How will MPFS changes affect your radiology practice?

When the Medicare Physician Fee Schedule (MPFS) final rule was published in December, it looked like radiology was facing a significant cut in Medicare reimbursement for 2021. We reported that professional component fees would drop 10% to 11%, while global reimbursement would see a lesser impact.

The Consolidated Appropriations Act, 2021 (CAA) rolled back those cuts at least for 2021, although the Medicare fee schedule for radiology will likely continue to be adjusted downward in the future as implementation of the revalued evaluation and management (E&M) services is fully phased in.

Sandy Coffta from Healthcare Administrative Partners.

The final conversion factor for 2021, after adjustment by the CAA, is $34.89. This is a 3.3% reduction from the 2020 rate. The adjustment of the conversion factor upward from the MPFS final rule was accomplished by eliminating a new E&M code (G2211) that was originally introduced for complex visits. The use of G2211 has been deferred until 2024.

Our analysis of the most frequently performed procedures shows that professional component fees have been reduced 3% to 5%, while global fees have been both increased and decreased over a much wider range. Global fees for screening mammography will decrease by 4% and dual-energy x-ray absorptiometry (DEXA) by 3%, but many diagnostic x-ray exams will increase by 3% to 5%.

There are some outlier exams to note. The professional component of the high-volume CT thorax exam (CPT 71250 and 71260) has been cut 10% and the global fees have been cut 9% and 7%, respectively. As we reported in a recent article on coding changes for 2021, the CT lung cancer screening exam code has changed from G0297 to the new code 71271, and along with that change the reimbursement for the exam has been drastically revised. The global reimbursement has been reduced by 38%, while the professional reimbursement has been increased by 1.4%.

The effect on your practice

A volume-weighted analysis is the only way the actual result of all these changes can be evaluated for your individual practice. This process involves gathering data from the previous year that show the number of times each procedure code was billed for Medicare patients.

The procedure volumes are multiplied by the 2020 Medicare fee schedule rates in one column, and again by the 2021 Medicare fee schedule rates in another column. Totaling each column will reveal the total practice revenue for the previous year and the reimbursement that the practice could expect in the current year assuming the volume of each procedure is unchanged. The percentage increase or decrease can then be calculated.

Using this weighted-average methodology on a composite compiled by Healthcare Administrative Partners, we found a 4.24% decrease in professional component reimbursement and a 1.78% decrease in global reimbursement. Below is what a typical full-service practice might find after performing its volume-weighted analysis.

The professional component of radiology procedures, which is more heavily weighted by work relative value units (RVUs) rather than practice expense RVUs, suffered more from the increased valuation of E&M services in the 2021 Medicare fee schedule. E&M services, which are most often associated with interventional procedures, is the only area in our sample hospital practice that shows an increase. Due to the high volume represented by CT procedures, this modality shows the largest financial loss and also the largest percentage decrease.

Global reimbursement at the imaging center is less affected by this shift. In fact, some increases are noted in general diagnostic x-ray and in ultrasound.

These results depend on the mix of modalities and the volume performed for each procedure. The final analysis for any individual practice will depend on its structure (hospital-based professional component versus global imaging center billing) and its mix of modalities.

Understanding the annual changes in Medicare's fee schedules is useful when analyzing areas where the practice's revenue might be increasing or decreasing. Many commercial payers base their fees on the Medicare table, although not all of them make exactly the same changes, or at the same time, as Medicare does. The same volume-weighted analysis technique can be applied to commercial fee schedules as well.

Sandy Coffta is the vice president of client services at Healthcare Administrative Partners.

The comments and observations expressed are those of the author and do not necessarily reflect the opinions of AuntMinnie.com.