Cold Iron Truth

The 2021 Medicare proposed rule: The good, the bad, and the ugly


As most of you know, Medicare publishes its proposed rule, which determines the physician fee schedule, around July 1 each year, accepts comments for 60 days, and then publishes a final rule on or around Nov. 1, which becomes final on Jan. 1 of the following year. The proposed rule is watched closely and has great impact, because not only are Medicare fees based on the rule, but most private insurances are based on Medicare.

Dr. Brett M. Coldiron, a dermatologist and Mohs surgeon in Cincinnati.

Dr. Brett M. Coldiron

This year’s proposed rule, announced in early August, is extraordinary by any past standard. It can be found here.

It cuts the conversion factor (which is what the work, practice expense, and malpractice values are multiplied by to get a payment) by 10.6%, from $36.09 to $32.26. This is necessary to maintain “budget neutrality” since there is a fixed pool of money, and payments for cognitive services are increasing. The overall effect on dermatology is a 2% cut, which is mild, compared with other specialties, such as nurse anesthetists and radiologists, both with an 11% decrease; chiropractors, with a 10% decrease; and interventional radiology, pathology, physical and occupational therapy, and cardiac surgery, all with a 9% decrease. General surgery will see a 7% decrease. Those with major increases are endocrinology, with a 17% increase; rheumatology, with a 16% increase; and hematology/oncology, with a 14% increase.

The overall push by CMS (and the relative value update committee) is to improve the pay for cognitive services, that is evaluation and management (E/M) services. Since dermatology also provides such services, the effect of the proposed rule will vary dramatically depending on your case mix. I must also point out that, since existing overhead is relatively fixed, say at 50%, a 10% decrease in revenue may translate into a 20% loss in physician income.

The good

Simplified coding and billing requirements for E/M visits will go into effect Jan. 1, 2021. For dermatology, any visit where a decision to do a minor procedure or prescribe a medication takes place will become a level 4 visit. Most of the useless documentation requirements and need to examine multiple organ systems will be eliminated. The most common E/M code currently used by dermatologists is a level 3, and this will on average move up to a level 4. Thus, general dermatology will benefit from the new rule. For example, if a dermatologist sees a patient and does a tangential biopsy of the skin, the payment will be $214.52, compared with $178.65 in 2020.

Cold Iron Truth 2021 Medicare -- the good

The bad

As mentioned above, the impact will vary by case mix. Those doing a lot of surgery will see a much larger cut. Mohs surgeons, for example will see about a 6.5% decrease.1

Aggravating the cuts to surgery is the fact that, while CMS has bolstered the pay for E/M stand-alone codes, they did not increase the reimbursement level of the built-in follow-up visits inside the 10- and 90-day global periods.

Cold Iron Truth 2021 Medicare -- the bad


Next Article: