Providers Want Budget Neutrality Waived for E/M Payment Changes

August 13, 2020 - In last week’s release of the proposed 2021 Medicare Physician Fee Schedule rule, CMS confirmed that it will implement changes to evaluation and management (E/M) payments by updating work relative value units (RVUs), as scheduled on January 1, 2021.

The proposed work RVU increased for nearly all E/M services, resulting in higher payment rates for the services that account for about 40 percent of all Medicare Physician Fee Schedule spending in a given year.

However, the agency also verified that any E/M payment increases resulting from new work RVUs next year will have a budget-neutral adjustment applied to offset the increase in total spending on the Medicare Physician Fee Schedule.

“If revisions to the RVUs cause expenditures for the year to change by more than $20 million, we make adjustments to ensure that expenditures do not increase or decrease by more than $20 million,” CMS stated in the proposed rule.

But the American Medical Association (AMA) and other industry groups are saying that E/M payment increases should not be offset by rate decreases for other services covered by the Medicare Physician Fee Schedule.

“Unfortunately, these office visit payment increases, and a multitude of other new CMS proposed payment increases, are required by statute to be offset by payment reductions to other services, through an unsustainable reduction of nearly 11% to the Medicare conversion factor,” Susan R. Bailey, MD, AMA president, said in a statement.

The Medicare conversion factor could result in substantial reimbursement reductions for some physicians, even though many physicians across specialties will experience major improvements in overall Medicare Physician Fee Schedule payments, according to the American College of Physicians (ACP).

Some surgical specialists, in particular, are slated to lose as much as 9 percent of their Medicare reimbursements next year, the Surgical Care Coalition calculated.

In the proposed rule, CMS stated that it would increase payment bundles for some specialty services, including maternity care. However, visits within the surgical global payment bundle were not part of the office visit payment increases. The bundled amount remained unchanged in the proposed rule.

Decreases in Medicare Physician Fee Schedule payments could be especially troubling for surgeons and other providers coming out of a pandemic that resulted in $15 billion in financial losses for practices from March through May alone.

“For this reason, the AMA strongly urges Congress to waive Medicare’s budget neutrality requirement for the office visit and other payment increases,” stated Bailey. “Physicians are already experiencing substantial economic hardships due to COVID-19, so these pay cuts could not come at a worse time.”

ACP and Surgical Care Coalition are also supporting requests to Congress to waive budget neutrality for the 2021 Medicare Physician Fee Schedule work RVU increases.

However, any waiver should not result in a delay of the E/M payment increases or undermine CMS’ decision to fully implement the increases and other improvements by January 1, 2021, ACP said.

Other improvements in the proposed rule endorsed by ACP include a new prolonged service code, increased payments for transitional care management services, a new code for certain visit complexities, and telehealth expansions.

“The improvements that CMS has included in the proposed fee schedule for 2021 will go a long way to help physician practices next year and in the future.  However, more still needs to be done to support physician practices, particularly primary care practices, to weather the COVID-19 pandemic,” said Jacqueline W. Fincher, MD, MACP, president of the ACP.

The Surgical Care Coalition and AMA also called on CMS to incorporate the office visit payment increases into the global surgery packages in the finalized rule.

Failing update payments for surgical services covered by the Medicare Physician Fee Schedule could lead to surgeons accepting fewer Medicare patients, resulting in longer wait times for surgeries and reduced access to care for older Americans, the Coalition added.