2021 Changes in CMS Physician Fee Schedule and Medicare Reimbursements

Telehealth is here to stay: and its impact extends to a doctor’s paycheck.

Ever since March 2020, medical professionals have come to understand that the only constant is change. This applies to reimbursements, which of course captures the close attention of physicians everywhere.

Cyclical changes for reimbursements aren’t new. Every year, the Centers for Medicare and Medicaid Services (CMS) review the Current Procedural Terminology (CPT) codes in accordance with their Work Relative Value Units (wRVU). This is also known as the Physician Fee Schedule. 

The review determines if changes need to be made based on factors, such as skill and training, of certain procedures. These reviews directly relate to physician compensation and medicare reimbursements. 

One major change made during the review was a status change for many telehealth CPT codes from temporary to permanent. 

These include:

• Home visits and established patients (99347-99348)
• Prolonged services (G2212)
• Psychological and neuropsychological testing (96121)
• Group psychotherapy (90853)

This change in status is evidence of a major shift in the medical field brought on by the effects of COVID-19. Aside from code statuses, other changes that were made have a substantial impact on physicians of all specialties. 

Read on to learn more about changes in physician work RVU and medicare reimbursement.

Physician Fee Schedule Changes

Physicians who work for medical groups and health organizations may get paid in work RVUs. These patient codes are based on productivity, skills, malpractice risks and more. Each CPT code has an established work RVU, which translates to compensation. The work RVU for each code is found in the Physician Fee Schedule and is updated annually by the CMS. 

The CMS review of the Physician Fee Schedule made some major changes and some minimal changes to certain CPT code work RVUs. 

Here are a few codes which have had changes within the 2021 Physician Fee Schedule:

Here is how compensation is translated using work RVUs:

• Physicians are paid per CPT code based on the work RVU.
• A physician may be paid $50 per 99213 code. 
• The $50 is multiplied by the 2021 work RVU of 1.30.
• This means that the physician is compensated $65. 

In 2020, the physician would have only been compensated $48.50 because the work RVU was lower. Although it may be confusing, this is extremely important to consider when it comes to physician contracts. Compensation should be in accordance with the 2021 fee schedule and contracts should be updated to reflect this. 

Medicare Reimbursement Changes

The Medicare statutes contain a budget neutrality clause. Essentially, any increase in one area of the budget means that another area of the budget will need to be decreased. The CMS has enacted that the Medicare reimbursement conversion will decrease from $36.0896 to $32.4085. 

Using the same codes as above, here is how Medicare reimbursements will change:

As you can see in the table, some codes—such as 99212 and 99213—have substantial increases in medicare reimbursement. Others, such as 99204, have reimbursement decreases. Using the same example from above, a 99213 code, in 2021, would result in a Medicare reimbursement of $63.52. 

Less common specialties may have much higher increases or much lower decreases than some of the more general specialities. 

Check out the CMS final rule for more information on medicare reimbursements. 

Physician Compensation Considerations for 2021

While the above may have been an overload of information, it’s important to look into how you, as a physician, will be impacted by the Physician Fee Schedule change. Many physicians are compensated, at least partially, based on work RVU rates. Some physicians may see an increase of compensation while others may see a decrease. This may entirely depend on your compensation agreement. Be sure to review your contract to understand just how work RVUs are considered in your compensation rates.

CMS Administrator Seema Verma said, “This finalized policy marks the most significant updates to E/M codes in 30 years” in a December 1, 2020 announcement. Although many physicians are receiving an increase in compensation, there is also the issue of Medicare reimbursement. 

Because reimbursement rates are also rising, physicians fear a loss of patients or decrease in care that patients receive. This is especially important for those who have to see specialists, as specializing physicians are seeing some of the biggest compensation decreases and reimbursement increases. 

Overall, it is imperative that physicians remain vigilant about their contractual compensation and understand what the change in Physician Fee Schedule means for them. Many health facilities have not yet applied the 2021 changes, giving themselves time to plan for how to adapt. Physicians should speak to administrators for more information if they have not yet already received it.

Physician Contract Review Services

If you are concerned about how the CMS Physician Fee Schedule change is going to affect your contract, get in touch with a dependable physician contract review service such as Contract Diagnostics. We have a long and successful track record of successful physician contract reviews and negotiations. 

Here are some of the services that we provide:

• Compensation and benefit review
• Compensation benchmarks
• Contract education
• Contract negotiations

Don’t stay in the dark about whether your contract is up-to-date or if you are paid fairly.At Contract Diagnostics, we have the resources and knowledge to make sure your contract is exactly the way you want it.
To get in contact with our team, give us a call at (888) 574-5526 or visit our website: https://contractdiagnostics.com