Source: Centers for Medicare & Medicaid Services (CMS) Final Rules and OPPS/HCPCS Updates, 2025

The Centers for Medicare & Medicaid Services (CMS) has finalized major updates to the 2025 billing code structure, effective January 1, 2025. These changes impact payment rates, outpatient procedures, mental health services, and telehealth. The updates are intended to modernize Medicare, expand digital care options, and align reimbursement with evolving care models. Providers must review these changes now to avoid billing errors, compliance issues, and delayed revenue.

Physician Fee Schedule Updates

In its final ruling for the 2025 Medicare Physician Fee Schedule, CMS confirmed a 2.93% reduction in the Medicare conversion factor, lowering it from $33.89 to $32.35 per RVU. A 0.02% budget neutrality adjustment was also applied to RVUs for covered services. This change directly affects reimbursement for office visits, diagnostics, and certain outpatient procedures. Practices still using outdated fee schedules should reconfigure billing software immediately.

Mental Health Coding Expansion

To support behavioral health integration, CMS introduced new HCPCS codes for digital mental health tools and interprofessional consultation services. These codes allow providers to bill Medicare for collaborative care planning and technology-enabled treatment. This expansion represents a significant step toward recognizing the role of tech-assisted therapy and coordinated mental health care in Medicare-covered services.

Permanent Telehealth Flexibilities

CMS has made several telehealth flexibilities permanent for 2025. These include continued coverage of audio-only visits for opioid treatment programs (OTPs) when clinically appropriate. CMS also extended coverage for new care management codes related to recovery coaching, peer support, and community resource navigation within OTPs.

Hospital Outpatient & ASC Code Revisions

In the April 2025 OPPS Update, CMS introduced:

• 21 new Proprietary Laboratory Analyses (PLA) codes (0531U–0551U) for genetic testing, pathology, and advanced diagnostics
• Reassigned status indicators and APC groupings for device-related codes, such as C1739 (tissue marker probes) and G0183 (cardiac imaging software)

These adjustments better reflect clinical intensity and cost, requiring outpatient departments and ASCs to update billing processes.

Mid-Year HCPCS Changes (July 2025)

CMS’s July 2025 OPPS update included:

• Seven new HCPCS codes for drugs, radiopharmaceuticals, and biologics (with pass-through payment status)
• Removal of eight outdated codes effective June 30, 2025
• Retroactive adjustments to status indicators for J1171 and J9074

Outpatient departments should update their chargemasters immediately to stay compliant.

Ongoing Quarterly HCPCS Updates

CMS continues to issue quarterly HCPCS Level II updates to reflect new drugs, technologies, and policy decisions. The Q2 2025 release included newly approved drug codes reviewed through MEDCAC and the MEARIS portal. Providers are advised to monitor CMS bulletins regularly to ensure billing systems remain up to date.

Future Changes on the Horizon

CMS is currently reviewing structural reforms to billing code development. Notably, RFK Jr. has proposed shifting CPT and HCPCS code authority from the AMA to CMS itself, which would centralize governance of U.S. billing codes.

Separately, the Trump administration has floated proposals to raise Medicare physician pay by 3.8% in 2026 for providers engaged in value-based care. If finalized, this could offset the downward trend in conversion factors.

Key Takeaways for Providers

• Update billing software with the new $32.35 conversion factor
• Train staff on new behavioral health and digital mental health codes
• Review telehealth policies for OTP and peer support services
• Refresh chargemasters using the April and July 2025 OPPS updates
• Monitor CMS’s quarterly HCPCS announcements to stay compliant