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Mixed Reaction to Changes in Conversion Factor and E/M Visit Codes for 2021

The 2021 Physician Fee Schedule (PFS) announcement by the Centers for Medicare & Medicaid Services (CMS) has received mixed reactions from healthcare organizations. The downward adjustment of the conversion factor for Calendar Year (CY) 2021 has caused many raised eyebrows in the healthcare industry, mainly due to the present challenges already felt by healthcare providers from the ongoing coronavirus pandemic.

Per CMS, payments are based on the relative resources typically used to furnish the service. Relative value units (RVUs) are applied to each service for physician work, practice expense, and malpractice. These RVUs become payment rates through the application of a conversion factor. We can see why a reduction in the conversion factor is a big deal for healthcare providers.

AMA's President Susan R. Bailey, MD recently said, "This will result in a shocking reduction of 10.2% to Medicare payment rates in the midst of the worsening COVID-19 pandemic while physicians are continuing to care for record numbers of patients diagnosed with COVID-19 and trying to keep the lights on in their practices." She goes on to say the AMA is strongly urging Congress "to prevent or postpone the payment reductions resulting from Medicare's budget neutrality requirement." She added, "Physicians are already experiencing substantial economic hardships due to COVID-19, so these payment cuts could not come at a worse time."

Why is there a reduction in the conversion factor?

According to CMS, payment rates are calculated to include an overall payment update specified by statute. CMS goes on to explain precisely what this means and the reason for the reduction: "With the budget neutrality adjustment, as required by law, to account for changes in RVUs including significant increases for E/M visit codes, the final CY 2021 PFS conversion factor is $32.41, a decrease of $3.68 from the CY 2020 PFS conversion factor of $36.09."

CMS believes that providers will benefit from the E/M changes that will go into effect in 2021. For example, consider the following comments from CMS Administrator Seema Verma, "This finalized policy marks the most significant updates to E/M codes in 30 years, reducing burden on doctors imposed by the coding system and rewarding time spent evaluating and managing their patients' care." She goes on to say, "In the past, the system has rewarded interventions and procedures over time spent with patients - time taken preventing disease and managing chronic illnesses."

Do the E/M changes equal or outweigh the reduction in conversion factor?

As part of their news release, CMS mentioned the increase in payment for E/M office visits, simplified coding, and documentation changes for Medicare billing for these visits will go into effect beginning January 1, 2021. From there, the news release mentions these changes will significantly reduce the burden of documentation for all clinicians, giving them greater discretion to choose the visit level based on either guideline for medical decision-making or time dedicated to patients. CMS estimates these changes are expected to save clinicians 2.3 million hours per year in administrative burden, freeing more time for clinicians to spend with their patients. AMA's President, Dr. Bailey, believes the changes are "foundational improvements." As 2021 is quickly approaching, we will learn soon enough if the E/M changes cover the reduction in conversion factor, unless there is a delay in the reduction in conversion factor due to the ongoing COVID-19 pandemic.

HCP believes providers can benefit from these changes...

Healthcare Compliance Pros' coding and auditing team has thoroughly reviewed and analyzed the changes in store for 2021 and has put together the following list of recommendations for providers to make sure they will actually benefit from the changes rather than be negatively impacted by the 10.2% reduction in the conversion factor.

  1. Focus on documentation - you know the saying "if you didn't document it, it's the same as if you didn't do it?" CMS has said reviewers determine claims to have insufficient documentation errors when the medical documentation submitted is inadequate to support payment for the services billed. Documentation that is accurate and thorough is one of the best ways for healthcare providers to ensure that they are reimbursed for services provided.
  2. Be familiar with time requirements - the changes to E/M services in 2021 include documenting visits based on either time or Medical Decision Making. In 2021, Time will be minimum instead of typical. Time will consist of both face-to-face and non-face-to-face time spent by the physician and/or other qualified healthcare professional(s) on the day of the encounter. Providers should review the updated Time requirements and be familiar with them as time alone can be used for codes 99202, 99203, 99204, 99205, 99212, 99213, 99214, and 99215.
  3. Know your Medical Decision Making -in 2021, Medical Decision Making will include the following three elements: Number and complexity of problems; Amount and/or Complexity of Data to be Reviewed and Analyzed; and Risk of Complications and/or Morbidity or Mortality of Patient Management. There are four types of Medical Decision Making: straightforward, low, moderate, and high. Providers should be aware and pay close attention to Medical Decision Making and make sure documentation supports it.
  4. Make sure Billing and Coding staff are trained on 2021 E/M changes - According to CMS Administrator Seema Verma, the "finalized policy marks the most significant updates to E/M codes in 30 years, reducing burden on doctors imposed by the coding system and rewarding time spent evaluating and managing their patients' care." Like providers, billing and coding staff need to be familiar with the E/M changes in 2021. Did you know Healthcare Compliance Pros offers an E/M Changes for 2021 training module that covers what you need to know?
  5. Audit for deficiencies and missed opportunities - Audits provide an opportunity to look for and address deficiencies and missed opportunities. Quite often, our auditors notice providers could get to a higher level with better documentation. In 2021, to take full advantage of the benefits of the E/M changes and ensure proper reimbursement, an audit that identifies deficiencies and missed opportunities is a must. The findings of an audit, including lessons learned, can be communicated in training materials for providers, coders, and billing staff.

In Conclusion

While 2020 has been a year of uncertainty due to the COVID-19 Pandemic, 2021 should provide opportunities for the healthcare industry to get back on track. Whether there is a hold placed on the conversion factor until things settle down, or if it remains unchanged, we believe providers can benefit from the E/M changes. It starts with bulletproof documentation that supports services billed for. In 2021, both Time and Medical Decision Making are more important than ever before. Healthcare organizations should make sure all billing and coding staff are trained on E/M changes and understand how to ensure what's being submitted doesn't get denied or include missed opportunities for proper reimbursement. This is why an audit is so important and can significantly benefit providers and their practice in 2021 and beyond.

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