December 3, 2020

The 2021 Physician Fee Schedule Final Reg: The Good, the Bad, and the Ugly

Earlier this week, the Centers for Medicare & Medicaid Services (CMS) released the calendar year 2021 physician fee schedule (PFS) final regulation. As a reminder, this is the major annual reg that impacts Medicare payments for physicians and other health care practitioners for the next calendar year. The rates included in the PFS often serve as the basis for which many private payors revise their reimbursement levels. The reg also includes updates to the Merit-based Incentive Payment System (MIPS)—the quality performance program established by the Medicare Access and CHIP Reauthorization Act (MACRA). CMS had issued a proposed reg in August, which ACEP responded to with a robust set of comments.

We are still digging our way through the 2,100+ page final reg, but we posted a high-level overview of the major policies the day it was released. Overall, CMS finalized many of the good, the bad, and the ugly proposals I identified in previous Regs & Eggs posts.

Let’s start with the bad and even potentially ugly policy that we are extremely disappointed CMS finalized. Much to our dismay, CMS is finalizing a 6 percent cut to emergency medicine reimbursement. The cut stems from CMS’ decision to significantly increase the values of office and outpatient evaluation and management (E/M) codes and create a new add-on code for complexity. There is an existing budget neutrality requirement under the Medicare PFS, which forces CMS to make an overarching negative adjustment to physician payments to counterbalance any increases in code values that CMS implements. CMS usually does this by adjusting the Medicare “conversion factor” which converts the building blocks of PFS codes (relative value units or RVUs) into a dollar amount.

The increases in the office and outpatient E/M values and the new add-on code for complexity lead to a significant downward adjustment to the conversion factor. CMS estimated in the proposed reg that the cut to the conversion factor would be around 10.6 percent. We provided specific policy recommendations to CMS in our comments on the proposed reg about how the agency could completely eliminate or at least mitigate the reduction. We also tried to highlight what effects a reduction of this magnitude could have on you and your patients especially during a pandemic. Unfortunately, CMS did not take any of our suggestions. Instead, CMS only made minor adjustments to their budget neutrality calculations and is finalizing a 10.2 percent cut to the conversion factor instead of 10.6 percent. This small difference does not affect the estimated cut to emergency medicine reimbursement.

The only silver lining here is that it could have been worse for emergency medicine. ACEP pushed CMS to increase the emergency department (ED) E/M codes (the most commonly billed codes in emergency medicine) in 2021 to appropriately align with the newly-valued office and outpatient E/M codes. We are happy to report that CMS is finalizing its proposal to adopt our recommended values for the ED E/M codes. According to CMS, the increase in the value of these codes would have otherwise increased your payments by 2 percent without budget neutrality factoring in. What this means is that if CMS had not finalized this proposal, the overall reduction to emergency medicine caused by the budget neutrality adjustment would have been greater than 6 percent.

So, what happens next? Now that the final reg has been released, the only way to prevent these devastating cuts from taking place is for Congress to act by passing legislation that holds physicians harmless. ACEP, along with a coalition of organizations representing more than 1 million physicians and allied health professionals, support including the “Holding Providers Harmless From Medicare Cuts During COVID-19 Act of 2020” in any year-end legislative package. The bill—introduced by Representatives Ami Bera, MD (D-CA) and Larry Bucshon, MD (R-IN)—would temporarily maintain for the next two years physicians’ reimbursement in Medicare at 2020 levels if they were otherwise scheduled to receive a payment cut.

We also calling on you to contact your House and Senate members to urge them to act on this issue before the end of the year.

Moving on to the “good” policies, we are pleased with how CMS decided to finalize its telehealth proposals. As you may know, one of the temporary telehealth flexibilities CMS has granted during the COVID-19 public health emergency (PHE) allows you to bill all five E/M codes you typically use in the ED setting from any location. In the reg, CMS examines which of the codes that are temporarily on the list of approved Medicare telehealth services during the COVID-19 PHE should remain on the list permanently, extended temporarily, or removed from the list once the PHE ends. CMS breaks out the codes that it temporarily added to the list of approved telehealth services into three buckets:

  1. Codes that CMS is including on the list of approved telehealth services permanently.
  2. Codes that CMS is including on the list of approved telehealth services for the remainder of the calendar year in which the PHE ends (i.e., until December 31, 2021).
  3. Codes that CMS is removing from the list of approved telehealth services once the PHE ends.

Much to our delight, CMS is finalizing its proposal to keep ED E/M code levels 1 through 3 (CPT codes 99281-99283) on the approved telehealth list for the remainder of the year after the PHE expires (i.e., Bucket 2). In addition, CMS adopted our recommendation to also include ED E/M levels 4 and 5 (CPT codes 99284 and 99285), critical care codes, and observation codes in Bucket 2 as well. CMS had initially proposed to eliminate these codes from the list of approved telehealth services once the PHE ends but was convinced by commenters like ACEP who suggested that these codes should continue to be on the telehealth list through 2021. CMS does note that it still needs to see more data and evidence about the benefits of providing ED E/M, critical care, and observation services via telehealth in order to permanently add these codes to the list of approved telehealth services.

Another important policy CMS includes in the reg that falls under the “good” category relates to Medicare payment for medication-assisted treatment (MAT) in the ED. Based on our advocacy, CMS is finalizing its proposal to pay for MAT delivered in the ED starting in 2021. Specifically, CMS is creating an add-on code to be billed along with ED E/M codes during an ED visit. This add-on code will include payment for assessment, referral to ongoing care, follow-up after treatment begins, and arranging access to supportive services. This is a significant victory for emergency medicine, as it will hopefully provide you with the reimbursement you need to provide essential MAT services to Medicare patients with opioid use disorder.

While there are many other important policies in the reg, the last area I want to touch on relates to MIPS updates. Overall of note, CMS is extending the COVID-19 hardship exemption policy it established in 2020 into 2021. Under that policy, you can submit a hardship exception application for all four MIPS performance categories if you are unable to report due to the ongoing response to the COVID-19 PHE. If your application is approved, you will be held harmless from a payment adjustment—meaning that you will not be eligible for a bonus or potentially face a penalty based on your MIPS performance.

In the reg, CMS also finalizes changes to the performance weights of the Quality and Cost categories for 2021. Specifically, CMS is reducing the quality category weight from 45 to 40 percent and increasing the Cost category from 15 to 20 percent. Under current law, the Quality and Cost categories must each be weighted at 30 percent starting in 2022.

CMS is increasing the performance threshold that clinicians need to achieve to avoid a penalty from 45 points in 2020 to 60 points in 2021. CMS had initially proposed to set it at 50 points in 2021, but ultimately decided to finalize a higher threshold. CMS recognizes that not all practices have been impacted by COVID-19 to the same extent and many clinicians have been able to successfully participate in MIPS. The additional performance threshold for exceptional performance will remain at 85 points in 2021. As required by statute, the maximum negative payment adjustment is negative 9 percent, and the positive payment adjustment can be up to 9 percent (before any exceptional performance bonus).

Finally, CMS is finalizing its proposals related to MIPS Value Pathways (MVPs). CMS is delaying the implementation of MVPs until at least 2022 and is establishing new criteria to assess MVP proposals going forward. CMS will also be allowing qualified clinical data registries (QCDRs) to support MVPs. ACEP is working on developing an MVP for emergency medicine and is examining how ACEP’s QCDR, the Clinical Emergency Data Registry (CEDR), can help emergency physicians participate in an MVP.

If you have any questions about these policies or any others in the final reg, feel free to email me. Until next week, this is Jeffrey saying, enjoy reading regs with your eggs.

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