2100 Pages for 2021: Key Takeaways from CMS's New Physician Payment Rules

On December 1, the Centers for Medicare & Medicaid Services (CMS) officially released its annual Physician Fee Schedule (PFS) final rule for 2021. The rule updates payment policies and quality programs under Medicare’s Physician Fee Schedule (PFS) starting January 1, 2021. At 2,165-pages in length, the rule includes a long list of other important policy updates impacting everything from telehealth services to accountable care organizations to regulatory waivers tied to the COVID-19 national emergency.  

Due to the pandemic, this year CMS released the rule a month later than its usual late October or early November timeframe. Despite this delayed release, the rule will still go into effect on January 1, 2021, leaving less than a month for physicians to digest and prepare for the changes. 

In the midst of the pandemic, the holiday season, and usual end-of-year business activities, that creates a challenging compliance timeline for physician groups and healthcare organizations.  With that in mind, here are my key takeaways from the rule (in less than 2,100 pages):

• The final rule makes only minor changes from the August 2020 proposed rule. CMS released its proposed 2021 PFS rule in early August and following the public comment period, released this final rule without making any major wholesale changes. This happened despite heavy lobbying from physician trade associations and medical societies against some of the proposed policies (including the cut in the conversion factor). Considering that the later-than-usual December 1 release of the rule only leaves a month to prepare for implementation, the lack of major changes from the proposal should at least help us get through the 2,100 plus pages a little quicker.

• CMS is moving forward with its most significant office visit documentation and payment system reforms since the 1990s. In the 2020 PFS final rule that was released last year, CMS finalized significant changes to the five-level documentation, coding, and payment system for Medicare Evaluation and Management (E/M) outpatient office visits. Due to 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 confirmed again that those changes will take place, while refining some of guidance and payment policies. Overall, CMS is adopting the new coding structure and payment amounts for the E/M codes as recommended by the American Medical Association’s CPT Editorial Board. This includes scrapping the 1995 and 1997 documentation guidelines for a new system where level code selection will be based on either medical decision making or time. In terms of reimbursement, established patient office visits (levels 2-5) will see over 10 percent payment rate increases, while new add-on codes for complex patient visits (G2211) and prolonged visits (G2212) will offer additional opportunities to increase payment for these visits. 

• The office visit payment rate increases will trigger a 10 percent across-the-board rate cut next year. Medicare law established by Congress requires overall Medicare PFS spending to be “budget neutral.”  Thus, to offset the significant increases for the E/M visit codes, the rule also finalizes a 10.2 percent “across-the-board” payment cut for all physician services next year (reflected via a 2021 conversion factor of $32.41, a decrease of $3.68 from the 2020 conversion factor of $36.09).  As a result, certain specialists and surgical providers who do not bill E/M services will see significant Medicare payment cuts next year. Understandably, many physicians strongly oppose these payment cuts and after failing to convince CMS to reverse this proposal, have now turned to lobbying Congress. Indeed, within hours of the release of the final rule, a coalition of organizations representing more than one million physicians and nonphysician providers had already written Congress asking them to include legislation in any year-end package to override these cuts.

• CMS will make only minor changes to the MIPS program next year. In an effort not to overburden healthcare providers as they continue to respond to the pandemic, CMS said that it is trying to “limit the number of significant changes to the Quality Payment Program in 2021.”  For the 2021 Merit Based Incentive Payment System (MIPS), CMS will increase the overall scoring performance threshold from 45 to 60 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%. CMS also reiterated that due to the pandemic it would delay the initial transition to the MIPS Value Pathways (MVPs) participation framework until at least 2022.  

• CMS is permanently expanding the list of covered telehealth services, but not permanently eliminating its restrictive patient geographic and site location rules. In a press release announcing the rule’s publication, CMS said it was finalizing a “Permanent Expansion of Medicare Telehealth Services.”  On the list for permanent expansion include more complex office visits, prolonged services, behavioral health services, and home visits.  However, while it is true that the rule permanently expands the list of telehealth services covered by Medicare beyond the COVID-19 emergency period, it fails to permanently extend other key pandemic telehealth policies.  As noted by CMS in the press release, “Medicare does not have the statutory authority to pay for telehealth to beneficiaries outside of rural areas or, with certain exceptions, allow beneficiaries to receive telehealth in their home.” Thus, despite the overly optimistic press release headline, it would still require an act of Congress to allow patients to continue to receive care at home and in non-rural geographic locations after the public health emergency ends.

Beyond these highlights, there are many other critical policy changes included in the final rule that will impact physician groups in 2021 and beyond. NextGen Healthcare clients interested to learn more about the final rule and how it might impact your practice can sign up for our next Health Reform Simplified webinar on December 17 HERE.