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On December 2, 2020, CMS posted the final Medicare Physician Fee Schedule (PFS) for the 2021 calendar year (CY). The final 2021 PFS changes include documentation and code selection updates, updates to work relative value unit (wRVU) values, an update to the conversion factor, extension of reimbursement for telehealth services, quality reporting factors related to accountable care organizations, and various other specialty-specific updates. For more information related to the final rule, see the CMS Fact Sheet.

What Physician Enterprise Leaders Need to Know

  1. wRVUs for office/outpatient E&M visits finalized as proposed. CMS finalized the proposed increases to the evaluation and management (E&M) visit wRVUs. It further finalized wRVU updates to code sets that encompass similar characteristics or have historically been set in relation to E&M visit codes. Specialties of specific note in this regard include obstetrics, nephrology, psychiatry, internal medicine, gerontology, emergency medicine, therapy services, and psychotherapy. A detailed chart of the specific CPT codes affected is attached at the end of this article.
  2. Conversion factor decreased by 10 percent. As the PFS is required to be budget neutral, the effect of CMS’ wide-reaching increase in wRVUs is a mandatory offset in the overall per-unit reimbursement rate (the conversion factor) for RVU payments. Therefore, the final rule reduces the conversion factor from $36.09 in CY 2020 to $32.41 in CY 2021, a decrease of $3.68 per RVU. Similarly, the conversion factor for anesthesia services is reduced from $22.20 to $20.05, a decrease of $2.15 or 9.67 percent. 
  3. Telehealth services expanded on permanent and temporary bases. CMS finalized nine codes, as proposed, for permanent addition to Medicare telehealth services. CMS further expanded the telehealth list by finalizing 62 codes temporarily. The 62 temporary codes will remain on the telehealth list through the end of the year in which the public health emergency ends.

What You Need to Do

The overall financial effect of the RVU and conversion factor changes will depend on your organization’s distribution of clinical activity, payor contracts, and provider compensation structure. This will require an analysis specific to your organization to determine the effect and action imperative.  

The final rule will take effect January 1, 2021. Therefore, it’s imperative that organizations take prompt action as necessary to address potential financial effects. We recommend organizations:

  • Educate providers on coding changes
  • Analyze the effect of reference-based payor contracts
  • Analyze overall reimbursement effect to Medicare reimbursement
  • Analyze the amount and distribution on wRVU-referenced services arrangement pay
  • Take contracting or policy actions, as needed

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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