Every physician knows that change is inevitable in the medical world. One major change that is starting to take effect is the 2021 CMS Physician Fee Schedule. Physicians can expect increases and decreases in work RVUs as well as changes in Medicare reimbursements.

Learn more about the 2021 CMS Physician Fee Schedule here. 

Hospitals are making strategic choices about when they are going to implement the new Physician Fee Schedule (PFS). While they are allowed to implement it straightaway, they also have the ability to wait until July 1, 2022. 

The timeline for 2021 PFS implementation can have a big impact on physician contracts. It is important for physicians to complete contract reviews as soon as they find out when their facility is implementing the new fee schedule. 

Read on to find out more about the Physician Fee Schedule and how these timelines could directly impact your pay. 

Impact of 2021 Physician Fee Schedule on Specialities

With the 2021 Physician Fee Schedule, some specialties can expect major changes in work RVUs. These changes directly impact their compensation. 

Here is a table illustrating the percent of change per specialty:

Specialty% of Increase in Total Work RVUs
General Surgery3%
Gastroenterology3.8%
Obstetrics/Gynecology3.9%
Orthopedic Surgery6.3%
Cardiology8.4%
Pediatrics13.5%
Internal Medicine17.4%
Hematology/Oncology17.4%
Family Medicine19.3%
Urgent Care24.4%

Physicians within these specialties can expect increases in their total work RVUs. 

The Centers for Medicare and Medicaid Services website has more info on the specifics of the 2021 Physician Fee Schedule. 

Professionals in family medicine and urgent care can expect dramatic changes in their work RVUs. Many of these changes are in direct correlation with increases in admittances from COVID-19. Urgent care and family medicine physicians should be first in line to review for contract reviews, to ensure optimal compensation in line with new work RVUs. 

Financial Impact of RVU Changes

Understanding the financial impact of these RVU changes is key. It is estimated that work RVUs will increase by an estimated 13%, at the same level of professional activity, under the 2021 Physician Fee Schedule for certain specialties. 

To get a better understanding of how the 2021 fee schedule will change compensation amounts, here is an example of total changes across 13 specialties in a healthcare facility with 122 providers:

Work RVUsCurrent CompensationFuture CompensationDifferencePercent Change
Totals under 2020 PFS712,011$41.7 million$42.6 million$942,7522.26%
Totals under 2021 PFS803,893$41.7 million$49 million$7.3 million17.50%

What this table means is that hospitals will have to spend an additional $7.3 million on physicians if they implement the 2021 PFS without making any changes to their current compensation plan.

2021 Physician Fee Schedule Implementation Options

Hospitals have a few options for implementing the 2021 Physician Fee Schedule. 

Here are the two main ones:

  1. Healthcare facilities can continue using the 2020 Physician Fee Schedule until July 1, 2022. During this time, the facility would need to plan for the switch to the 2021 Physician Fee Schedule. This means that they should run the 2021 PFS, in a simulation, at the same time as the 2020 PFS to understand the impact on compensation and reimbursements. 
  2. Healthcare facilities can move to the 2021 Physician Fee Schedule on July 1, 2021. The difficulty that organizations are having with this plan is that it requires a lot of planning in a short period of time. Administrators would need to quickly adjust productivity models and conversion factors to align with the new 2021 CMS models and conversion factors. 

Many healthcare facilities are going to go with the first option. 

There are some advantages to implementing the 2021 Physician Fee Schedule in July of 2022:

  • Lessens disruption and change that physicians have to face, especially in the wake of COVID-19.
  • Not much is known about 2021 PFS coding and reimbursement impacts.
  • Gives leadership more time to assess the change to the 2021 PFS.
  • Allows for the time for market data to begin to reflect the impact of the new fee schedule.

The biggest concern with moving to the 2021 fee schedule is the lack of knowledge about it. Advantages don’t totally mitigate disadvantage. If healthcare facilities wait until 2022 to implement the 2021 PFS, they may simply be delaying the inevitable: an increase in physician spend.

It’s important to note that the CMS aims to reward ambulatory care and primary care physicians with compensation increases due to their efforts during COVID-19. 

Industry Statistics for the Implementation of the Physician Fee Schedule

If healthcare facilities decide to change to the 2021 Physician Fee Schedule, physicians should plan to review their contracts and negotiate terms. 

Before heading into this review or negotiation, physicians should be armed with data. Here are some statistics about which Physician Fee Schedule year organizations are using in 2021:

  • 2% on 2019
  • 72% on 2020
  • 14% on 2021
  • 4% will reevaluate in six months
  • 2% have some physicians on the 2020 and some on 2021, depending on the contract
  • 6% is undecided

Whether or not your employer has decided they will move to the 2021 Physician Fee Schedule, it is important to review your contract and begin the process of updating it. 

Contract Review and Negotiation for the 2021 Physician Fee Schedule

The 2021 Physician Fee Schedule is sure to make waves in the medical world for the next few years. With such major incoming changes, you need expert knowledge for your contract review. 

Contract Diagnostics has the experience to back their incredible services. These include contract negotiations, compensation benchmarks, benefit review and contract education.

Whether you need to review your contract in relation to the 2021 CMS Physician Fee Schedule changes, or because it’s simply time for an update, the Contract Diagnostics team is here to help.
Give us a call at (888) 574-5526 or visit https://www.contractdiagnostics.com to learn more about our services.