Significant Medicare Payment Reductions Finalized for 2021

Dec 7, 2020

Last week, the Centers for Medicare and Medicaid Services (CMS) finalized policies for services furnished under the Medicare Physician Fee Schedule (PFS) that will result in significant payment reductions for ASRA members starting in 2021. CMS’s own estimates project that Medicare payments to anesthesiology specialists in 2021 will decrease by 8% overall compared to total payments for 2020, although impacts will vary by practice. 

These reductions are being driven, in large part, by changes to coding and payment for office and outpatient evaluation and management (E/M) visits that CMS is implementing for 2021. Specifically, in the Calendar Year 2021 PFS Final Rule, CMS specified that highly anticipated changes to documentation, coding, and payment for office and outpatient E/M codes would generally move forward as planned in 2021. Among these changes, CMS adopted most RUC-recommended values for the office and outpatient E/M visits, resulting in increases of between 0 to 46 percent in work RVUs for these E/M codes. CMS also finalized coverage and payment of add-on HCPCS code G2211 (Visit Complexity Inherent to Certain Office/Outpatient E/M Visits) (formerly GPC1X).

Current law requires expected payment increases for these and other changes to be offset under statutory PFS budget neutrality requirements. As a result, the PFS conversion factor and the Anesthesiology conversion factor are scheduled to experience sharp reductions, as shown in Table 1. 

 

Table 1: Comparison of PFS and Anesthesiology Conversion Factors for 2020 and 2021

 

2020 CF

2021 CF

Percent Change

Physician Fee Schedule Conversion Factor

36.0896

32.4085

- 10.2%

Anesthesiology Conversion Factor

22.2016

20.0547

- 9.7%

 

The reductions in the conversion factor will carry over to every service paid under the fee schedule, including radiofrequency neurotomy services, nerve injections, genicular injections, and radiofrequency ablation. While RVU increases for many of the office and outpatient E/M codes will offset the conversion factor decreases, the net effect expected for anesthesia practices is a significant reduction in Medicare payment given the mix of services furnished.

The changes to payment take effect January 1, 2021, raising concerns about significant payment reductions for physician practices still struggling with the impacts of the COVID-19 pandemic. These concerns have been raised to Congress, which is deliberating on legislation to mitigate the negative impacts. Without enactment of such legislation, the payment reductions will move forward as finalized.