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2021 Medicare Physician Fee Schedule Final Rule: What You Need to Know

2021 Medicare Physician Fee Schedule Final Rule: What You Need to Know

Earlier this month, the Centers for Medicare and Medicaid Services (CMS) published the final rule of the Medicare Physician Fee Schedule (PFS) for 2021. At the heart of the MPFS is the annual conversion factor update. After legislatively mandated adjustments, the 2021 conversion factor will be $32.41, a 10 percent decrease from the 2020 PFS conversion factor of $36.09, though slightly higher than the $32.26 in the 2021 proposed rule.

In addition to changing the payment rates for 2021, the Final Rule also makes changes to several payment policies. We’ve highlighted a few of the biggest changes.

E/M Changes

In the 2020 Medicare Physician Fee Schedule, CMS finalized simplified coding and billing requirements for office/outpatient E/M visit codes that will go into effect January 1, 2021. Along with those changes, RVUs for the three highest E/M levels for both new and established patients will be increased. 

“The Medicare population is increasing, with over 10,000 beneficiaries joining the program every day. Along with this growth in enrollment is increasing complexity of beneficiary healthcare needs, with more than two-thirds of Medicare beneficiaries having two or more chronic conditions,” CMS said in a press release announcing the changes. “Increasing the payment rate of E/M office visits recognizes this demand and ensures clinicians are paid appropriately for the time they spend on coordinating care for patients, especially those with chronic conditions.”

CMS also is increasing the value of many other services that are comparable to or include office/outpatient E/M visits, including emergency department visits, end-stage renal disease capitated payment bundles, physical and occupational therapy evaluation services, and others. The agency says these changes will “help to ensure that CMS is appropriately recognizing the kind of care where clinicians need to spend more face-to-face time with patients, like primary care and complex or chronic disease management.”

For many office-based specialties, the changes are expected to result in a positive net increase in Medicare allowable charges, including the following:

  • Allergy/Immunology: +9%
  • Endocrinology: +16%
  • Family Practice: +13%
  • Hematology/Oncology: +14%
  • Interventional Pain Management: +7%
  • Rheumatology: +15%

For other specialities, especially hospital-based and non-patient facing specialties, the policy changes are expected to result in significant decreases in Medicare allowable charges, including the following:

  • Anesthesiology: -8%
  • Cardiac Surgery: -8%
  • Interventional Radiology: -8%
  • Nurse Anesthetists/Anesthesiologist Assistants: -10%
  • Pathology: -9%
  • Physical Therapists/Occupational Therapists: -9%
  • Radiology: -10%


During the COVID-19 public health emergency (PHE), CMS temporarily added numerous codes to the list of approved telehealth services. These temporary codes are known as Category 2 telehealth codes. In the final rule, CMS is permanently adding some of these services to the approved telehealth services list (Category 1 codes), is extending others through the calendar year in which the PHE ends (what are now called Category 3 codes), and removing some from the list at the end of the PHE (or remain Category 2 codes). 

Some services added as Category 2 codes during the PHE are so similar to other Category 1 codes that CMS is adding them to the permanent list. Those services include the following:

  • Group Psychotherapy (90853)
  • Psychological and Neuropsychological Testing (96121)
  • Domiciliary, Rest Home, or Custodial Care services, Established patients (99334- 99335)
  • Home Visits, Established Patient (99347- 99348)
  • Cognitive Assessment and Care Planning Services (99483)
  • Visit Complexity Inherent to Certain Office/Outpatient E/Ms (G2211)
  • Prolonged Services (G2212)

According to CMS, services which do not present “significant concerns” with regards to “patient safety, quality of care, or the ability of clinicians to provide all elements of the service remotely” are approved for continuation on the temporary list of telehealth services (Category 3) through the calendar year in which the PHE ends. However, they will be available only to rural patients as allowed by program requirements between the time the PHE ends and the end of that calendar year. Those services include the following:

  • Emergency Department Visits (99281-99285)
  • Domiciliary, Rest Home, or Custodial Care services, Established patients (99336, 99337)
  • Home Visits, Established Patient (99349, 99350)
  • Nursing facilities discharge day management (99315, 99316)
  • Psychological and Neuropsychological Testing (96130-96133; 96136-96139)
  • Therapy Services, Physical and Occupational Therapy, All levels (97161- 97168; 97110, 97112, 97116, 97535, 97750, 97755, 97760, 97761, 92521- 92524 , 92507)
  • Hospital discharge day management (99238- 99239)
  • Inpatient Neonatal and Pediatric Critical Care, Subsequent (99469, 99472, 99476) 
  • Continuing Neonatal Intensive Care Services (99478-99480) 
  • Critical Care Services (99291-99292)
  • End-Stage Renal Disease Monthly Capitation Payment codes (90952, 90953, 90956, 90959, and 90962) 
  • Subsequent Observation and Observation Discharge Day Management (99217; 99224- 99226)

Originally, some of the codes finalized for the Category 3 list were considered inappropriate for that list because of “increased concerns for patient safety or jeopardizing quality of care.’ However, once the PHE ends and “all of the statutory restrictions will also apply,” CMS does not “anticipate any significant increase in utilization.” Also, adding them to the Category 3 list may allow for additional analysis to determine if they should be added to the telehealth list permanently.

Direct Supervision by Interactive Telecommunications Technology 

During the COVID-19 PHE, CMS revised the definition of “direct supervision” to include virtual presence of the supervising physician or practitioner using interactive audio/video real-time communications technology. In the 2021 PFS final rule, CMS extended that revision through the later of the end of the calendar year in which the PHE ends or December 31, 2021.

Supervision of Diagnostic tests by Certain Nonphysician Practitioners (NPPs)

Also during the COVID-19 PHE, nurse practitioners (NPs), clinical nurse specialists (CNSs), physician assistants (PAs) and certified nurse-midwives (CNMs) have been allowed to supervise the performance of diagnostic tests in addition to physicians. Previously, these nonphysician practitioners were authorized under Medicare regulations to order and furnish diagnostic tests, whereas only physicians (medical doctors and doctors of osteopathy) were authorized to supervise the performance of diagnostic tests.  

For 2021, CMS is adding this diagnostic supervisory role permanently to the scope of practice for NPs, CNSs, PAs, CNMs, and CRNAs as long as it falls within their state scope of practice and applicable state law and provided they maintain the required statutory relationships with supervising or collaborating physicians. 


In light of the COVID-19 PHE, CMS has finalized limited changes to MIPS policies that “focus on the highest priorities for the program.” Here are a few changes to particularly take note of.

Quality and Cost Performance Category Weighting

For 2021, performance categories will be weighted as follows for individual MIPS eligible clinicians, groups, and virtual groups reporting traditional MIPS. These values represent slight changes from 2020 (as noted below):

  • Quality = 40% (down 5% from 2020)
  • Cost = 20% (up 5% from 2020)
  • Promoting Interoperability = 25%
  • Improvement Activities = 15%

By law, the Cost and Quality performance categories must be equally weighted at 30% beginning in the 2022 performance period.

For APM Entities reporting traditional MIPS in 2021, performance categories will be weighted as follows:

  • Quality = 50%
  • Cost = 0%
  • Promoting Interoperability = 30%
  • Improvement Activities = 20%

Performance Threshold and Payment Adjustments

For the 2021 performance period, the performance threshold will increase to 60 points, up from 45 in 2020, and the exceptional performance threshold would remain at 85 points,

As well, in 2020, the MIPS program reached the maximum negative payment adjustment of -9 percent, with positive payment adjustments up to a factor of 9 percent, and those adjustments will remain the same for 2021.

Performance PeriodPerformance ThresholdExceptional Performance BonusPayment Adjustment
2017370Up to +/- 4%
20181570Up to +/- 5%
20193075Up to +/- 7%
20204585Up to +/- 9%
20215085Up to +/- 9%

Performance Category Updates

Among the various performance categories, the following updates and changes have been finalized for 2021 and beyond:

  • Quality: Address substantive changes to 113 existing MIPS quality measures, removing 11 quality measures from the MIPS program, and proposing a total of 209 quality measures starting in the 2021 performance year, including two new administrative claims-based measures; remove one measure from the emergency medicine quality measure set: 333 – Adult Sinusitis: Computerized Tomography (CT) for Acute Sinusitis (Overuse).
  • Cost: Update existing measure specifications to include telehealth services that are directly applicable to existing episode-based cost measures and the TPCC measure.

MIPS Value Pathways

Because of the COVID-19 PHE, MIPS Value Pathways (MVPs), which were supposed to begin in 2021, will not be available for MIPS reporting until the 2022 performance period, or later. In the meantime, the 2021 final rule does provide several tweaks to the program, including allowing qualified clinical data registries (QCDRs) to support MVPs starting in 2022.  

Complex Patient Bonus

Finally, CMS is doubling the complex patient bonus for the 2020 performance period only. Clinicians, groups, virtual groups and APM Entities would be able to earn up to 10 bonus points (instead of 5 bonus points) to account for the additional complexity of treating their patient population due to COVID-19.

Learn More

For more information about the final rule, including numerous policies that we didn’t have room to highlight, check out the following resources:

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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