The 2021 Medicare Physician Fee Schedule and Quality Payment Program Final Rule: Major Takeaways and Next Steps

On December 1, 2020, the Centers for Medicare & Medicaid Services (CMS) released the calendar year 2021 physician fee schedule (PFS) final rule-- the major annual rule that impacts Medicare payments for physicians and other health care practitioners. The PFS rates often serve as the basis for which many private payors revise their reimbursement levels. The rule 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). When CMS had issued proposed rule in August 2020, ACEP responded with a robust set of comments.

There are numerous policies in the rule that have a substantial effect on emergency physicians. One of the most significant policies stemmed from CMS’ decision to (1) increase the values of office and outpatient evaluation and management (E/M) codes and (2) create a new add-on code for complexity (G2211). 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 led to a significant downward adjustment to the conversion factor. Because of the cut to the conversion factor in 2021, CMS initially estimated , payments to emergency medicine clinicians would be 6 percent lower in the aggregate compared to 2020. A reduction of this magnitude was unacceptable, so ACEP joined with the American Medical Association (AMA) and other medical associations in fiercely opposing this cut and urging Congress to pass legislation that would eliminate the reduction. Congress did act, and the major omnibus bill passed at the end of 2020 included a partial fix. While Congress did not completely eliminate the cut to the conversion factor in the omnibus bill, the legislation did include two provisions that, taken together, had the overall effect of offsetting around two-thirds of the reduction.

Now, overall, instead of receiving a 6 percent reduction to Medicare payments, some emergency physicians may see an increase in their Medicare reimbursement in 2021 depending on what services they deliver. In the final rule, ACEP was able to secure increases for the emergency department (ED) E/M codes levels 3 through 5 (CPT codes 99283, 99284, and 99285)—the most commonly billed codes for emergency medicine. Initially, the large across-the-board cut to the conversion factor totally wiped out the increases to the ED E/M code values. Now, with a smaller cut to the conversion factor, these increases will show. In fact, ACEP has calculated that emergency physicians will see an increase of 9.8 percent for ED E/M level 3 services, 1.6 percent for ED E/M level 4 services, and 2.0 percent for ED E/M level 5 services in 2021.

Moving beyond this major policy, CMS in the rule finalized its telehealth proposals. One of the temporary telehealth flexibilities that CMS has granted during the COVID-19 public health emergency (PHE) allows emergency physicians to bill all five E/M codes from any location. In the rule, CMS examined 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 broke 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.

CMS has decided 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 ACEP’s 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.

CMS includes another important policy in the rule as it relates to Medicare payment for medication-assisted treatment (MAT) in the ED. Based on ACEP’s advocacy, CMS finalized its proposal to pay for MAT delivered in the ED starting in 2021. Specifically, CMS created an add-on code to be billed along with ED E/M codes during an ED visit. This add-on code (G2213) includes payment for assessment, referral to ongoing care, follow-up after treatment begins, and arranging access to supportive services.

While there are many other important policies in the rule, the last major topic area that impacts emergency physicians directly is MIPS. Overall of note, CMS extended the COVID-19 hardship exemption policy it established in 2020 into 2021. Under that policy, individual clinicians or groups can submit a hardship exception application for one or more of the four MIPS performance categories if they are unable to report due to the ongoing response to the COVID-19 PHE. If their application for an exception from all four categories is approved, they will be held harmless from a payment adjustment—meaning that they will not be eligible for a bonus or potentially face a penalty based on their MIPS performance. The deadline for filling out a hardship exemption application for the 2020 performance period was February 1, 2021, and the deadline for the 2021 performance period will likely be in early 2022.

In the rule, CMS also finalized changes to the performance weights of the Quality and Cost categories for 2021. Specifically, CMS reduced the quality category weight from 45 to 40 percent and increased 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.

Further, CMS increased 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 recognized 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 remains at 85 points in 2021. As required by statute, the maximum negative payment adjustment for the 2023 payment year (based on performance in 2021) is negative 9 percent, and the positive payment adjustment can be up to 9 percent (before any exceptional performance bonus).

Finally, CMS finalized its proposals related to MIPS Value Pathways (MVPs). MVPs represent a streamlined approach to MIPS reporting that will allow clinicians to report on a uniform set of measures on a particular episode or condition in order to get MIPS credit. CMS previously indicated that the first set of MVPs would be introduced in 2021. However, due to the COVID-19 pandemic, CMS has postponed MVPs to at least 2022. CMS has indicated that it will allow qualified clinical data registries (QCDRs) to support MVPs. ACEP is 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.

While the majority of the policies in the 2021 final rule are now in effect, the Biden Administration (and Congress) will have the opportunity to adjust some of the policies in future years. First, with respect to Medicare reimbursement, the fix that Congress instituted to avert a major payment cut was only temporary. Beyond 2021, the large increases to the office and outpatient E/M codes will continue to trigger across-the-board cuts to the conversion factor, and therefore Congress may need to act again in 2022 to prevent another reduction from occurring. Next, CMS under the Biden Administration will have an opportunity to weigh in on the future of telehealth services—including whether it will continue reimbursing for ED E/M services in Medicare past the end of 2021. Finally, the administration will have numerous decisions to make related to MIPS, including how to manage the program as the bar for achieving a bonus continues to become harder and harder for clinicians to reach. CMS also needs to consider how it will continually adjust requirements as the COVID-19 PHE rages on. While CMS already extended the hardship exemption process into 2021, it will be important for CMS to ensure that clinicians who are able to report are appropriately rewarded. Lastly, CMS will soon be receiving MVP proposals from stakeholders (including ACEP), and it must consider which of these to implement starting in 2022. The Biden Administration will also have the opportunity to adjust MVP policies as more MVPs become approved and clinicians start to get experience reporting measures under one.

Overall, there are a lot of issues that ACEP will continue monitoring, and we will always keep members updated on the latest developments. Please read my weekly blog, Regs & Eggs, for the latest regulatory updates.