Blog Post

2021 physician payment rules have changed—again

By Daniel Kuzmanovich

February 24, 2021

    The biggest headline you might have missed: The physician payment crisis has been averted, for now. 

    It was easy to overlook as it came late in December 2020, but as part of the stimulus bill (the Consolidated Appropriations Act, 2021), Congress intervened to "support physicians and other professionals in adjusting to changes in payment for physicians' services during 2021."

    The 2021 Medicare Physician Fee Schedule Rule: What you need to know

    At least for calendar year (CY) 2021, this legislation mitigates much of the impact the Medicare Physician Fee Schedule (MPFS) final rule was supposed to have. There will still be some specialties that will see slight decreases or slight increases in their Medicare reimbursement. But the changes will be on a much smaller scale than the significant cuts and increases expected. 

    What was supposed to happen

    The combined impact of the payment rate updates and E/M code changes in the 2021 MPFS final rule was essentially a redistribution of physician payment: shifting reimbursement from procedural specialties to more time-intensive medical specialties (including primary care). Some surgical specialties were facing a cut of almost 10% of their Medicare reimbursement, while other medical specialties—such as endocrinology—were slated to see an increase of 15% or more. 

    And all of this came at a time when provider organizations saw their margins evaporate because of the enduring Covid-19 pandemic and ongoing recession. 

    The final rule raised several questions, but the biggest one for physician executives was, "What to do about physician compensation?" Leaders fundamentally had two options:

    1. Transmit the market: Follow the wRVU changes so that proceduralists see less and medical specialties see more.

    2. Protect providers from market forces: Don't follow the Medicare changes and pay providers based on previous wRVU productivity with a method for "settling up" later.

    The 2 biggest changes to MPFS for CY 2021

    According to CMS, "the Consolidated Appropriations Act, 2021 modified the" MPFS for CY 2021. While there were other changes, the two biggest ones were:

    • A 3.75% increase in MPFS payments for CY 2021. This change increased the overall amount of reimbursement a physician service will receive this year from what it would have received under the final rule.
    • A delay in the implementation of the inherent complexity add-on code for evaluation and management services (G2211) until CY 2024. By pushing this code's usage out a few years, Congress decreased the swing of dollars from procedural to medical specialties.

    When combined, these changes reduced both the cuts and the increases. If a procedural specialty was slated to see a 10% cut under the final rule, the congressional mitigation means that specialty care is more likely to see a 4% cut. This isn't ideal, but it's much more manageable for physicians, advanced practice providers (APPs), and executives.

    What this means

    In the short term, this should come as a major relief for most physician executives. While there are still some cuts and increases, the impact of the cuts has been significantly reduced. The legislation gives physicians, APPs, and provider organizations a better chance to manage the impacts of Covid-19 and the recession. 

    But, the stimulus bill did not make the MPFS changes go away long term. This was a one-time adjustment and a postponement. 

    What executive should know and do

    • This is a delay, not a reprieve … for now. As it stands, this is a delay of the impact until future years. The choices, strategies, and compensation plans executives scrambled to create should not be eliminated. Save them in a safe place you'll remember. Executives should take the first half of 2021 to continue refining their physician compensation plans and educating their physicians and APPs.
    • Reconsider the big picture. When the final rule dropped, provider organizations had to react with terrific speed. Now, executives can look at the changes from the 2021 final rule in light of other industry forces—site-of-care shifts, unaffordability challenges, and a new presidential administration with similar ambitions pertaining to value-based payment models and cost of care—and consider their strategy and compensation plans more holistically.
    • Don't count on this again. It would be an understatement to say the congressional mitigation was very unexpected. The industry hasn't seen an intervention like this since before MACRA passed in 2014 and should not bank on it happening again.
    • All eyes should be on the 2022 MPFS Proposed Rule. When the proposed rule for 2022 comes out in late summer/early fall of 2021, we'll learn a lot about the new CMS and presidential administration. But what changes—if any—CMS makes to the 2021 MPFS Final Rule will tell us a ton about how the next four years could look.

    Learn more: Unpack how QPP impacts your Medicare reimbursement

    money

    The 2015 Medicare Access and CHIP Reauthorization Act (MACRA) set annual baseline payment updates for clinicians and established the QPP. The first performance year began on January 1, 2017. Performance affects payment two years later, so 2019 was the first year clinicians began to see payment adjustments. CMS will continue to evolve the QPP through annual updates in the Medicare Physician Fee Schedule (MPFS) regulations.

    Download our report for a crash course on how QPP impacts your Medicare reimbursement.

    Download Now

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