How CMS Is Changing Physician Payments in 2021

Thoughtware Alert Jun 24, 2020
Wealth advisor assisting in the health care field.

CMS announced in the calendar-year 2020 Medicare Physician Fee Schedule (PFS) file rule that it will implement changes to office visit Evaluation and Management codes for the 2021 calendar year.

The expected 2021 PFS changes include documentation and code selection updates as well as updates to work RVU (wRVU) values. This alert will focus on the wRVU value updates that affect code ranges 99201 to 99205 (new patient visit codes) and 99211 to 99215 (established patient visit codes). For more information related to documentation and code selection updates, view our recent webinar.

Proposed Code Changes & wRVU Increases

CMS announced its plan to remove code 99201 from the new patient visit code range and increase the wRVU values for the remaining new patient and established patient visit codes as outlined in the tables below:

CPT Code

CPT Code

The average increase in wRVU values is 8 percent, or 0.17 wRVUs, for new patient codes and 28 percent, or 0.33 wRVUs, for established patient visit codes.

CMS is required to keep the PFS budget neutral, which means that increasing the wRVU values for these nine codes would require CMS to decrease wRVU values for other CPT codes, reduce the conversion factor, or some combination of both.

Effect of PFS Change

For independent groups, the change isn’t yet known but can be predicted based on a group’s relative use of CPT codes. In general, it’s reasonable to expect physicians and clinics that are heavy users of the above codes to be favorably affected by the above changes, even if the budget-neutral offsets aren’t yet known.

For hospital-owned physician practices, the overall financial effect is more complicated. The PFS is a key point of reimbursement and reference thereto by certain commercial payors. Thus, changes to the PFS will change overall levels of reimbursement, and the mix of provider specialties within the group will determine the relative favorability of the pending change. However, the PFS’ underlying wRVU values are often used in compensation plans as well. This means that an increase in wRVU values for these codes also will have an increase in compensation for certain physicians. As it’s often the case that compensation amounts per wRVU exceed the conversion factor (approximately $36), an increase in wRVU values may have the effect of increasing provider subsidies.

The overall financial effect will therefore depend on both the calendar-year 2021 PFS and your organization’s compensation structure. To promptly take action as necessary, we recommend analyzing work effort and your compensation arrangement to evaluate various scenarios. CMS hasn’t yet indicated what method it would implement to manage budget neutrality. However, this information is expected in the 2021 PFS proposed rule, which is due out in mid-July 2020.

We’ll continue to monitor this situation and send updates as they become available. We expect to host a webinar to review the proposed changes at the end of July. Subscribe to BKD Thoughtware® to receive notifications about the webinar and get the most up-to-date information. If you have questions or would like to speak to one of our physician industry specialists, reach out to your BKD Trusted Advisor™ or use the Contact Us form below.

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