For the last several years, there has been growing consensus that primary care physicians have been underpaid relative to specialists. Last year, CMS and the American Medical Association kicked off an effort to overhaul the Evaluation and Management codes for the first time in 30 years.
In April, the AMA released revisions to be effective in 2021. A few weeks ago, CMS released its annual Physician Fee Schedule with proposed changes to accommodate the AMA’s revisions. In so doing, CMS also took advantage of a once in a generation opportunity to reset the RVUs for each of these codes, thus hiking payment considerably to the several practice areas that bill the most for these services.
Everyone else gets caught in the crossfire.
The purpose of the revisions is to allow physicians more flexibility in the services they provide, and the documentation required. History and exams will no longer be used to select the code level. Instead, these activities will be performed when clinically appropriate. Physicians will select higher codes based on level of Medical Decision Making and time spent on the day of the visit.
Because the codes are now tied more directly to time spent, the AMA and CMS amended the Work RVUs to account for the additional time required for more complex cases. The AMA is also deleting CPT Code 99201 and adding two prolonged visit codes.
Here is where the trouble starts.
The law requires that when changes to certain RVUs result in an estimated increase in Medicare spending in excess of $20 million, CMS must offset the change with reductions elsewhere. The revised E/M codes and other changes would result in an 11% increase in spending. Using its typical budget neutrality adjustment process and applying it proportionately to all other practice areas results in a significant reduction in Medicare payments to some physicians.
The offsetting increases would occur in practice areas, such as Endocrinology, which bill under E/M codes to manage chronic conditions like diabetes.
Worth noting that the hardest hit practice areas are those that have been part of roll-up strategies in recent years like MD, Team Health and Envision. The locum tenens segment of AMN will also suffer depending on their mix of specialties. We won't know how HCCOU's soon to be acquired SOC Telmed will be affected until we know more about their practice areas. Because an exam no longer determines the code used, it seems that TDOC should benefit.
Fixing this problem will not be easy. The statute is not ambiguous. Previous budget neutrality waivers have occurred but only through an act of Congress. Allowing a budget neutrality waiver to tag along on a stimulus bill seems like the only viable option. There may be some emergency power buried deep within the code that could be exercised by imaginative lawyers but thus far that option has not emerged.
With inpatient and ambulatory visits down to 80% of baseline, the change is more tough sledding particularly for hospital owned practices. For primary care practices, virtual or otherwise, the increased payment will help overcome extended closures due to COVID-19 and perhaps provide a lifeline to keep practices alive.
Emily Evans
Managing Director – Health Policy
