaining traction.
- Providers in these models must track episode-based costs and patient outcomes.
- Some payment bundles include performance-based bonuses—or penalties.
Key Billing Consideration:
Understand how your organization is participating in APMs. Align billing practices with episodic care tracking to ensure timely, accurate claims.
Changes to Covered Services and Codes
Each year, CMS updates the list of covered procedures, screenings, and preventive services. In 2025:
- New CPT/HCPCS codes for emerging technologies like AI-driven diagnostics and remote therapeutic monitoring
- Expanded coverage for behavioral health, including marriage and family therapists (MFTs) and mental health counselors (MHCs)
- Certain low-value services may be removed from coverage
Next Steps:
Update chargemasters and scrubbers to reflect new covered services. Communicate updates to clinical teams to prevent billing for non-reimbursable services.
ICD-10-CM/PCS Coding Updates
ICD-10 updates typically take effect October 1 each year, but billers should start preparing early. For 2025:
- Dozens of new diagnosis codes are introduced, especially around social determinants of health (SDOH), long COVID, and obesity
- Procedure code revisions focus on advanced surgical techniques and novel devices
Strategy for Success:
Schedule coder training in mid-year. Validate your encoder and billing software reflects the October 2025 changes before Q4.
Compliance and OIG Watchlist Updates
CMS and the Office of Inspector General (OIG) have increased their focus on:
- Telehealth fraud
- Upcoding E/M levels
- Improper use of modifiers (especially 25 and 59)
- Inaccurate place of service codes
- Overuse of outpatient procedures in non-approved settings
Biller’s Responsibility:
Conduct internal audits regularly and collaborate with compliance teams to ensure that billing policies align with clinical intent and CMS regulations.
Tips to Prepare Your Team
The 2025 CMS updates are extensive—but not unmanageable. Here are practical steps to get your team ready:
Conduct a Billing Audit:
Identify any areas where your practice may be vulnerable to denials or overpayments. Use 2024 data to guide improvements.
Update Training Materials:
Ensure all billing and coding staff receive updated documentation and attend refresher sessions, especially around E/M changes, telehealth, and risk adjustment.
Review and Revise Workflows:
Streamline billing processes to incorporate new documentation, prior authorization, and submission timelines.
Check Vendor Readiness:
Confirm that your billing software, clearinghouse, and EHR vendors are aligned with 2025 changes, including telehealth codes, ICD-10 updates, and electronic PA requirements.
Communicate with Providers:
Engage clinical staff early. Provide easy-to-read guides summarizing the billing and documentation implications of policy changes.