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ACP: 2021 Medicare Physician Fee Schedule Should Be Implemented Fairly

Advocate Masthead

Changes should not be delayed, but Congress should waive budget neutrality to avoid reductions for some physicians

Oct. 9, 2020 (ACP) – As 2021 approaches and the changes to the Medicare Physician Fee Schedule are in sight, the American College of Physicians is urging the nation's leaders to find an equitable and comprehensive outcome that protects all physicians.

Because of a Medicare statute known as “budget neutrality,” while reimbursement levels will go up for some physicians under the new fee schedule, others will see reductions. “The solution must be fair, and it must allow increases in primary care visit codes, care management codes and complex visit codes to go into effect,” said Bob Doherty, ACP senior vice president for governmental affairs and public policy.

As previously set by the Centers for Medicare & Medicaid Services, the 2021 Medicare Physician Fee Schedule, which sets the rates for physician reimbursement under Medicare, will greatly improve payment for primary and comprehensive care services, also known as evaluation and management services (E/M), including the most complex visits, care management services, vaccine administration and telehealth services. It will also streamline and reduce documentation burdens on physicians that take time away from patients.

These changes – slated to go into effect on Jan. 1, 2021 – are very positive. “These improvements are essential toward addressing the ongoing impact of the COVID-19 pandemic, providing much-needed increases to physicians for their primary, cognitive and comprehensive care services at a time when practices are under severe financial stress and at risk of closing due to lost revenue from COVID-19,” said Dr. Heather E. Gantzer, chair of the ACP Board of Regents. “Hundreds of thousands of physicians who are struggling to keep their practices open will be helped by these changes.”

But there's a major hitch: “Budget neutrality” could spell trouble for many physicians, including some primary care doctors. To keep overall spending at a steady level, the Medicare statute requires that increases in the Relative Value Units (RVUs) for physician services in the fee schedule must be offset by an across-the-board budget neutrality reduction in the dollar conversion factor that applies to all services paid under the fee schedule.

RVUs, when multiplied by the dollar conversion factor, determine how much physicians are paid for each service they provide.

While reimbursement levels will go up for physicians who provide undervalued E/M services, budget neutrality is leading to reductions too. Physicians who provide non-E/M services will see lower reimbursement levels. Physicians such as surgeons will be affected, as will some primary care doctors.

To resolve this situation, Congress can waive the budget neutrality requirement. ACP supports this approach. ACP sent a Sept. 11 letter and fact sheet to congressional leaders calling for them to support a waiver. “Any solution must be fair to primary care,” Doherty said. At the same time, “it must not provide preferential treatment to one group of physicians or distort the basic process of valuing services based on the relative work and expenses involved.”

As Dr. Gantzer puts it, a waiver would “appropriately eliminate the reductions for physicians facing cuts while increasing the overall payments to physicians who provide mostly E/M services.” She notes in the letter that a waiver must not be accompanied by any changes that would “reduce, delay, or in other ways detract from the benefits to patients and their physicians of higher payments for E/M services, complex visits, vaccines, care coordination, telehealth, and other improvements.”

Congress must act quickly to waive budget neutrality before the new fee schedule goes into effect at the beginning of next year. “ACP will continue to carefully monitor the situation,” Doherty said, “and we will make sure that our voice is heard.”

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Back to the October 9, 2020 issue of ACP Advocate