2021 Physician Fee Schedule Updated after COVID-19 Stimulus Package Signed

On December 1, 2020, the Centers for Medicare and Medicaid Services (CMS) issued their Final Rule for the 2021 Physician Fee Schedule (PFS). The Final Rule contemplated significant policy changes for professional services reimbursement by increasing the relative value units (RVUs) primarily associated with Evaluation and Management (E/M) CPT codes and decreasing the conversion factor used to convert RVUs into reimbursement amounts due to budget neutrality requirements.CMS also updated the 2021 PFS Final Rule after a COVID-19 stimulus package was included within the Consolidated Appropriations Act, 2021 (CRA) signed by President Trump on December 27, 2020. Important components of the CRA that updated the 2021 PFS Final Rule include:

  • $3 billion that funds a 3.75 percent increase in 2021 PFS payments for all providers to “…support physicians and other professionals in adjusting to changes in payment for physicians’ services during 2021…”
  • Suspension of the 2.00 percent sequestration adjustment through March 31, 2021
  • Increased payments for the work component of physician fees in areas where the labor cost is determined to be lower than the national average through December 31, 2023, by reinstating the 1.0 floor on the work Geographic Practice Cost Index
  • Delaying the implementation of the inherent complexity add-on E/M code G2211 until January 1, 2024

Therefore, the CRA largely mitigated budget neutrality cuts originally contemplated within the 2021 PFS Final Rule, though changes to RVUs are still effective for 2021.Given the chiefly fee-for-service environment existent within the U.S. health care industry, organizations that employ physicians and advanced practice providers tend to utilize wRVUs to derive provider compensation. Thus, the revised 2021 PFS Final Rule may presage a significant increase to provider compensation vis-à-vis the E/M RVU increases.Because of the 2021 RVU changes and 2022 payment uncertainties, we recommend organizations adopt our three-step call to action:

  1. Don’t panic! Freeze physician wRVU payment rates at 2020 levels and take time to analyze the situation.
  2. Analyze. Run CPT level scenario projections to understand top-line revenue changes and the associated physician compensation impact.
  3. Implement a plan. Review the results and weigh the alternatives. Select the appropriate course of action and move forward with implementation. Proactively communicate the plan with your physicians and administrators.

Next Steps:

Related Insights