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E/M and ME: How will the 2021 E/M coding changes impact medical practices?

E/M and ME: How will the 2021 E/M coding changes impact medical practices?

  • January 26, 2021

Much has been written about and discussed relative to the prospective impact of the 2021 changes to the Medicare Physician Fee Schedule (MPFS) in the past year, with virtually all healthcare organizations publishing insights or conducting training regarding the financial implications of these significant changes, with Coker being no exception.

If you are not caught up, take a minute and listen to the informative and easy-to-understand Coker webinar completed last month.

As we continue to speak with clients, especially in the past 60 days, one question remains: what does this mean for my practice?

In a year of uncertainties and financial hardships for independent medical practices, many physicians are concerned about the future of their medical practice under these coding changes. Even before 2020 and its unforeseen challenges, private practices have become the exception in an increasingly hospital-employed/aligned industry. Those that remain private can be successful due to their innovative strategies, services, scale, or location; however, every organization has felt the pressure of decreasing reimbursement and increasing operational challenges. Strong leaders are looking forward and wondering if there is a way to use the evaluation and management (E/M) code updates to their advantage, and if not, how best to weather the storm.

The simple answer is it depends on your specialty. The complicated answer is that due to maintaining budget neutrality, the wRVU amount tied to E/M codes is increasing, but the conversion factor is decreasing for MPFS payments. So, there are opposing factors at play, resulting in proverbial winners and losers.

 

2021 Reimbursement Impact for Selected Specialties

Final 2021 MPFS (Table 106)

As noted above, we expect radiology to experience the most significant negative impact, while endocrinology is projected to see the most significant positive impact. In reviewing the data by specialty, the key conclusion is that specialties with a high focus on procedures and hospital-based specialties tend to fare worse under this model, with specialties focused on office visits faring better.

So again, the key question is, what does this mean for my practice?

 

Negative Impact of E/M Changes

There are many options available to specialties that expect to see decreases in reimbursement due to these E/M changes (as noted in the chart above, this includes radiology, physical/occupational therapy, and anesthesiology, among others). While these specialties will be impacted negatively related to reimbursement, physicians on a wRVU-based compensation plan (virtually all employed/aligned providers) will still technically see an increase due to the increase in all office-based E/M code wRVUs (at least until their hospital/health system partner adjusts the compensation model). Thus, if you are currently employed or aligned, it may make great sense to continue with that affiliation for the time being.

Conversely, if your practice is currently independent, there is an opportunity to affiliate with a hospital to align provider compensation with production versus reimbursement. While organizations will have to modify their plans due to these changes, it is still likely that physicians would see an increase in compensation under an aligned model versus remaining independent. Further, it is imperative to understand that aligned does not mean employed, with a host of options available to practices that wish to remain independent while stabilizing their financial status.

Suppose alignment is not an option you are willing to consider. In that case, there are still many internal initiatives that should be considered to ensure you are coding correctly and efficiently while receiving all potential reimbursement for which you are eligible.

 

Positive Impact of E/M Changes

Suppose your practice is one of the “lucky” specialties that stands to reap the reward from these E/M updates (such as endocrinology, hematology/oncology, or family practice). In that case, you still need to prepare your organization and ensure you have updated your processes internally to realize the potential increases fully. Specifically, you should consider:

  • Education and training of providers, in-house coders, and other revenue cycle management personnel
  • Review of EMR templates and internal policies to support new requirements and necessary revisions
  • Develop audit process and ongoing education

 

If anything is true about healthcare, the industry is continually changing, so now is not the time for your practice to rest on its laurels; recognize further changes may also be coming for your specialty in the near-term future.

 

Employed Providers

If you are already employed or employ providers, it is essential to understand how this may affect wRVU-based compensation plans and the associated financial implications. Providers and leadership should review the expected impact of E/M updates on wRVUs for their employed providers, complete applicable pro forma modeling supported with data, and strategize on necessary adjustments to compensation methodologies, including considering the impact of lagging survey data and fair market value/commercially reasonable parameters.

 

Summary

While this level of change to such an integral part of the healthcare business can feel daunting, opportunities abound for discerning practices. As the industry continues to evolve, organizations should ensure they remain ahead of these changing dynamics and set themselves up to be successful, even in an environment that can feel as if it is entirely out of their hands.

 

Next Steps

  • TAYLOR COWART

    TAYLOR COWART

    Senior Associate

    Contact
  • AIMEE GREETER

    AIMEE GREETER

    Senior Vice President

    Contact

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