Key Medicare changes for 2021

New federal legislation signed into law in late December 2020 will diminish the drastic Medicare payment reductions originally scheduled to begin on January 1, 2021. APA and other health care societies have been lobbying members of Congress to protect health care professionals, including psychologists, from the cuts projected by the Centers for Medicare and Medicaid Services (CMS) in the proposed and final rules on the 2021 Physician Fee Schedule. Psychologists submitted thousands of comments to members of Congress and to CMS warning that the cuts in reimbursement would threaten beneficiary access to vital psychologist services.

Under the Consolidated Appropriations Act 2021, rather than reducing the conversion factor by over 10%, CMS will implement a 3.75% increase as well as delayed implementation of the newly created evaluation and management visit complexity HCPCS code G2211, which dramatically effected the reimbursement of services across the fee schedule.

The conversion factor is a number multiplied by the values assigned to each billing code to produce a dollar amount for Medicare payment purposes. Prior to the changes made by the new federal law, budget neutrality required CMS to offset the costs of new higher values for certain outpatient evaluation and management (E/M) services by reducing the costs of other services in the fee schedule.

This chart compares the nationwide Medicare payment rates for billing codes used by psychologists in 2020 and 2021. Payments will vary by geographic location.

To compare the updated reimbursement changes with what was projected in the final rule see APA’s December 2020 Practice Update article Psychologists likely to see increases for psychotherapy services, but pay cuts for other services in Medicare for 2021.

Congress also temporarily suspended the 2% sequestration charge applied to all provider services from January 1, 2021 through March 31, 2021.  Sequestration had been on hold since May 2020 under the 2020 Coronavirus Economic Relief and Security (CARES) Act but was scheduled to resume on January 1, 2021.

On January 7, 2021, HHS Secretary Alex Ajar renewed the current PHE, allowing the current telehealth waivers to remain in effect through April 20, 2021.

Psychologists will also be interested to know that the new law revises the geographic and originating site restrictions in telehealth for mental health services. When the PHE ends, psychologists can continue to furnish telehealth services to patients who do not reside in rural areas. The law also allows patients to receive mental health services via telehealth in their own homes. These changes apply only to diagnostic, evaluation, and treatment services for a mental illness. The psychologist must have furnished an in-person service to the patient within six months preceding the telehealth visit. These changes will require CMS to issue further guidance on proper delivery of the in-person and telehealth services through future rule making, which APA will closely monitor. APA will advocate for expansion of these changes to apply to other approved telehealth services, such as the Health Behavior Assessment and Intervention (HBAI) services. 

Psychologists are reminded that once the PHE ends, Medicare will no longer reimburse providers for furnishing services via audio-only devices. Absent further action by Congress, only devices that have both audio and video transmission capabilities will be eligible for reimbursement under telehealth.

Another key element in the new law is the PPP, designed to provide financial assistance to businesses impacted by the PHE. The eligibility criteria for PPP loan assistance in 2021 differs depending upon whether it is the first or second time an entity is applying. The Small Business Administration will issue guidance on the new PPP requirements by January 13, 2021.

Email APA’s Office of Health Care Financing with questions regarding these new changes.