It’s January 1, 2021. Do you know what happened to your RVUs?

The 2021 Medicare physician fee schedule final rule was released this past week, and with the pandemic demanding all our time and energy (and then some), many physicians and administrators may not have taken notice of the 2,165 page final rule, the few headlines it made, or the massive implications it will have to physician compensation in a few short weeks. Here are a few big changes that may affect your compensation as early as next month:

  1. RVU allocations have increased for codes heavily used by primary care physicians and specialties that treat patients with chronic conditions.
  2. The physician fee schedule is required by law to be budget neutral. As the relative value units (RVUs) increase, the physician fee schedule, or Medicare rate under which physicians are compensated, is being reduced to offset the cost. This is generating a 10.2% reduction in the conversion factor that drives Medicare payment rates.
  3. These rates only affect Medicare, but private insurers use these changes as guideposts for their own payments. Expect broader changes across payers as a trickle-down effect.

Now that you know, here are some steps you can take to prepare and protect your practice.

  1. Taking into account the specialties and services you provide, model out the impact to your entire book of business, as well as the compensation for each employed physician.
  2. Identify outliers. Who are the big winners and losers in this case? Are they still within fair market value for their specialty? Is a decrease in productivity weighting within their compensation plan appropriate? What does their contract allow for in regards to such adjustments?
  3. Some practices and individual physicians will not withstand this change, should it take effect as scheduled in a few short weeks. What are your plans to retain employed physicians if their compensation is adversely affected? How does this change your local market and strategy?
  4. Last but not least, keep an eye on H.R.8702 – Holding Providers Harmless From Medicare Cuts During COVID-19 Act of 2020, a bill which proposes delaying the fee schedule cuts until after COVID. 

Did the new fee schedule make the news near you? How are you preparing for it? How are you anticipating it will affect your practice?

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