5 Key Takeaways from Medicare’s New 1,300 Page Physician Payment Regulation

On August 3, the Centers for Medicare & Medicaid Services (CMS) released its proposed 2021 Medicare Physician Fee Schedule rule. The 1,353-page rule proposes updates that would take effect on January 1, 2021 for Medicare’s physician payment system, Quality Payment Program, Shared Savings Accountable Care Organization (ACO) program, telehealth services program, and more. This year’s rule was highly anticipated by industry stakeholders because it includes important COVID-19 updates impacting both the current public health emergency and the permanent Medicare program.  

Following its release to the public, the proposed rule is now open for public comment for 60 days. Then, CMS will release its final rule before December 1 (later than usual this year due to the pandemic) ahead of its January 1, 2021 implementation date.  

With that tight timeline in mind, here are five key takeaways from the new 1,300+ page proposed rule that could have a major impact on physician groups:

1. It permanently adds to the list of covered telehealth services, but does not permanently change other restrictive telehealth rules.  

As recently promised by senior CMS and HHS officials and in compliance with President Trump’s recent Executive Order, the rule would permanently expand the list of telehealth services covered by Medicare beyond the COVID-19 emergency period. Services added include more complex office visits, prolonged services, behavioral health services, and home visits. The rule would also keep other services, including ED visits and nursing facility discharges, on the Medicare telehealth list for the remainder of the calendar year that the emergency ends. However, a more sweeping permanent extension of pandemic telehealth policies, including enabling patients to receive care at home and in any geographic location, requires Congressional action, and thus was not included in this rule. Regarding audio-only telephone visits, CMS said that it would not continue paying for them at the same rate as video visits after the emergency ends.  

2. It confirms that the previously finalized office visit documentation and payment system reforms will take effect in 2021.

In the 2020 Physician Fee Schedule final rule that was released last November, CMS finalized significant changes to the five-level documentation, coding, and payment system for Medicare Evaluation and Management (E/M) outpatient office visits.  Because of the significance of the changes and to allow the industry time to prepare for the transition, they were established with an implementation date of January 1, 2021.  In this rule, CMS reconfirmed that those changes will take place on January 1, 2021, while refining some of guidance and payment policies. This confirmation is significant, especially given the strong opposition to the changes by several key national medical specialty associations.

3. It significantly increases payment rates for E/M office visits, but offsets those increases with an across-the-board double-digit rate cut.  

In addition to changing the documentation and coding system, the E/M reforms will significantly increase the payment rates for the different levels of E/M office visits next year. Because Medicare law requires that overall Medicare physician fee schedule spending be “budget neutral,” to offset the E/M spending increases the rule also proposed an 11% “across-the-board” payment cut for all physician services next year (reflected via the 2021 conversion factor of $32.26, a decrease of $3.83 from the 2020 conversion factor of $36.09.) For certain specialists and surgical providers who primarily do not bill E/M services, this will result in significant Medicare payment cuts next year. In response, physician specialty associations and organizations have already denounced the proposals and will be lobbying hard over the next few months to try to get CMS or Congress to reverse the proposed double-digit payment rate cuts.

4. It makes only minor changes to the MIPS program in 2021 and delays the transition to Merit Based Incentive Payment System (MIPS) Value Pathways (MVPs) until 2022. 

In this rule, CMS said that it is trying to “limit the number of significant changes to the Quality Payment Program in 2021” so that “clinicians across the country continue to respond to the COVID-19 pandemic”. For the MIPS in 2021, CMS proposed to increase the overall scoring performance threshold from 45 to 50 points; decrease the quality performance category to be weighted at 40% (down from 45% in 2020); increase the cost performance category to be weighted at 20% (up from 15% in 2020); and maintain the Promoting Interoperability performance category weighting at 25% and the Improvement Activities performance category weighting at 15%.  Unsurprisingly, due to the pandemic CMS also delayed the initial transition to the MIPS Value Pathways (MVPs) participation framework from 2021 until at least 2022.  .

5. It makes major changes to the ACO quality measure set, reducing the total number of measures from 23 to 6.  

In an effort to continue to reduce “clinician burden,” CMS is proposing to revise and reduce the number of quality measures that Medicare Shared Savings ACOs are required to report. Starting with the 2021 performance year, the total measures ACOs would be scored on would decrease from 23 to six and the number of measures on which ACOs would be required to actively report would be reduced from 10 to three. However, ACO participants should note that a big part of this reduction is a decision by CMS to start counting the patient satisfaction CAHPS for ACOs survey as a single measure next year (instead of ten separate measures as it currently does.)  Also, in an effort to align ACO quality reporting with MIPS quality reporting, CMS is proposing to remove the CMS Web Interface from the MIPS data submission types for groups beginning with the 2021 performance year.

The rule is officially titled, “Medicare Program: CY 2021 Revisions to Payment Policies under the Physician Fee Schedule and Other Changes to Part B Payment Policies; Medicare Shared Savings Program Requirements; etc.” and it includes numerous other important regulatory changes that could impact physician groups in 2021 and beyond.  

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