On December 1, the Centers for Medicare & Medicaid Services (CMS) announced the 2021 Medicare Physician Fee Schedule (MPFS) Final Rule, thereby adopting nearly all the proposed rules identified in August. Key updates include the following:
- Initiation of updated evaluation and management (E&M) WRVU amounts for CPT codes 99202–99205 and 99211–99215. The resulting inflation of WRVUs for primary care and cognitive specialties will have major impacts on benchmarks and compensation planning.
- A new care coordination code (G2211, formerly known as GPC1X). CMS is only expecting 90% adoption of this code in the first year, which affected the conversion factor budget adjustment.
- An updated prolonged visit time code, G2212, to replace 99358 and 99359.
- A budget adjustment to the conversion factor, which is being reduced by 10.2% instead of 10.6%, from $36.09 in 2020 to $32.41 in 2021.
Dozens of other updates and revisions are codified in the new rule. We detail five of the most important strategic implications of these updates.
1. Medicare is shifting professional fee reimbursement away from procedural specialties and toward cognitive specialties and primary care.
The increase in relative value for E&M codes (table 1) and the decrease in the reimbursement value (figure 1) will result in a significant shifting of dollars across the specialty spectrum away from providers who spend their time in the hospital. This revenue shift will impact our industry in several ways:
- The industry’s ability to rely on productivity and revenue benchmarks will be hampered for two to three years (also due in part to COVID-19).
- Provider compensation will shift over the next two to three years in response to the specialty-specific revenue changes illustrated in figure 1; to a degree, this will vary by market.
- This shift is a clear next step along the path to an industry landscape dominated by value-based payment models.
2. Telehealth and virtual visits are here to stay.
The final rule extends many of the virtual visit types that have grown in prominence due to the pandemic. As consumers and providers alike have become more comfortable with this care model, it will become imperative for health systems to build and reinforce the infrastructure to deliver care in this way. The addition of codes allows for telehealth to have more reimbursable uses and means organizations can improve patient access.
List of key codes that CMS added to its permanent telehealth list:
- Prolonged Services: G2212
- Group Psychotherapy: 90853
- Neurobehavioral Status Exam: 96121
- Domiciliary, Rest Home, or Custodial Care Services: 99335
- Care Planning for Patients with Cognitive Impairment: 99483
- Home Visits: 99347, 99348
Learn more about ECG’s perspectives on the digital health revolution.
3. APPs are growing in importance.
The 2021 MPFS has increased the applicable scope of service for advanced practice practitioners (APPs). On top of the policy finalized under the May 2020 COVID-19 interim final rule, CMS made permanent the rule that will allow nurse practitioners, clinical nurse specialists, physician assistants, and certified nurse-midwives to supervise the performance of diagnostic tests in addition to physicians. Further, the allowance of “direct supervision” to be provided using real-time, interactive audio and video technology will afford APPs greater autonomy. The WRVU increase for E&M codes, particularly existing patient office visits, will further enhance APPs’ value and contributions. Consequently, organizations will need to consider how to deploy care teams to optimize the use of APPs.
4. Operational changes will be required.
The 2021 MPFS will precipitate a number of operational changes. The elimination of the history and exam criteria for coding E&M visits and the emphasis on medical decision-making or time is a departure from recent requirements. Organizations will have to educate staff and providers about the new documentation requirements and the process of substantiating E&M codes. Further, organizations will need to ensure that billing and coding of the add-on codes (G2211, G2212) is completed.
As telehealth continues to grow in importance, organizations must expand telehealth capacity to capitalize on the list of covered services. Organizations may need to develop infrastructure or clinical spaces to provide these services and review regulations in order to meet compliance requirements.
The operational changes will also extend to provider compensation. Medical groups paying providers based on the 2020 MPFS will need to develop “shadow models” and other parallel administration capabilities report how the 2021 MPFS will impact provider compensation. Revised workflows will likely be needed to maintain productivity reports from two different fee schedules.
5. Medical groups will be challenged by this update.
The 2021 MPFS update represents a significant challenge to medical groups on multiple levels:
- The WRVU change will require groups to educate providers and staff about the update to ensure patient visits and revenue are optimized.
- The impact to provider compensation plans will be far reaching due to the relationship between WRVUs and compensation; ultimately, organizations will need a process to stabilize the funds flow and eventually adopt the new fee schedule.
- There could be an aggregate revenue impact; this will vary by medical group, and in some cases will result in declines in overall revenue.
Impact Analysis
ECG analyzed how the 2021 MPFS would affect 22 multispecialty groups in markets across the nation by comparing WRVU/TRVU totals from their CY 2019 CPT activity under the 2019 and 2021 MPFSs. The average group size was 655 providers, with 398 physicians and 217 APPs.
The typical group in our study will experience a 17.7% increase in WRVUs from its providers due simply to the change in the MPFS and the G2211 code. Without adjustment, this will drive provider compensation beyond expected budgets. The TRVUs are increasing by an average of 16.8%, and after factoring in the 10.2% decrease in conversion factor, the result is a modest 5.0% increase in revenue for the average group. Tables 2 and 3 summarize the results of our analyses.
ECG has to date reviewed the impact from the MPFS for almost four dozen multispecialty medical groups (along with 11 single-specialty groups) across the country and is helping many of them with navigating this challenge. The impact from this change will have significant effects for all organizations, and the time to start planning is now.
Published December 17, 2020