CMS Finalizes 2021 Physician Fee Schedule, Including E/M Changes

After some delay due to the COVID-19 pandemic, CMS has released the final rule for the 2021 Medicare Physician Fee Schedule.

The final rule unveiled by CMS yesterday evening will dictate how much Medicare physicians get paid for delivering care starting January 1, 2021. In the 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.

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.

The increases drew ire from healthcare stakeholders when first proposed by CMS in early August. Some industry groups argued that the increases would trigger the budget neutrality requirement, causing CMS to reduce the RVUs for other services, including specialists who have been on the frontline of the COVID-19 pandemic, such as critical care and emergency medicine providers.

But CMS said in the final rule that the 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.

The agency also believes the final rule will also aid other clinicians by reducing E/M documentation burden through a more streamlined reporting process for E/M levels.

“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 stated in the rule’s announcement. “In the past, the system has rewarded interventions and procedures over time spent with patients – time taken preventing disease and managing chronic illnesses.”

Administrator Verma also touted the final rule’s new telehealth provisions, including the addition of more than 60 services to the Medicare telehealth list.

The services added to the list will be covered and reimbursed by Medicare after the COVID-19 public health emergency ends, allowing greater access to the virtual care services, especially by beneficiaries in rural areas, CMS explained.

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.

The telehealth expansions in the final rule are a major win for the Trump Administration, which has promised providers that it would support virtual care transformations made to adjust care delivery during COVID-19 and widespread shelter-in-place orders.

“During the COVID-19 pandemic, actions by the Trump Administration have unleashed an explosion in telehealth innovation, and we’re now moving to make many of these changes permanent,” said HHS Secretary Alex Azar. “Medicare beneficiaries will now be able to receive dozens of new services via telehealth, and we’ll keep exploring ways to deliver Americans access to healthcare in the setting that they and their doctor decide makes sense for them.”

Industry groups are also welcoming changes to the Medicare telehealth list, but providers are still critical of 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.

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 for public display.

Readers can also view a CMS fact sheet on the rule here.

CORRECTION 12/07/2020: A previous version of this article stated that the conversion factor was $31.41. That was incorrect. The article has been updated to reflect the correct conversion factor of $32.41.