CMS Recalculates Medicare Physician Fee Schedule Rates for 2021

CMS has updated Medicare Physician Fee Schedule rates for 2021 after a COVID-19 stimulus package mitigated budget neutrality cuts finalized in a December rule.

The Consolidated Appropriations Act, 2021 passed by Congress on Dec. 21, 2020, enacted a 3.75 percent increase in Physician Fee Schedule payments for all providers in 2021 to “support physicians and other professionals in adjusting to changes in payment for physicians’ services during 2021.”

The $1.4 trillion COVID-19 stimulus package also suspended payments for Healthcare Common Procedure Coding System (HCPCS) code G2211 for three years, which also impacted the budget neutrality requirement for the Physician Fee Schedule.

G2211, an add-on code for the complexity inherent to evaluation and management (E/M) visits, accounted for about $3 billion, or three percent, of spending in the Medicare Physician Fee Schedule, according to the American Medical Association (AMA).

The delay in implementing the code will reduce the budget-neutrality adjustment, and as a result, some specialists will no longer face significant rate cuts as laid out in the 2021 Medicare Physician Fee Schedule final rule, the Association said.

The rule finalized cuts of up to 10.2 percent for certain specialties and services because of a budget neutrality requirement that forces any significant increases in Physician Fee Schedule payments to be offset in other areas.

CMS had decided in the final rule to boost rates for E/M services that support primary care and chronic disease management, which triggered the budget-neutrality adjustment factor for 2021.

The agency reported that the final rule decreased the Physician Fee Schedule conversion factor by $3.68 to $32.41 to reflect a statutory update of 0.00 percent and the adjustment to account for changes in relative value units and expenditures that would result from finalized policies.

“This finalized policy marks the most significant updates to E/M codes in 30 years, reducing burden on doctors imposed by the coding system and rewarding time spent evaluating and managing their patients’ care,” CMS Administrator Verma said at the time. “In the past, the system has rewarded interventions and procedures over time spent with patients – time taken preventing disease and managing chronic illnesses.”

Specialty providers have opposed the rate cuts, which would have disproportionately impacted certain specialties and services during the COVID-19 pandemic.

“While the COVID-19 pandemic rages and wreaks havoc on the health care system, providers continue to contend with overflowing hospitals and the financial impact of the spring-summer government-recommended shutdown of most non-urgent medical care. Against this backdrop, double-digit Medicare cuts will be devastating for patients, communities and providers,” the American College of Radiology (ACR) said in a December statement.

ACR was one of nearly 400 medical organizations to call on Congress to stop the rate cuts as part of a year-end legislative package. Over 300 members of Congress also sought to prevent the cuts by waiving the budget neutrality adjustment in the 2021 Medicare Physician Fee Schedule or mitigating the cuts.

In the Consolidated Appropriations Act, 2021, Congress also suspended the two percent payment adjustment for the statutory Medicare sequester through March 31, 2021, and reinstated the 1.0 floor on the work Geographic Practice Cost Index through 2021.

CMS updated the Physician Fee Schedule as of Jan. 7 to reflect the changes in the COVID-19 stimulus package, according to a recent MLN Connects bulletin.

The revised conversion factor for the Physician Fee Schedule in 2021 is $34.89, which is 3.3 percent less than the conversion factor in 2020 but more than the $32.26 finalized in the Physician Fee Schedule rule for 2021.

Providers can view revised payment rates in the Downloads section of the CY 2021 Physician Fee Schedule final rule (CMS-1734-F) webpage.