2020 Medicare Physician Fee Schedule Final Rule Highlights

A final rule updating the physician fee schedule rates was issued by The Centers for Medicare and Medicaid Services (CMS) this month. The new regulation, which increases the 2019 conversion factor of $36.04 to $36.09 in 2020, will be published in the Federal Register on November 15, 2019.

The final rule reflects a broader strategy to “create a healthcare system that results in better accessibility, quality, affordability, empowerment, and innovation.” It demonstrates efforts to reduce the administrative burden for physicians, allowing for more time providing patient care and less time completing paperwork. CMS estimates this final rule will save providers 2.3 million hours per year through red-tape reduction.

The new rule not only simplifies documentation but also addresses the current perception of lower reimbursement for primary care services. These changes together have the potential to help reduce physician burnout and improve the shortage of primary care physicians.

Five key changes speak to CMS’s stated goals and represent significant changes for calendar years 2020 into 2021.

Revised Tiers for Evaluation and Management (E/M) Visit Payments 

Previously, CMS had proposed collapsing the current 5-level E/M visits into blended rates. In fact, last year CMS finalized blended payment rates for the second through fourth-tier of E/M visits to be effective calendar year 2021. However, in this update, CMS has published a return to separate rates for each level in calendar year 2021. 

According to the American Medical Association, the primary aim of the E/M revisions are[1]:

  1. To decrease the administrative burden of documentation and coding.
  2. To decrease the need for audits through the addition and expansion of key definitions and guidelines.
  3. To decrease unnecessary documentation in the medical record that is not needed for patient care.
  4. To ensure that payment for E/M is resource-based and that there is no direct goal for payment redistribution between specialties.

In the new regulation, established patients will retain current 5-level codes, and the new 4-level coding system will be applied to new patients. This new system deletes new patient office visit code 99201 and provides an add-on code created for prolonged service times. 

CMS has revised the definitions for E/M codes that include time and medical decision-making guidelines for each level. These revisions won’t be effective until January 1, 2021. 

Assuming no further changes in the next year, WRVUs for E/M visits will increase substantially through 2021. The table below lists the current work relative value units (“WRVUs’), illustrating the effective changes in calendar year 2021 based on the 2019 and 2020 final rules.


The full impact of these changes is unknown at this time. Since any changes CMS implements must be budget neutral, it is likely CMS will also implement a reduction in conversion factor and/or reduction in payment rates for other services. The full effect of these changes will be dependent on the mix of services billed. 

Historical Documentation Simplified

The final 2020 rule includes revisions to documentation policies for historical patient records. Previously, providers were required to re-document elements of history and physical exam made by other members of the medical team. Starting in 2020, physicians and certain non-physician providers will be able to review and verify history by simply signing and dating previous medical record notes. 

New Provisions for Opioid Use Disorder (OUD) Treatment

Several provisions related to the opioid crisis are included in the final rule. Changes include:

● Implementing a Medicare Part B benefit for OUD treatment beginning January 1, 2020

● Bundled payments for treatment of OUD

● The addition of the following codes to support telehealth-based OUD treatments: G2086, G2087, and G2088

Simplified Requirement of Physician Supervision of Physician Assistants (PAs) 

Current regulations require general physician supervision for PA services. In the new regulation, this has been updated to provide PAs with greater flexibility to practice. The rule now allows that the physician supervision requirement is met when the PA provides services in accordance with state law and scope of practice rules, within the state of services provided.

Shifts Within Quality Payment Program (QPP) and Merit-based Incentive Payment System (MIPS) 

According to CMS, the 2020 rule was designed to maintain as many of the 2019 requirements possible while reducing physician administrative burden. 

The rule indicates a transition from MIPS into MIPS Value Pathways (MVPs) for the performance period of 2021. MVPs are a conceptual participation framework for MIPS aimed at moving away from single activities and towards a more meaningful, aligned set of measures. These measures aim to connect activities across the following performance categories:

  • Quality
  • Cost
  • Promoting Interoperability
  • Improvement Activities 

There were no changes in category weights from 2019. The performance threshold to avoid a negative payment adjustment under MIPS will increase as follows between 2020 and 2021: Slide1-10


CMS is clear in its efforts to reduce administrative and oversight burden through measures to simplify and better align some elements of MPFS. However, the actual effects and the additional budget changes needed to keep CMS’s budget neutral are still uncertain. Efforts to implement strategies to mitigate the impact of the E/M revisions may be premature at this point given the number of unknowns. 

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  [1] https://www.ama-assn.org/practice-management/cpt/cpt-evaluation-and-management

Topics: Medicare, Physician Compensation

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