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On August, 3 2020, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that announces and solicits public comments on proposed policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, on or after Jan. 1.

The CY 2021 PFS proposed rule is one of several proposed rules that reflect a broader Administration-wide strategy to create a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation.

Background on the Physician Fee Schedule

Since 1992, Medicare has paid for the services of physicians and other billing professionals under the PFS.  Physicians’ services paid under the PFS are furnished in a variety of settings, including physician offices, hospitals, ambulatory surgical centers, skilled nursing facilities and other post-acute care settings, hospices, outpatient dialysis facilities, clinical laboratories, and beneficiaries’ homes.  Payment under the PFS is also made to several types of suppliers for technical services, often in settings for which no institutional payment is made.  For most services furnished in a physician’s office, Medicare makes payment to physicians and other professionals at a single rate based on the full range of resources involved in furnishing the service.  In contrast, PFS rates paid to physicians and other billing practitioners in facility settings, such as a hospital outpatient department (HOPD) or an ambulatory surgical center, reflect only the portion of the resources typically incurred by the practitioner in the course of furnishing the service.  For many diagnostic tests and a limited number of other services under the PFS, separate payment can be made for the professional and technical components of services.  The technical component is frequently billed by suppliers like independent diagnostic testing facilities and radiation treatment centers, while the professional component is billed by the physician or practitioner.

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.  Payment rates are calculated to include an overall payment update specified by statute.


CY 2021 PFS Ratesetting and Conversion Factor

We are proposing a series of standard technical proposals involving practice expense, including the implementation of the third year of the market-based supply and equipment pricing update, and standard ratesetting refinements to update premium data involving malpractice expense and geographic practice cost indices (GPCIs).

With the budget neutrality adjustment to account for changes in RVUs, as required by law, the proposed CY 2021 PFS conversion factor is $32.26, a decrease of $3.83 from the CY 2020 PFS conversion factor of $36.09.

Medicare Telehealth and Other Services Involving Communications Technology

For CY 2021, we are proposing to add the following list of services to the Medicare telehealth list on a Category 1 basis. Services added to the Medicare telehealth list on a Category 1 basis are similar to services already on the telehealth list.

Read the list of services now available for Medicare telehealth.