Reminder, CPT just took effect at the beginning of January. Are You Ready for the Proposed Changes to the CMS Physician Fee Schedule?

What impact will the proposed changes have to your physician compensation plan?  Based on a recent STAT survey from MGMA, 53% of healthcare leaders say they are not prepared for the changes.

Here are some of the high-level changes:

• proposed changes to the evaluation and management codes (E&M)

• Medicare Physician Fee Schedule (PFS) conversion factor will be reduced from $36.09 in 2020 PFS to $32.26, which reflects approximately an 11% decrease
• some moderate changes to Telehealth services
• affirmation of reduction in documentation burden that was finalized in the 2020 PFS

It is important to recognize that when CMS increases or decreases any relative value units (RVU) it is required by law to adjust the conversion factor to stay budget neutral.  Therefore, to offset the increase made to E&M levels, CMS will reduce the conversion factor.

What impact will these changes have on your compensation plan? For those of you with wRVU-based compensation arrangements, the increases in E&M levels will result in an increase in physician compensation which could also result in FMV issues and an unexpected budgetary shortfall to your organization.

Clearly, physician groups and health systems need to perform a deep dive into their compensation plan and assess the impact the increase in E&M levels will have on their compensation plan. Since salary survey data is compiled based on submissions and trends from the previous year, these changes will not be reflected in your MGMA, S&C or ECG surveys until 2022.   This means physician employers should test and more than likely modify their compensation plans in the next quarter.

The biggest impact will be to primary care practices, endocrinologists, rheumatologists, hematologists/oncologists, and other office-based physicians for clinic visits.  Compensation plan development and implementation requires buy-in from many stakeholders, but most importantly, it takes time and close attention to detail.  You want to be sure that your providers are compensated fairly, but that they are not over compensated.  You will want to calculate the projected compensation increase to your physicians vs. the projected revenue shortfall and make the appropriate adjustments to the physician’s total compensation to offset the decrease in revenue.

HOW CAN ENVISION BETTER HEALTH, LLC HELP?

We can assist you in determining the potential impact to your physicians’ salary and your budget.  We can review your current compensation plan or start de novo.  We have experience developing compensation plans for small as well as large provider groups.  Contact us at:

www.envisionbetterhealth.org

www.linkedin.com/in/ncruz-envisionbetterhealth