Medical Practices Consulting / CMS Physician Fee Schedule and RVU Changes for 2021 – 7 Areas to Consider

CMS Physician Fee Schedule and RVU Changes for 2021 – 7 Areas to Consider

The Centers for Medicare and Medicaid Services (CMS) released its proposed rule for the 2021 Medicare Physician Fee Schedule (PFS) in August of this year. While we are still waiting with bated breath for the release of the final rule, which will hopefully be released the first week of December, it is anticipated there will be significant changes to the 2021 fee schedule that providers, and administrators alike, should anticipate and prepare for now.

The proposed rule introduced significant changes to the RVU’s in some cases, but especially for Evaluation and Management (E/M) codes.  It appears that CMS will increase the reimbursement for the core set of E/M codes; however, due to budget neutrality where there is an increase, there is a necessary cut.  Although many of the updates focus on increasing wRVU values for certain services, there is a mandatory offset in the overall per-unit reimbursement rate (Conversion Factor) for CMS payments. This amount has generally been flat or slightly increased over the last 10 years, usually ranging from $34-$36. The proposed change is expected to decrease the Conversion factor from $36.09 in CY 2020 to $32.26 for CY 2021.

Things to consider while we wait for the release of the final PFS:

  1. The increase in wRVU’s might have a positive effect for groups that have a high volume of E/M codes, especially for primary care groups including pediatrics. For all other groups (i.e. Specialists whose volume is mostly procedural-based, opposed to visit-based) may see their Medicare payments slashed by 6-9% in some cases due to the reduction associated with the Conversion Factor.
  2. It is imperative that all practices prepare an analysis of their top CPT code utilization once the fee schedule is published to see how the changes will affect your total revenue. Remember that many of the local managed care plan contracts are based on CMS rates.  For end of year planning, forecasting, and budgeting you need to know how these changes will affect your practice‘s revenue.
  3. Groups that compensate physicians based on RVU’s should take into account that although CMS’s wRVU value will change in 2021, the overall reimbursement may decrease. The effect of these changes should be analyzed to predict any major changes to provider total compensation. In addition, the annual statistics that many practices use to compare and contrast will no longer be valid going forward if they are not adjusted.
  4. Providers who work for a health system are usually compensated based on wRVU’s and should run an individual analysis to see how the changes might possibly affect your compensation.
  5. It is a possibility that due to the new RVU’s and collection practices, independent groups will need to analyze and revamp provider agreements prior to the beginning of the year as well.
  6. Please note the following link for the ACP which shows primary care and primary care subspecialty estimates for the overall effect of the 1/1/21 changes. For all other specialties please check with your local society.
  7. And last, but certainly not least, CMS’ changes to the requirements for documentation of E/M services will also take effect January 1st, 2021. Providers and groups that are not fully educated about these changes, can easily fall out of compliance due to the new requirements surrounding areas such as time-based encounters, medical decision making, etc. 

Major changes are on the horizon beginning January 1, 2021 just to add a little bit more stress to an already tumultuous year for the healthcare community.  We are monitoring this closely and will send out our analysis as soon as we have the information.  We will continue to keep you apprised of further developments as we find out.

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