CMS’ Proposal for 2021 Medicare Physician Fee Schedule Includes Significant Decrease in the Conversion Factor

Last Updated: Aug 6, 2020


The Centers for Medicare and Medicare Services (CMS) issued a proposed rule on Aug. 3,2020 that would update physician fee schedule payment rates and quality provisions for calendar year (CY) 2021.

CMS has proposed to retain certain codes for telehealth services that were temporarily added during the COVID-19 public health emergency (PHE). The planned changes are consistent with President Trumps’ executive order on telehealth expansion issued the same day.

The Pennsylvania Medical Society (PAMED) is in the process of reviewing the 1,355-page rule to. We are concerned about the effect that payment decreases for some specialties will have on Pennsylvania physicians and medical practices. Following a careful review of the proposed rule, PAMED will determine our next advocacy steps and will share updates with our members.

In the meantime, here is an overview of noteworthy provisions included in the proposed rule:

  • Conversion Factor – CMS is proposing the conversion factor (CF) to calculate payment rates to be $32.26 for 2021, representing a nearly 11 percent decrease from the $36.09 CF for 2020.

    Due to budget neutrality requirements set by law, proposed increases to office visit payments, as well as other proposed payment increases, are being offset by payment reductions to other services – for example, surgery and anesthesia.

    In the proposed rule, CMS includes a table with an estimated impact on total allowed charges by specialty. View the table here.
  • E/M Coding and Payment Changes – CMS plans to largely align the E/M coding recommendations from the CPT® Editorial Panel for implementation Jan. 1, 2021.

    CMS is proposing to clarify the time for which prolonged office outpatient E/M visits can be reported and a revision to the time used establish rates for this code set.

    CMS is also proposing to revalue these code sets connected to outpatient E/M visits equal to the increases for E/M visits: End-State Renal Disease Monthly Capitation Payment Services; Transitional Care Management Services; Maternity Services; Cognitive Impairment Assessment ad Care Planning; Initial Preventive Physical Examination and Annual Wellness Visits; Emergency Department Visits; Therapy Evaluations; and Psychiatric Diagnostic Evaluations and Psychotherapy Services.

  • Telehealth - The COVID-19 pandemic has led to a rapid increase in telehealth usage nationwide. The CMS estimates that, from mid-March through early July, over 10.1 million Medicare beneficiaries have received a telehealth service – compared to 14,000 beneficiaries receiving a telehealth service in an average week prior to the emergency.

    The proposed rule includes additions to Medicare’s Category 1 telehealth list. Visit complexity associated with certain E/M outpatient visits and prolonged services E/M codes are among the codes CMS is proposing to add to the Category 1 telehealth list.

    CMS is also proposing to create a third temporary category of services to the list of Medicare telehealth services. Category 3 describes certain services – for example, emergency department services – added to the Medicare telehealth list during the PHE. CMS is proposing that the services remain on the list through the end of the calendar year in which the current public health emergency expires.

  • Quality Payment Program Updates – Some of the key changes proposed for the QPP in 2021 include:
    • Merit-Based Incentive Payment System (MIPS) performance threshold would be 50 points.
    • MIPS performance categories would have the following weights: Quality – 40 percent; Cost – 20 percent; Promoting Interoperability – 25 percent; and Improvement Activities – 15 percent.
    • Beginning in the 2021 performance period, CMS proposes to remove the CMS Web Interface as a collection type and submission type for reporting MIPS quality measures.
    • CMS plans to delay the implementation of the MIPS Value Pathways (MVPs) performance framework option from 2021 to 2022. The goal of the new framework, when implemented, is to create a set of measure options more relevant to a clinician’s scope of practice.
    • CMS is proposing to implement Advanced Alternative Payment Model Performance Model that would be complementary to MVPs.
    • The proposed rule includes a provision to increase the complex patient bonus from 5 to 10 points for 2020 performance only to account for the complex patient population due to COVID-19.

  • Appropriate Use Criteria (AUC) Program – The AUC Program is a consulting and reporting process developed for outpatient advanced imaging. No further changes to the Appropriate Use program were included in the proposed rule. As a result, CMS will be moving forward with mandatory AUC consultation and reporting requirements effective Jan. 1, 2020. PAMED offers more details on AUC in this fact sheet.

A PDF of the complete 2021 Medicare PFS proposed rule is available here.

A copy of the proposal has been published via the Federal Register and is available here. The deadline to submit public comments on the proposal was Oct. 5, 2020. A final version of the rule will be released this fall.

Additional Resources

CMS offers these fact sheets with more information on various components of the proposed rule:

Medical associations such as the American Medical Association have already issued statements urging Congress to waive Medicare’s budget neutrality requirements for office visits and other payment increases. The AMA notes the negative impact that payment cuts will have on physicians who were already experiencing economic hardships due to COVID-19. Read the AMA’s statement.

The American College of Surgeons (ACS) has also issued a statement opposing the payment cuts. “The proposed rule will likely force surgeons to take fewer Medicare patients, leading to longer wait times and reduced access to care for older Americans,” ACS said. Read statement.

PAMED members with questions on the 2021 Medicare PFS proposal can contact our Knowledge Center at 855-726-3348 or

Login to be able to comment

Leave a comment