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Revisiting the Medicare 2021 Physician Fee Schedule Changes

What Did They REALLY Mean For Your Practice?

In 2021, the healthcare industry was abuzz with the significant changes CMS made to their Physician Fee Schedule. There were the typical additions and deletions of approved CPT codes, and due to the COVID-19 pandemic, the list of approved telehealth services expanded. But far and away, the most significant impact was felt with the modifications to the calculation of Work RVUs for outpatient E&M Codes.

RVU values for some of the highest volume codes increased substantially. However, to maintain budget neutrality, the RVU conversion factor utilized to determine the approved payments to providers for services rendered was decreased at a proportional level. These changes had a significant impact, not only on practices with high Medicare and Medicaid patient panels but also practices that rely heavily on the CMS RVU calculations for anything ranging from provider productivity reporting and benchmarking to utilizing RVUs to determine physician compensation.

October 2021 Quote Graphic for RVU ArticleInitially, the extreme nature of the RVU modifications led to some out-of-the-ordinary spikes in a handful of commonly trended financial and productivity metrics. For example, Medicare reimbursement increased dramatically for Primary Care and select office-based specialties, and many surgical specialties saw modest increases due to the increase in Practice Expense calculations. However, practices that rely heavily on RVUs for budgeting, analysis, and compensation were left scrambling.

Finance teams and analysts needed to quickly adjust to the new expected trends based on the CMS changes. Many practices were forced to alter RVU-based compensation packages for their providers, while others began utilizing dual RVU calculation tables for benchmarking, productivity reporting, and budgeting.

As 2021 winds down, we’re now seeing that most practices have gotten a grasp of how the modifications affected their practices, at least at a high level. However, the next challenge is just beginning; it’s time for practices to assess if commercial payers are keeping up with the CMS changes, and if so, to what extent.

Constant vigilance is a critical component in relationships between practices and payers. Practice contracting and reimbursement teams always need to be aware of key indicators reflecting how each payer is performing. Practices must also keep in mind that the changes to the CMS RVU valuations throw yet another level of complexity into the mix.

Critical questions practices should be considering today include:

  • How do each payer’s rates compare to other commercial payers?
  • How do each payer’s rates compare to Medicare?
  • Are payers paying in compliance with contracted rates?
  • Are there operational issues (denials, slow-payment, etc.) that are reducing reimbursement?
  • How do changes to rates compare across each division and specialty in the practice?

To begin analyzing payer contracts, practices may want to start by taking a look at outpatient E&M Codes. The CMS changes to the 2021 Physician Fee Schedule increased reimbursement for outpatient E&M codes by 10%-25% or more. These are codes that, in 2020, may have been reimbursed by commercial payers at 150%-160% of Medicare rates – however, in 2021, they may have dropped to 110%-115%. And some payers that may have been reimbursing these higher volume codes at lower rates may now actually be paying less than Medicare rates. Maintaining fair market value for outpatient services is something that practice contracting teams will want to be aware of for upcoming rate negotiations.

In addition to the changes in outpatient E&M codes, the Practice Expense component of the Total RVU calculation was also modified. This impacts many surgical procedures as well as visit codes. If payer contracts were based upon TRVU conversion factors, the new valuation of the TRVU components could have conceivably reduced those conversion factors across the board. This is an important factor for future negotiations when payers may propose conversion factors against 2020 (or earlier) RVU values versus 2021 RVU calculations.

The impact of reimbursement on telemedicine visits will also need to be understood by the payer relations team and contracting staff. CMS has dramatically expanded the number of services approved for full reimbursement utilizing telehealth for patient contact. Many commercial payers are following suit in this arena. However, some of the codes approved for telehealth visits vary from payer to payer – and even with individual payers from state to state.

The need for reimbursement teams to identify individual payer patterns in denials or reduced payments for telehealth services is two-fold. Reimbursement teams need to be able to educate providers internally as to what is and is not approved, and they need to work with payer relations teams to understand why specific policies differ from those of CMS and other commercial payers.

As payer contracting moves forward with changes implemented at a national level, it is more important than ever for contracting and reimbursement teams to have contract analysis information at their fingertips. Understanding how the new rates impact each specialty – and in some cases, each provider – is key.

When contract terms come up for renegotiation, practices need to make sure they have the same information as the payers going into the negotiation. Practices need to be able to model the proposed terms to understand how the new rates will compare – not only to the old contracts but to current contracts of comparable commercial payers.

Once the new rates are implemented, practices need the ability to confirm that payers are reimbursing accurately and in accordance with the new rates. Even if contracting is an outsourced function of the practice, administrators and executives should apply the same vigilance to the vendor contract as they do the payer contract to ensure they are benefitting from these critical business relationships. By maintaining this level of analysis, communication, and distribution of data to all levels of the organization, practices are setting themselves up to navigate through the current challenging times in healthcare and positively prepare themselves for future changes.

Written by Scott Everitt, VP of Healthcare Solutions at Practical Data Solutions

Practical Data Solutions to Showcase Expertise and Innovation at MGMA’s Medical Practice Excellence: Leaders Conference

FOR IMMEDIATE RELEASE

Practical Data Solutions will gain industry exposure providing medical practice management
professionals with actionable learnings during a time of rapid industry change

Southbury, CT (10/11/2021) – Practical Data Solutions (PDS) is pleased to announce its participation in the Medical Group Management Association (MGMA) Medical Practice Excellence: Leaders Conference, Oct. 24-27, 2021. This year, to help medical practices across the United States stay ahead of the industry's rapid pace, medical practice leaders can meet in-person or via a virtual platform. This will provide all attendees, regardless of location or travel preference, to reconnect with peers to solve some of the biggest challenges medical practices face every day, such as improving patient outcomes, tackling physician burnout, minimizing inefficiencies, building winning teams, and optimizing revenue cycles.

Throughout the 4-day in-person conference, PDS will be showcasing best practice visual analytics and reporting solutions to the market and media while engaging with its consumer base.

PDS first exhibited at the MGMA conference in 2001, and they have exhibited at every MGMA conference since then. PDS feels the MGMA is the best avenue to speak directly with medical groups to understand the challenges they are facing in order to tune their product offerings to stay at the forefront of healthcare analytics.

“CMS made significant changes to RVUs and practices are still trying to measure the impact,” said Russell Hendrickson, CEO of Practical Data Solutions. “PDS will be showcasing our new PDS RVU Enhancer software that allows organizations to manage multiple RVU calculations for each year for analysis of productivity or negotiation of contacts. We know MGMA leaders attending the conference are looking for performance improvement solutions. Our new RVU Enhancer product allows organizations who leverage MGMA benchmarks to better analyze their performance to understand the impact of CMS changes on their Medicare and Commercial Contracts. This is an audience who understands the value of analytical reports that drive revenue improvements.”

The theme of the MGMA Medical Practice Excellence: Leaders Conference is Be Extraordinary Together. The conference will bring healthcare professionals together to choose the educational path that fits their day-to-day roles and responsibilities and offers attendees access to the latest healthcare operations, patient care, leadership, and financial education topics. The sessions this year will emphasize interactive elements and allow attendees access to 70 sessions, 120 speakers, and opportunities to network with 4,000+ peers in a state-of-the-art in-person and digital experience.

“MGMA is proud to host innovative organizations like Practical Data Solutions at our annual conference to showcase the latest in the healthcare industry and beyond,” said Andy Swanson, MPA, CMPE, Vice President of Industry Insights at MGMA. “With the 20+ years of experience in healthcare solutions, Practical Data Solutions will bring a welcomed perspective to this year’s conference.”

For more information about Practical Data Solutions, visit www.pds-online.com. Healthcare professionals can register here. Information on speakers, session details, and schedule for the conference can be found here. Join the conversation on social media by following MGMA on Facebook, Twitter, and LinkedIn.

The conference hashtag is #MPE21.

COVID-19 full vaccination is required to attend the MPE: Leaders Conference in San Diego. Please click here for more information.

About Practical Data Solutions
Practical Data Solutions is a healthcare analytics company based in Connecticut. For over 20 years, PDS has partnered exclusively with healthcare organizations to design, build and support state-of-the-art technologies employing best practices for data warehousing, business intelligence, analytics, and dashboard reporting. As Information Architects for Healthcare, their number one objective is to exceed their clients' expectations and achieve measurable ROI results. For more information, please visit PDS-Online.com or follow us on LinkedIn and YouTube.

About MGMA
Founded in 1926, the Medical Group Management Association (MGMA) is the nation’s largest association focused on the business of medical practice management. MGMA consists of 15,000 group medical practices ranging from small private medical practices to large national health systems representing more than 350,000 physicians. MGMA helps nearly 60,000 medical practice leaders and the healthcare community solve the business challenges of running practices so that they can focus on providing outstanding patient care. Specifically, MGMA helps its members innovate and improve profitability and financial sustainability, and it provides the gold standard on industry benchmarks such as physician compensation. The association also advocates extensively on its members’ behalf on national regulatory and policy issues. To learn more, go to MGMA.com or follow us on LinkedIn, Twitter, and Facebook.

Reanalyzing Payer Contracts in Today's Healthcare Landscape

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WebinarIconIn 2021, CMS made significant modifications to RVU calculations and how certain telehealth codes are reimbursed. There are two critical questions regarding these changes that practices need to examine to ensure optimum reimbursement – is CMS reimbursing the practice accurately, and are commercial payers reimbursing services appropriately?

In this webinar, PDS will uncover how payer contract data modeling, along with the use of visual analytics, can help practices precisely understand how payers are reimbursing for key procedures – now, and in the future.

Key topics in this webinar include:

  • Analyzing payer trends year-to-year
  • Calculating Key Payer Performance Metrics
  • Utilizing commercial payer benchmarking to ensure fair market value for services
  • Determining whether commercial payers are reimbursing accurately
  • Modeling proposed fee schedules for impact against current fee schedules

Originally presented on September 22, 2021.

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Creating a Strong ROI for Enhancing Analytics

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Healthcare organizations often hesitate to invest in analytics improvement projects due to budgetary concerns. However, with forward-thinking and the proper benefits assessment of analytical and automation tools, enhancement efforts can offer quantifiable ROI results.

In this webinar, learn how improvements in data extraction, reporting, and visual analytics can deliver measurable fiscal improvements. We’ll discuss the broad range of benefits stemming from providing the right information to the right people at the right time. See case studies where PDS clients have leveraged their analytical capabilities to achieve significant financial gains through volume and productivity improvement, reimbursement increases, cashflow enhancements, and denial recoveries.

Understand how an investment in an organization’s analytics strategy can resolve inefficiencies, reduce reporting errors, and free up administrators to lead data-driven, impactful change initiatives to improve the bottom line.

Webinar topics include:

  • Understanding “Hard” versus “Soft” ROIs
  • Building quantifiable ROIs
  • Clarifying current analytical capability, gap evaluation, and continual improvement strategies
  • Demonstrating the benefits of both one-time cash influx as well as ongoing efficiency gains
  • Using data insights to maximize and maintain bottom-line revenue effectively

Originally presented on July 21, 2021. webinar.

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2021 RVUs ~ Empowering Healthcare Users with Self-Service Analytics

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Calculating 2021 RVUs for analysis and comparative purposes is only part of today's healthcare analytics challenges. Effectively empowering those who need the information is now a vital and timely goal.

"Self-service analytics" means the right users have the right information at the right time; however, many organizations deal with roadblocks when trying to access data. A transparent analytics strategy can ensure users have the insight and training to retrieve and manage key critical metrics. This webinar will take you from guided analytics for casual data users to the more powerful OLAP functionality for key power users. See the crucial role web-based visualizations can play in your organization and explore the power of automated Excel dashboard generation.

Key topics include:

• Multiple Sets of RVUs for Effective Management in 2021
• OLAP Technology for Quick Slice-and-Dice of Data
• Role of Security in Guided Analytics
• Reports with Prompts
• Interactive Visualizations vs Excel Dashboards

Originally presented on May 26th, 2021.

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Making RVUs Meaningful in 2021

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Pulling standardized reports out of an application can result in metrics that are not measuring what an organization needs to manage successfully. Today, one set of Work RVUs and Total RVUs is not enough given today's CMS modifications. Leading-edge tools, enhanced data models, and a new way of thinking are now needed to manage productivity, payer contracts, and physician compensation effectively.

In addition to RVUs, other uniquely defined metrics – such as visits, cases, encounters, and denials – bring challenges to reporting. Practices that use multiple billing systems exponentially increase the variation between those metrics.

In this webinar, we'll focus on how to model your data to organizational and industry standards so that you can quickly understand what's changing, what's working, and what needs improvement.

Webinar topics include:

  • RVU roles in Productivity, Reimbursement, and Compensation
  • Incorporating Benchmarks, Budgets, and Targets
  • Metrics typically requiring customization (Visits, Cases, Encounters, Denials, etc.)
  • Best practices in organizational standards for reporting
  • Challenges with multiple billing systems

Originally presented on April 28th, 2021.

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Maximizing Revenue Performance with PDS Denials Analytics

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The significant changes in RVUs and CMS reimbursement require organizations to implement best-practice management regarding revenue integrity. Effective prevention and recovery of denials is essential to maximize the bottom-line. Learn how PDS Denial Analytics, coupled with leading-edge revenue cycle management strategies, can take your practice from average financial performance to outstanding results.

Understand how PDS Denial Analytics delivers structured data for clarity in reporting and useful visualizations to:

  • Categorize denials into effective reporting dimensions to increase comprehension.
  • Understand recovery successes and failures for most efficient use of limited resources.
  • Deliver focused dashboards for departmental process improvement.
  • Manage cashflow impact against recovery and prevention efforts.
  • Measure the financial benefits of focused analytics on denial challenges.

This webinar will provide insight for comparing your current analytical tools and efforts against PDS Denial Analytics – a solution used nationally by many prestigious healthcare systems to manage denial rates and recover lost revenue from denials.

Originally presented on March 24, 2021.

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Every Dollar Counts – Maximizing Denial Recovery

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WatchWebinarCrop iStock 468161242Fee recovery from denied claims is a critical strategy healthcare practices must have to safeguard profitability; however, executing a denial recovery plan is far more complicated than merely setting a billing staff goal. Teams need to track denial patterns, understand transactional activity AFTER the denial, and formulate an appeals process that includes measurable results. An effective analytics platform, along with highly targeted and organized visualizations, will support a practice’s revenue integrity efforts.

We discuss key strategies to maximize the denials recovery process, track successes and weak areas, and ensure your practice is in the optimal position for financial strength.

Webcast topics include:

  • Essential categorization of denials into meaningful groups
  • Analysis of recovery successes and failures from different angles
  • Departmental causes and corrections with focused dashboards
  • Implications of recovery efforts on cashflow
  • Financial benefits of incorporating prevention efforts

Originally recorded on February 24, 2021.

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Medicare 2021 Impact: Ensuring Revenue Cycle Integrity

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The lessons of 2020 still linger. The pandemic and variable patient volumes have led to financial uncertainty in many practices. As healthcare organizations move into 2021, providers now must navigate the new RVU valuations and reimbursement decreases from CMS as part of their 2021 Physician Fee Schedule. Ensuring the utmost revenue integrity is critical at this time. This webinar will explore revenue integrity strategies around the new E/M Coding rules, A/R Management, and Denials Prevention and Recovery to maximize a practice's bottom-line cash-flow.

Webinar topics include:

  • Understanding the CMS 2021 Physician Fee Schedule Final Rule impacts
  • Analysis of what this could mean for practices
  • Understanding Key Levers driving Revenue Integrity

Originally presented on January 20, 2021

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What Do the Changes to the Medicare 2021 Physician Fee Schedule Mean for Your Practice?

On December 2, 2020, CMS released the final rule for the 2021 Physician Fee Schedule (PFS). It was revised on January 7th as part of the COVID Recovery Act. Every year, practices can expect to see small changes to the RBRVS scale and the expected budgetary modifications to the RVU Conversion Factor, but the 2021 changes to the PFS are significant.

RVU values for some of the highest volume codes were increased substantially. However, to maintain budget neutrality, the RVU conversion factor utilized to determine the approved payments to providers for services rendered was decreased at a proportional level. These changes could have significant impacts not only on practices with high Medicare and Medicaid patient panels, but also practices that rely heavily on the CMS RVU calculations for anything ranging from provider productivity reporting and benchmarking, to utilizing RVUs to determine physician compensation. The modifications are significant enough that practices should start modeling these changes immediately to be able to plan for the impact they will have on their bottom line.

2021 Physician Fee Schedule Change Finalized

On the positive side for physician practices, there was a revaluation of the RVU values for common Evaluation and Management (E/M) procedures – particularly the New and Established Patient Office Visit codes. In most practices, these are the most commonly billed codes by a fairly significant margin. The highest-level New Patient E/M Codes (99203-99205) increased by an average of approximately 10%. The Established Patient Outpatient E/M Codes increased by an average of 30% to 35%. Because these codes are so commonly billed in most practices and RVU values are universal across all patients, many providers will see significant RVU increases in their productivity reports. Additionally, most CPT codes will see a small increase in Practice Expense components of the Total RVU which is utilized to calculate Medicare reimbursement.

These RVU increases are offset from a budgetary standpoint by CMS originally proposing to drop the RVU conversion factor for all codes from the 2020 value of $36.08 to $32.41 in 2021. This equates to approximately a 10.5% decrease. The COVID stimulus act appropriated some additional funds for the physician fee schedule so that the decrease would only be around 4% to approximately $34.89.

To understand what this means, we will use an example of billing code 99213 - Established Patient Office Visit:

  • In 2020, the Work RVU value for this code was .97 and the NF Total RVU was 2.11.
  • When the 2.11 is multiplied by the 2020 $36.08 Conversion Factor, it led to an approved payment of $76.13.
  • In 2021, the Work RVU component for the same code increases to 1.3, and, with the practice expense increase the NF Total RVU increases to 2.68.
  • When multiplied by the 2021 RVU Conversion factor of $34.89, the approved payment amount is $93.51 – an increase of $17.38 or nearly a 23% increase.

Most codes, however, do not see similar increases.

For example, a New Patient Office Visit Level 5 – CPT Code 99205 – which does have an increase in the Work RVU component, does not see as significant an increase. This particular code projects a 2% increase from the 2020 approved reimbursement of $211.07 to $215.62 Other codes including surgery, radiology, etc., do not see an RVU increase at all, so the reimbursement could decrease by up to 4%.

Modeling the Medicare Reimbursement impact can help practices better understand how this rule affects their bottom line. By taking the utilization of the seven impacted E/M codes, modifying the RVU, and then repricing their Medicare Total RVU values – including the E/M increases – at the 2021 RVU Conversion Factor, a practice can predict the change in Medicare reimbursement that will be realized. This should be done at a division, specialty, or and provider level depending upon the organization and the level of Medicare in the organization’s payer mix.

Keep in mind, however, that the Reimbursement changes are not the only impact. The RVU changes are universal, regardless of payer. This will have an impact on Provider Productivity reporting and benchmarking. Depending upon the benchmarking service a practice uses, new benchmarks incorporating the E/M changes may not be available for 6-months to a year. As such, the provider’s RVU productivity compared to the benchmark may be artificially inflated by the E/M RVU modifications for all payers. Practices may want to adjust the benchmarks or productivity reports to take these changes into account.

RVU based physician compensation is also a key area to monitor with regards to the RVU changes. Organizations will see RVU increases across the board for most physicians, even when reimbursement remains flat or decreasing. This may have a significant financial impact on many organizations. Often, there is not a lot that the organization can do about the compensation plan; however, modeling the expected compensation increase based upon each provider’s E/M utilization can be a huge benefit to finance and payroll departments as they plan for the impending financial impact and adjust the budgets and projections accordingly.

The 2021 proposed rule for the Physician Fee Schedule is the most significant change in Medicare reimbursement in a single year that I have seen in my 20+ years in Healthcare. Organizations should model the changes and plan now, to fully understand the impact on their organization.


Written by Scott Everitt, VP of Healthcare Solutions at Practical Data Solutions

Automating Excel to Drive Timely Reporting, Accuracy and Efficiency During COVID

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Reporting in the healthcare industry relies heavily on Excel; however, automating report production can be difficult and time-consuming. Without Excel automation, managers and analysts may be spending more time creating and populating reports than using them to improve financial or operational performance in hospitals and practices.
In this webinar, learn about the common challenges with Excel and how to use the automation and dashboard design features in PDS DASH to maximize Excel's visualization and customization features. Understand how this powerful tool can reduce user errors, improve overall accuracy, and increase staff productivity by 20-60%.

Discover how to leverage your current Excel skills using PDS DASH to blend data on the fly, update designs and produce timely dashboards that handle today’s unique reporting requests. See proven template designs that can be automated and implemented rapidly to identify performance improvement opportunities.

Highlights:

  • Understanding the advantages and challenges of using Excel for dashboards
  • Demonstration of Excel’s powerful visualization capabilities
  • How PDS DASH can blend data from disparate sources to leverage Excel capabilities
  • Utilizing PDS DASH to automate the creation of visualizations at multiple levels of an organization

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Modeling Medicare 2021 Proposed Changes ~ Webinar

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Anyone who manages Revenue Cycle, Reimbursement, Physician Compensation or Productivity will find the content of this webinar extremely beneficial.

On August 3, 2020, CMS released its annual proposed rule changes to the Physician Fee Schedule for 2021. The changes include an increase in RVU valuation and payments for common E&M Codes, and an expanded list of approved telehealth services. However, due to budget neutrality requirements, the proposed RVU conversion factor decreases. Medical groups and practices need to understand – now – the potential impact these changes will have on their financial health and viability.

Learn how data analytics can predictively model the proposed changes and assist practices in forecasting and planning for 2021 and beyond.

Topics include:

  • Understanding the practice’s Medicare population by volume and service mix
  • Illustrating the impact of the changes in E/M Services vs. other procedures
  • Modeling the revised Physician Fee Schedule against historic utilization by Specialty
  • Predicting how the revised CMS fee schedule could modify rates from commercial contracts

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What Do the Proposed Changes to the Medicare 2021 Physician Fee Schedule Mean for Your Practice? ~ A PDS Article

On August 3, 2020, CMS released the proposed rule for the 2021 Physician Fee Schedule (PFS) for the Public Comment Period. Every year, practices can expect to see small changes to the RBRVS scale and the expected budgetary modifications to the RVU Conversion Factor, but the 2021 proposed changes to the PFS are significant.

RVU values for some of the highest volume codes were increased substantially. However, to maintain budget neutrality, the RVU conversion factor utilized to determine the approved payments to providers for services rendered was decreased at a proportional level. These changes could have significant impacts not only on practices with high Medicare and Medicaid patient panels, but also practices that rely heavily on the CMS RVU calculations for anything ranging from provider productivity reporting and benchmarking, to utilizing RVUs to determine physician compensation. The proposed changes are significant enough that practices should start modeling these changes immediately to be able to plan for the impact they will have on their bottom line.

2021 Medicare Proposed CMS Fee Schedule ChangesOn the positive side for physician practices, there was a revaluation of the RVU values for common Evaluation and Management (E/M) procedures – particularly the New and Established Patient Office Visit codes. In most practices, these are the most commonly billed codes by a fairly significant margin. The highest-level New Patient E/M Codes (99203-99205) increased by an average of approximately 10%. The Established Patient Outpatient E/M Codes increased by an average of 30% to 35%. Because these codes are so commonly billed in most practices and RVU values are universal across all patients, many providers will see significant RVU increases in their productivity reports.

These RVU increases are offset from a budgetary standpoint by CMS proposing to drop the RVU conversion factor for all codes from the 2020 value of $36.08 to $32.26 in 2021. This equates to approximately a 10.5% decrease.

To understand what this means, we will use an example of billing code 99213 - Established Patient Office Visit:

  • In 2020, the Work RVU value for this code was .97 and the Total RVU was 2.11.
  • When the 2.11 is multiplied by the 2020 $36.08 Conversion Factor, it led to an approved payment of $76.13.
  • In 2021, the Work RVU component for the same code increases to 1.3, and the Total RVU increases to 2.44.
  • When multiplied by the 2021 RVU Conversion factor of $32.26, the approved payment amount is $78.71 – an increase of $2.58.

Most codes, however, will not see similar increases.

For example, a New Patient Office Visit Level 5 – CPT Code 99205 – which does have an increase in the Work RVU component, will not see an increase. This particular code projects a decrease from the 2020 approved reimbursement of $211.07 to $199.37; the RVU increase is not enough to compensate for the decrease in the conversion factor. Of course, other codes, surgery, radiology, etc., will not see an RVU increase at all, so the reimbursement will decrease.

Modeling the Medicare Reimbursement impact can help practices better understand how this rule will affect their bottom line. By taking the utilization of the seven impacted E/M codes, modifying the RVU, and then repricing their Medicare Total RVU values – including the E/M increases – at the Proposed 2021 RVU Conversion Factor, a practice can predict the change in Medicare reimbursement that will be realized by the proposed changes. This may need to be done at a division, specialty, or even provider level depending upon the organization and the level of Medicare in the organization’s payer mix.

But the Reimbursement changes are not the only impact. The RVU changes are universal, regardless of payer. This will have an impact on Provider Productivity reporting and benchmarking. Depending upon the benchmarking service a practice uses, new benchmarks incorporating the E/M changes will not be available for 6-months to a year. As such, the provider’s RVU productivity compared to the benchmark may be artificially inflated by the E/M RVU modifications for all payers. Practices may want to adjust the benchmarks or productivity reports to take these changes into account.

RVU based physician compensation is also a key area to monitor when these RVU changes go into effect. Organizations will see RVU increases across the board for most physicians, even when reimbursement remains flat or decreasing. This can be a significant financial hit for many organizations. Often, there is not a lot that the organization can do about the compensation plan; however, modeling the expected compensation increase based upon each provider’s E/M utilization can be a huge benefit to finance and payroll departments looking to plan for the impending financial impact and adjust the budgets and projections accordingly.

The 2021 proposed rule for the Physician Fee Schedule is the most significant change in Medicare reimbursement in a single year that I have seen in my 20+ years in Healthcare. Organizations should take heed and look into the impact, model the expected changes, and plan now in case all of these changes are adopted so that they will not be caught off-guard.

Written by: Scott Everitt, MBA, VP of Healthcare Solutions at Practical Data Solutions

Call PDS 203.262.9224