CMS Releases Proposed Rule for 2021 Physician Fee Schedule

On August 3, 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that includes proposals to update payment policies and payment rates for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2021. While the proposed rule predicts an almost 11% overall reduction in payments, the impact will not affect all physicians and specialties in the same manner. In fact, pain management specialists may realize a 7% increase overall in Medicare payments.

The Basis for the Change in Payment

The Social Security Act, that established Medicare, requires that increases or decreases in relative value units (RVUs) may not cause the amount of expenditures for the year to differ by more than $20 million from what it would have been in the absence of any changes. If the threshold is exceeded, adjustments are made to the dollar conversion factor (CF) to maintain budget neutrality.

For 2021, the primary reason for the adjustments is due to significant increases in the RVUs for the revised Office/Outpatient Evaluation and Management (E/M) services (99202-99215). The proposed rule confirms CMS’s intention to implement these new codes and finalize guidelines and payment rates. The increases are based on recommendations on resource costs from the AMA/Specialty Society RVS Update Committee (RUC), which AAPM participates in and advocates on behalf of its members. Since office/outpatient E/M services account for ~20% of overall expenditures, an increase in the value for these codes makes a substantial impact on the fee schedule. As a result, the proposed rule estimates a conversion factor (CF) of $32.26 which is a $3.83 reduction from the 2020 CF of $36.09.

As a result, pain specialists who provide multimodal care, including a mix of initial and follow up evaluations in addition to the procedures they perform, are likely to see greater reimbursement for the E/M visits and greater overall practice revenue. Nevertheless, despite CMS’ goal of reducing reimbursements for procedures, the AAPM representatives working with RUC will continue to fight for appropriate procedure reimbursement and challenge any and all attempts to reduce these payments in our specialty. 

Impact on Physicians and Specialties

The payment impacts in the proposed rule reflect averages by specialty based on Medicare utilization and classifications. Specialties with a greater proportion of E/M services may see increases in payments while those specialties that are primarily procedural-based may see decreases.

AAPM President Ajay D. Wasan, MD MSc, commented, “For some time, CMS policies and reimbursement decisions have effectively shifted reimbursement from procedures toward more comprehensive care-based services such as E/M services. This is reflected in the current plan to not apply the E/M increases to those E/M services included in surgical procedures with a 10 and 90-day global period. In other words, pain specialists who practice multimodal care and integrate the use of procedures, medications, physical therapy, and other modalities are likely to see an increase in practice revenue from their E/M services. These changes will encourage physicians to review treatment plans, establish long term goals, and focus more on patient engagement.”

Although pain medicine physicians do perform procedures, office visits comprise a significant portion of the typical services offered by comprehensive pain medicine practices. Therefore, the predicted average for pain medicine specialties reflect an increase in Medicare payments. The payment impact for an individual physician could vary from the average and would depend on the mix of services he or she furnishes.

Dr. Wasan continued, “The current trend by pain medicine specialists to offer multimodal services with an appropriate mix of E/M services not only improves patient care, it also supports the financial health of physician practices.”

Budget Neutrality and the Public Health Emergency

The AMA and many specialty societies had proposed to CMS that the budget neutrality adjustment should be waived considering the COVID-19 public health emergency. While the proposed rule did not accept that recommendation, comments on the proposed rule will be accepted until October 5, 2020. In the absence of positive action by CMS, Congress can waive the budget neutrality payment reductions. Historically, Congress has eliminated reductions in physician payments based on the prior formula for neutrality adjustments known as the Sustainable Growth Rate (SGR).

AAPM leadership and staff will continue to review possible actions in collaboration with the AMA and other specialties societies to reduce the financial hardship on physicians imposed by the negative change to the dollar conversion factor.

View text of the proposed rule. 

Access the CMS fact sheet to learn more.