Physician Reimbursement 2021: Who Are the Big Winners?

Elizabeth Woodcock, MBA, CPC


September 16, 2020

Amid all the chaos and problems caused by COVID-19, one might hope that physicians would get a break on their complicated payment reporting programs.

But that's not the case: The government recently released the 2021 proposed rule for the Quality Payment Program (QPP), often referred to by its most popular participation track, the Merit-based Incentive Payment System (MIPS). The program, which launched in 2017, gets annual updates, and this year is no different.

Some good news has made primary care and some other physicians happy.

The government's proposal includes significant changes to reimbursement for all physicians. Most important, the government is boosting rates for the office/outpatient evaluation and management (E/M) codes, combined with simplifying coding requirements.

Specialties that rely heavily on office-based E/M services are delighted at this change. Those include internists, family physicians, neurologists, pulmonologists, dermatologists, and all other specialties that rely heavily on office encounters.

According to the Centers for Medicare & Medicaid Services' (CMS') estimate, endocrinologists and rheumatologists are the big winners, at 17% and 16% projected increases, respectively. The government has been pushing to make this shift in reimbursement from surgeries and procedures to office visits for years. Although some physicians may celebrate the change, others will not.

The reimbursement plan for professional services depends on budget neutrality, meaning that the budget increases need to be counterbalanced by budget declines. Specialties that rely heavily on procedures and surgeries will suffer losses. These corresponding reductions felt by proceduralists and surgeons will counterbalance the good fortune of physicians who rely on office visits for the bulk of their revenue. Radiologists, for example, are projected by CMS to experience a 11% downturn, and cardiac surgeons face a 9% decline.

These consequences are significant. The 2021 shift may be the single biggest transfer of reimbursement in the history of the scale, which was adopted in the early 1990s.

If the change affected only Medicare reimbursement, perhaps it would be less significant. Because the majority of private payers use the government's scale — the resource-based relative value scale — the impact will reverberate across physicians' bottom lines. Given the state of many physicians' finances, driven by the pandemic, this may send some affected physicians into a downward spiral.

The boost to E/M reimbursement — which represents approximately 20% of the overall Medicare payout to physicians each year — puts downward pressure on the professional services conversion factor as well.

For 2021, it is proposed to be $32.2605, representing a decrease of $3.83 from the 2020 conversion factor of $36.0896. The resultant conversion factor — which serves as a multiplier applied to the relative value unit to come up with the payment — effectively reduces payments to physicians across the board by 10.6%. Thus, even those who enjoy the benefits of the new E/M increases will see the potential reimbursement high point severed.

Before launching into the changes in store for 2021, it's good to determine whether or not you are an eligible clinician: You need to have more than $90,000 in Medicare Part B charges per year, see more than 200 Medicare Part B patients per year, and provide 200 or more covered professional services to Part B patients.

The program is voluntary, but there are steep penalties for eligible clinicians who don't participate. For the 2021 reporting year, a 9% penalty will be imposed on Medicare reimbursement in 2023 in the event of participation failure. You can verify your participation status here; you'll need your National Provider Identifier to run the search, but it takes only seconds to determine your eligibility.

A 9% penalty is a pretty big hit to your income. With 9% at stake, eligible clinicians need to actively engage in the program. Although there have been changes, the basic four-category system remains the same for the MIPS track. MIPS includes four performance categories: quality, cost, improvement activities, and promoting interoperability.

The four category weights, used to evaluate performance, are changing in 2021. Cost category weight goes up by 5 percentage points, to be 20% of the clinician's score, and the quality category goes down by 5 percentage points to contribute 40% to the weight. Promoting interoperability remains 25% of the score, with improvement activities constituting the final 15%.

Other key changes include:

  • The CMS' Web interface for submission for quality measures will be shuttered in 2021. Users of this submission method will have to find and use another way to report their quality measures.

  • Quality measures will be scored against pre-COVID benchmarks in lieu of comparisons with the 2020 reporting year; 206 quality measures are proposed for 2021, compared with the current list of 219.

  • Telehealth will be incorporated in the cost category by updates to the measure specifications for the episode-based and total per capita cost measures.

  • A new health information exchange measure is added to the promoting interoperability category, and "incorporating" replaces "reconciling" in the reporting requirement "Support Electronic Referral Loops by Receiving and Incorporating Health Information."

To avoid the 9% penalty, eligible clinicians must earn 50 points in 2021, up from 45 in the current year. Achieving "exceptional performance" remains at 85 points. This elevated level of engagement allows access to a pot of money Congress set aside for high performers.

Many physicians feel that too much work is required to earn the "paltry" bonuses; even a perfect score of 100 has only resulted bonuses of 1.88% and 1.68%, respectively, in the past 2 years. That includes the $500 million allocation that Congress set aside; this extra funding to reward exceptional performance is only available for the first 6 years of the law. Although the 2019 scores have been released to participants, CMS has not yet announced the overall national average, but it's expected to be minimal.

The combination of meager payouts and a diminishing funding mechanism has physicians questioning participation altogether. My recent conversations with physicians who qualify for the program revealed their intention to participate, but only at a level to achieve the minimum threshold of 45 points this year and 50 in 2021. With so little upside, it's impossible to make a business case to aim for the stars.

Perhaps the biggest change in 2021, however, is that the program is not making the previously planned switch to MIPS Value Pathways (MVPs). MVPs were designed to align the four performance categories around a specialty, medical condition, or patient population.

CMS introduced MVPs by giving an example of diabetes: "Endocrinologist reports same 'foundation' of PI [promoting interoperability] and population health measures as all other clinicians but now has a MIPS Value Pathway with measures and activities that focus on diabetes prevention and treatment." CMS had expected MVPs to launch in 2021 for all program participants; owing to the pandemic, CMS announced an extension for at least 1 year. This comes as a relief to physicians who are just trying to keep the lights on, given the financial pressures brought on by the pandemic.

MVPs, however, will be incorporated into the MIPS Alternative Payment Model (APM) participation segment. This will affect many physicians because this is the path that accountable care organizations (ACOs) have taken. If you are part of an ACO and you report through it, you'll see some more changes than your colleagues in 2021.

The good news is that ACOs that participate in MIPS and the Medicare Shared Savings Program will only have to report once to satisfy the requirements for both programs. The construct for this new APM-based program is called the "APM Performance Pathway." This pathway incorporates six population health-based measures that cross-cut specialties.

CMS is also proposing that telemedicine reimbursement will become permanent. As of now, telemedicine services will only be paid when a public health emergency has been declared. This ability to reimburse physicians for telemedicine would end when the current public health emergency is over. CMS is proposing to extend reimbursement beyond the pandemic, which will benefit all physicians who perform these remote encounters.

The CMS proposal would also make some other requirements easier to achieve. The use of codes 99495 and 99496 — the transitional care management codes — is expanding by reducing several key accompanying-services restrictions. Before the public health emergency, there were constraints related to scope of practice; the proposal would extend the ability of advanced practice providers to order diagnostic tests, even after the public health emergency ends.

Furthermore, the proposal reduces restrictions related to billing for remote physiologic monitoring services and outlines the possibility of a new, higher-paying virtual visit code.

Although the Quality Payment Program will undergo some changes, they are minor. Be aware of the requirement to hit the 50-point mark to avoid the steep penalties, however. Perhaps greater benefit will be achieved through the government's continued push to refine the reimbursement system. As a result of budget neutrality, however, these changes will advantage some physicians while resulting in losses for others.

The government's proposed changes are not final, and there is a period during which they are accepting comments on the proposal; the final rule will be announced in November.

If you want to wash your hands of this now, apply for the 2020 performance year hardship for the Quality Payment Program. The application is now open and available through December 31, 2020; completing it will release you of any program requirements in 2020 (and avoid that hefty 9% penalty on your 2022 reimbursement).

This way, you won't have to concern yourself with any of these rules until next year; the government's extension of this "get out of jail free" card is a welcome relief for physicians who are frustrated by the regulatory burdens despite the pressure exerted by COVID. Spending 15 minutes to complete this form is well worth your time and may eliminate much of your worry.

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