The 2021 Physician Fee Schedule is Finalized - Here are the Highlights

December 09, 2020 By: Quadax

New rule decreases payment conversion factor; increases telehealth expansion, E/M services

Before we dive into the finalized fee schedule, it’s important to understand how Medicare pays for physician services and how the relative values of medical services are translated into fee schedule payment amounts.

Basically, the relative value of a procedure multiplied by the number of dollars per Relative Value Unit (RVU) is the fee paid by Medicare for the procedure. The Conversion Factor (CF) is the number of dollars assigned to an RVU. It is calculated using a complex formula that takes into account the overall state of the economy of the United States, the number of Medicare beneficiaries, the amount of money spent in prior years, and changes in the regulations governing covered services.

A decrease in the conversion factor in 2021

In the 2021 rule, CMS finalized a conversion factor of $32.41, which is a decrease of $3.68 compared to the previous year’s conversion factor.

The decrease stems from the statutory requirement that the Physician Fee Schedule remains budget neutral in the event revisions to the relative value units (RVUs) that determine physician reimbursement result in changes of more than $20 million.

In 2021, the Physician Fee Schedule is slated to experience expenditures changes of this magnitude because of revisions to the RVUs for evaluation and management (E/M) services, CMS explained.

Increases for common office/outpatient E/M services

The agency finalized increases in RVUs for common office/outpatient E/M services, including maternity care bundles, emergency department visits, end-stage renal disease capitated payment bundles, and physical and occupational therapy evaluation services.

These increases are meant to support primary care clinicians who are facing a growing number of Medicare beneficiaries, including many with one or more chronic conditions. CMS also believes the final rule will aid other clinicians by reducing the E/M documentation burden through a more streamlined reporting process for E/M levels. 

Increases for telehealth benefits

The agency also finalized a new category of telehealth benefits under the Physician Fee Schedule. The new Category 3 list will include telehealth services covered by Medicare during the public health emergency and through the calendar year in which the emergency declaration expires.

So far, the Category 3 list includes services like home visits for established patients, emergency department visits levels one through five, hospital discharge day management, critical care services, and nursing facility discharge day management.

However, CMS walked back the proposed frequency limitation for subsequent nursing facility visits furnished via telehealth from one visit every three days to one visit every 14 days.

The agency also clarified in the final rule that licensed clinical social workers, clinical psychologists, physical therapists (PTs), occupational therapists (OTs), and speech-language pathologists (SLPs) can deliver brief online assessment and management services, as well as virtual check-ins and remote evaluation services. The final rule includes two new codes to support billing for telehealth services delivered by the providers.

Additionally, CMS created a new code for audio-only telephone services based on support from industry stakeholders who have leveraged telephonic care during the pandemic. The code accounts for 11 to 20 minutes of medical discussion to determine the necessity of an in-person visit.

Providers are criticizing new RVUs for certain E/M services

“Unfortunately, the newly adopted office visit payment rates, and other payment increases finalized in today’s rule, are required by statute to be offset by payment reductions to other medical services covered by Medicare,” Susan R. Bailey, MD, President of the American Medical Association (AMA) said in a statement.

“This will result in a shocking reduction of 10.2% [percent] to Medicare payment rates in the midst of the worsening COVID-19 pandemic while physicians are continuing to care for record numbers of patients diagnosed with COVID-19 and trying to keep the lights on in their practices. These cuts will hurt all Medicare patients, particularly those seeking care for COVID-19 critical care and hospital visits that will be reduced dramatically,” Bailey stated.

The cuts are especially troubling for providers fighting COVID-19, according to Anders Gilberg, senior vice president of government affairs at the Medical Group Management Association (MGMA).

“While MGMA is appreciative of streamlined documentation policies and payment increases to physicians that primarily deliver office/outpatient E/M services, the 10% decrease to the conversion factor and resulting reimbursement cuts to many specialties is deeply troubling during a time when COVID-19 cases are skyrocketing and practices are scrambling to stay financially viable,” Gilberg said in an emailed statement. “We are disappointed that CMS decided to not provide the stability that physician practices require to meet patient needs during this unprecedented public health emergency.”

Some providers, including the AMA, are now requesting Congress to intervene by postponing or preventing payment reductions stemming from E/M payment changes in the final rule.

View the final rule

To view the complete final rule, click here. Please note that the final rule has not yet been published for public display in the Federal Register. The public will be able to comment on the final rule once it is published.

View a CMS fact sheet on the rule.

Quadax is committed to staying on top of payer changes. Our comprehensive, up-to-date library of claim processing rules and edits are updated bi-weekly by our Edits & Documentation Group (EDG). The Quadax EDG team of experts, who are knowledgeable in both billing and ANSI claim requirements, reference nationally recognized sources, including AMA, CPT guidelines, Medicare Physician Fee and more.

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