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Winners and Losers: 2021 Physician Payment Rules

Some specialties see double-digit increases while others see decreases of up to 10%

By Sue Hermann | December 4, 2020

Endocrinologists and rheumatologists are up; chiropractors, nurse anesthetists and radiologists are out. That’s according to 2021 physician payment rules recently released by the Centers for Medicare & Medicaid Services (CMS).

The revisions to the rates governing Medicare reimbursement honored Congressional legislation from 2018 mandating a flat increase for the coming year, but benefitted some specialties at the expense of others. In general, procedure-based physicians saw a reimbursement reduction while office-based specialists benefitted from a reimbursement increase (see accompanying graphic for a complete list of payment changes).

“Overall, the recent announcement was relatively good news for hospital outpatient departments and ambulatory surgery centers,” said Jason Almiro, director of healthcare knowledge management at BOK Financial. “While several physician specialties are scheduled to receive payment reductions during 2021, Congress may step in and mitigate CMS’ planned physician payment reductions.”

In other changes, CMS added to the list of telehealth services that will be reimbursable by Medicare after the pandemic. The division of the Department of Health and Human Services also added more than 50 other services to a newly created list of telehealth services that will be reimbursable through the end of the calendar year in which the public emergency/pandemic ends.

“It’s expected that these services will ultimately become part of the permanent list of reimbursable telehealth services,” said Almiro.

Currently, many of these telehealth services will only be available to rural Medicare beneficiaries. However, CMS noted that “this is an important step” toward making telehealth services more broadly available to others outside of rural communities.

Hospital outpatient changes

Under the new rules, outpatient departments at for-profit hospitals will see an increase of 3.2% while departments at not-for-profit hospitals will only see an increase of 2.3%. CMS projected that total hospital outpatient department payments will increase by $7.5 billion to a total of $83.9 billion during 2021.

Based on a recent appeals court decision, CMS will continue to reimburse 340B drugs at the Average Selling Price (ASP) less 22.5%, down from ASP plus 6%. CMS alluded to additional future changes – potentially more favorable – saying that they will “continue to consider and evaluate the appropriateness of using 340B hospital survey data to set further payment rates for 340B drugs.”

CMS also made it easier for some physician-owned hospitals to expand their facilities, removing the cap on the number of additional operating rooms, procedure rooms and beds that can be approved with an exception application as well as the requirement that the expansion must occur on the hospital's main campus.

“These changes will allow physician-owned hospitals that qualify as “high Medicaid facilities” to more easily expand their operations,” explained Almiro.

CMS will begin phasing out a list of procedures that previously had to be conducted in an inpatient hospital setting beginning next year. This change will expand the list of procedures that can be performed in hospital outpatient or other departments – often at a lower reimbursement rate.

Ambulatory surgery center changes

CMS will increase payments to ambulatory surgery centers (ASCs) by 2.4% during 2021 to an estimated $5.4 billion. According to CMS, this update will help promote “site-neutrality” between hospitals and ASCs and encourage the migration of services from the hospital setting to the lower-cost ASC setting.

CMS continues to push for more procedures to be conducted at ASCs, adding 11 procedures to the ASC covered procedures list. CMS also eased the criteria used to add surgical procedures to the ASC covered procedure list, adding an additional 267 surgical procedures beginning 2021.