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Business of Practice

CMS adopts deep Medicare fee schedule cuts for 2021

Newly announced Final Rule includes a 10.2% cut in the conversion factor used to calculate provider payments.

Cite this
American Psychological Association. (2020, December 4). CMS adopts deep Medicare fee schedule cuts for 2021.


The Centers for Medicare and Medicaid Services (CMS) released the 2021 Medicare Physician Fee Schedule (PFS) Final Rule on December 1, 2020, including a 10.2% cut in the conversion factor used to calculate provider payments. The deep cut, made necessary by the payment increases CMS has approved for the revised office/outpatient evaluation and management (E/M) services, will affect payments for psychologists and a wide array of other health care professionals.

Psychologists providing diagnostic evaluations and psychotherapy services will fare slightly better as CMS is adopting the proposed relativity adjustments to psychiatric diagnostic evaluation services (90791, 90792) and to the 30-minute (90832), 45-minute (90834) and 60-minute (90837) psychotherapy services. Because CMS did not accept APA’s request for commensurate increases to uphold the relativity across all three families of behavioral health services, similar adjustments will not be made for health behavior assessment and intervention (HBAI) services or psychological and neuropsychological testing services.

APA and more than 60 other healthcare provider organizations, including the American Medical Association, have been working in coalition to prevent deep Medicare payment cuts since 2019, when CMS’s plan to adjust payments to offset E/M increases was first announced. Upon release of the 2021 PFS final rule, APA immediately joined the coalition in issuing a press statement (PDF, 132KB) expressing strong concerns about the effect the cuts would have on Medicare beneficiaries’ access to services. Our statement called on Congress to take action to prevent the cuts by including H.R. 8702, the Holding Providers Harmless From Medicare Cuts During COVID-19 Act of 2020, in any year-end legislation it passes. H.R. 8702 would set up supplemental Medicare payments for the next two years (2021 and 2022) to ensure that healthcare providers were not paid lower reimbursement rates for services than they received in 2020. APA encourages psychologists to contact their members of Congress in support of this legislation by visiting our advocacy action center.

APA staff are continuing to review the more than 2,000-page final rule on the 2021 Medicare fee schedule to ascertain its full effect on psychologists and our patients. We will have more information soon on other key issues such as coverage for telehealth and audio-only services, and policies regarding non-physician providers’ ability to supervise psychological and neuropsychological testing services While we are continuing to work with members of Congress in an attempt to address some of the issues raised by the final rule this year, it is likely that we will need to continue this work in the new, 117th Congress convening in January 2021.

We thank the thousands of psychologists who have made their voices heard with both CMS and their members of Congress on this issue, and we will continue working together to improve Medicare policies affecting psychologists and the patients we serve.