UPDATED: CMS Finalizes 10% Payment Cut, Expands Telehealth Services in 2021 Physician Fee Schedule

Updated 1/06/2020: CMS Updates 2021 Physician CF to $34.8931, a 3.3% Reduction from the 2020 CF

On December 1, 2020, the Centers for Medicare & Medicaid Services (CMS) released the CY 2021 Revisions to Payment Policies under the Physician Fee Schedule (PFS) and Other Changes to Part B Payment Policies [CMS-1734-F], which establishes Medicare physician payments and requirements for the Quality Payment Program (QPP) for 2021. This rule includes a significant payment increase for office/outpatient Evaluation and Management (E/M) services, typically delivered by primary care providers and certain specialty physicians. To offset the increased spending resulting from these payment increases, the rule finalizes an unusually large and controversial budget neutrality adjustment, resulting in a physician conversion factor (CF) of $32.4085 for CY 2021, a 10.20% decrease from the 2020 CF of $36.0896.

The impact of this policy varies significantly across specialties, with those that do not generally bill office/outpatient E/M visits potentially facing cuts of as much as 10%, while other specialties are anticipated to see increases of up to 16%. This policy change was announced and finalized in the CY 2020 PFS final rule for implementation in 2021. Physician specialty societies are vigorously pressing for relief and have turned to Congress to resolve the cuts, especially in light of the Coronavirus (COVID-19) pandemic’s impact on the financial health of many practices. Currently, bills are pending in Congress that would change CMS’s final policies. Resolution of this issue, like many others this year, will be an uphill battle.

This rule also continues the Administration’s efforts to increase flexibility to enable providers to better meet demands stemming from the pandemic, including several changes that make permanent or extend COVID-19 flexibilities.

Coding and payment policies for virtual check-in services and personal protective equipment (PPE) have been established on an interim final basis in this rule and are open for comment. Comments for these policies will be accepted until 60 days after the rule is posted for public inspection.

This final rule will be effective January 1, 2021, unless otherwise noted.

  • The final regulations are available here.
  • A CMS press release is available here.
  • A CMS fact sheet is available here.
  • The CMS QPP factsheet is available here.

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For more information, contact Paul Gerrard, Deborah Godes, Kelsey Haag, Sheila Madhani, Mara McDermott, Kristen O’Brien and Christine Song.