CMS final rule on physician fee schedule will impact documentation and virtual care in 2021

By Carley Thornell | December 8, 2020


While turning the tide of COVID-19 is understandably the primary focus for providers and staff as 2020 inches toward a close, other important changes are coming that affect physicians in nearly every specialty nationwide starting January 1. 

No one could have predicted the magnitude of the pandemic when the Centers for Medicare and Medicaid Services in 2019 finalized historic provisions to revise the Medicare Physician Fee Schedule for 2021 – provisions that also largely impact documentation standards. 

But last week, CMS administrator Seema Verma released the final rule, calling it "the most significant updates to E/M codes in 30 years." Notable for myriad reasons besides its timing, the overhaul updates and retires several widely used Evaluation and Management codes with the goal of reducing administrative burden, improving payment accuracy, streamlining terminology across payers, and updating codesets to reflect current medical practice. The most unexpected change was the inclusion of telehealth audio-only E/M services on an interim final basis. CMS has previously only favored real-time communications with two-way audio and video enabled. 

Complex counting systems that frequently varied by payer for history, exam, and data have been removed in new E/M office visit code selection, and in 2021, physicians can choose to code in two ways: by medical decision-making (MDM) related to the visit, or by total time.

The move is noteworthy because time is defined as total time spent – including non-face-to-face work, transitioning away from time dominated by counseling. It’s a significant step in a different direction as momentum builds to recognize the effort involved in services that aren’t face-to-face — like care coordination — and marks healthcare’s transition toward adopting value-based models. The move away from fee-for-service has gained steam as COVID-19 sheds a spotlight on the drawbacks of a volume-based system. (Learn more by watching a fireside chat sponsored by athenahealth, “Optimizing RCM and Practice Performance During a Time of Change.”)

Making time count

Activities that may count toward time-related E/M codes are broadly interpreted and include reviewing tests in preparation for a patient’s visit; counseling or educating a patient, family, or caregiver; ordering medications or tests; reporting test results by phone; “pajama time” documentation performed at home; and more.

The move may ultimately offset a gender pay gap and increase feelings of satisfaction among female physicians. Research performed by athenahealth in 2019 shows that female PCPs are 22 percent less satisfied with their jobs, and 31 percent are more likely to say they feel rushed during the workday. That often leads more women to use their evening hours (aka, “pajama time”) to catch up on patient communications and paperwork, for instance.

The same research reflected 20 percent of female PCPs say they work 15 hours a week or more at home outside of normal business hours, as opposed to 15 percent of male primary care physicians. Another 2020 study using de-identified athenahealth data shows that female primary care physicians spend more time with patients for less pay. The 2021 adjustments to evaluation and management codes include new provisions for prolonged service compensation, which could make caregiving more equitable for female providers. 

Readjusted conversion factors to impact specialties

Primary care is just one of the specialties that will see net percentage gains (approximately 13 percent more) in compensation in 2021 thanks to statutory requirements around budget neutrality. The law requires that any changes to the way Medicare evaluates the time, intensity and risk of the provider can’t increase or decrease expenditures for physicians' services overall by more than $20 million. While specialists in endocrinology stand to gain 17 percent, radiologists or anesthesiologists each face a combined impact of -11 percent in the conversion factor. The changes aim to control the cost of care with value-based models that keep patients out of higher-cost settings and reduce the payments for physicians in more expensive procedural specialties.

The American Medical Association president Susan R. Bailey, M.D., called the move “unsustainable” in a year already hard-hit by COVID-19. “Physicians are already experiencing substantial economic hardships due to COVID-19, so these pay cuts could not come at a worse time.”

More comprehensive compensation for virtual care

There are two “upsides” to the final ruling for provider organizations: the scope of both practice for non-physicians and what’s considered telehealth has widened. Previously, CMS has preferred two-way, real-time interactions with both audio and video enabled. Audio-only visits were made reimbursable for the first time during the pandemic, making the inclusion of audio-only E/M services on an interim final basis the biggest surprise in the fee schedule changes. The move piggybacks the expansion of virtual care services, with more than 60 to be added to the list for permanent reimbursements, and others reimbursed through the year in which the public health emergency ends.

The types of providers who can offer virtual care services has also been expanded, and the changes permanently allow physicians assistants, nurse practitioners, and other clinical nurses to supervise administration of diagnostic tests.

Learn more about how foundational revisions to E/M CPT codes may affect workloads and workflow by accessing AMA’s Ed Hub™ module Office Evaluation and Management (E/M) CPT Code Revisions; or virtual workshops from the American Academy of Professional Coders.

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