Proposed CY 2021 Medicare Physician Fee Schedule changes: Analysis of impact on telehealth flexibilities and E/M coding

• CMS released the CY 2021 Medicare Physician Fee Schedule (PFS) proposed rule, which includes significant updates that will affect physician payments beginning in January 2021.
  
• Some of the more impactful changes are related to the provision of telehealth services, including retaining several COVID-19 telehealth flexibilities and discontinuing others. 
• The other significant impact to physician payments will come from changes related to evaluation and management (E/M) services. 

 CMS released the CY 2021 Physician Fee Schedule (PFS) proposed rule, which includes significant updates that will affect physician payments beginning in January 2021.

Retained COVID-19 telehealth flexibilities

Some of the more impactful changes are related to the provision of telehealth services. If you had the opportunity to hear HFMA President and CEO Joseph J. Fifer’s interview with CMS Administrator Seema Verma during HFMA’s Digital Annual Conference, you know CMS put in place 135 waivers related to Medicare regulations due to the COVID-19 pandemic. The proposed PFS regulations include retaining several COVID-19 telehealth flexibilities, such as:

• Making permanent a number of added services that can be provided via telehealth, including group psychotherapy.
• Allowing for continuation of telehealth visits to nursing home residents, while also reducing the frequency limitations of these visits from once every 30 days to every three days.
• Allowing for direct supervision of services using real-time, interactive audio and video technology.

Discontinued coverage of some telehealth services

The proposed rule also outlines a number of flexibilities and services related to telehealth that will not continue beyond the PHE: One of note is CMS will no longer reimburse for audio-only visits.

Takeaway

Over the past several months, the rapid adoption of telehealth and the waivers in place have provided a way for patients to safely access medical care while offering physicians the ability to continue some services and sustain practices. CMS is on a path of continued expansion of telehealth, moving from what was previously restricted to rural settings, to expanding access in variety of settings, including nursing homes and patients’ homes. Telehealth also increases access to services such as specialty care and mental health, improving patient outcomes while also lowering costs and reducing barriers.

Solidifying some of the allowances and flexibilities in place for telehealth beyond the PHE will benefit both providers and patients. However, it will be important for physicians to  closely monitor the regulatory changes. There will be continued refinement to the delivery of telehealth around scope of practice, supervision, privacy and patient safety. And as telehealth expands, so do risks associated with compliance.

E/M coding guideline changes

The other significant impact to physician payments will come from changes related to evaluation and management (E/M) services. 

The rule implements E/M coding guideline changes as recommended by the American Medical Association. In short, removing history and exam from selecting the level of E/M code, and instead allowing the physician the option to use time or medical decision-making. In doing so, this simplifies the documentation requirements and reduces some of the administrative burden.

The proposed rule also revalues and increases payment rates for CPT codes related to these E/M services, typically delivered by primary care providers. Therefore, those physicians with a greater share of  E/M services will see a pay bump. For example, the rule estimates an increase in the impact of total allowed charges to family practice (+13%), general practice (+8%), endocrinologists (+17%) and rheumatologists (+14%).

However, to offset the increased value to E/M services, the rule also comes with an unusually large budget neutrality adjustment. CMS is proposing to reduce the PFS conversion factor by 10.61% for CY 2021. Therefore, many specialties with a lower use of E/M services, such as those billing for procedures, will receive a large decrease in Medicare reimbursement these include radiologists (-11%), vascular surgeons (-7%), pathologists (-9%) and nurse anesthetists (-11%).

Takeaway

The E/M coding changes taking place January 1, 2021, will have significant impacts not only to primary care physicians but also will significantly impact specialist’s reimbursement. As providers prepare for the new guidelines related to selection, coding and documentation of E/M services, they should also be aware:  It is an effort that will likely take a significant amount of provider education and changes to workflow. It will also be important to begin forecasting the potential financial impact to physician services across the continuum of care. Keep on the lookout for upcoming resources from HFMA toward this effort. 

A detailed summary of the CY 2021 Physician Fee Schedule Proposed Rule can be found here on the HFMA Regulatory Resources page.