Medicare Physician Fee Schedule Rule

2021 Proposed Rule

On August 4, 2020, the Centers for Medicare & Medicaid Services (CMS) published the annual Medicare Physician Fee Schedule proposed rule. The rule describes proposed payment and policy changes for 2021. This year, the rule included several proposals which could significantly impact physiatry. CMS estimates that the proposals in this rule, if implemented, would result in a three percent cut to payment for physical medicine and rehabilitation. Because of the variability across our membership, we expect the exact impact on individual practices may vary substantially. 

2021 Conversion Factor

The conversion factor is used, in conjunction with relative value units (RVUs) and geographic practice cost indices (GPCIs) to calculate payment for Medicare services. The proposed conversion factor for calendar year 2021 is $32.26. This reflects a decrease of $3.83 or 10.6 percent from the 2020 conversion factor, which is $36.09. The conversion factor is calculated annually according to a formula which CMS is required to use under statute. The formula accounts for fluctuations in RVUs across the fee schedule. 

Evaluation and Management Coding

In the proposed rule, CMS affirmed its plan to implement a new coding and payment structure of office and outpatient Evaluation and Management (E/M) visits. These changes were proposed by the American Medical Association CPT Panel and RUC and are the result of a large multi-specialty revision and valuation process in which AAPM&R was an active participant. Key to the proposal is a revision to the documentation and code selection guidelines for office and outpatient E/M. History and physical will no longer be key elements in code selection for these services. Effective January 1, 2021 code selection will be based either on time or medical decision making. Revised definitions of time and medical decision making are described in detail in the new guidelines. Further, CPT code 99201 has been deleted.

CMS has also added a new add-on code for office and outpatient E/M services. The new code, GPC1X is intended to compensate for visit complexity inherent to E/M associated with primary care services. CMS has not formalized guidelines for this code and is seeking additional stakeholder feedback regarding the code. 

Telehealth Services

CMS currently has many waivers in place for telehealth services associated with the public health emergency (PHE) which are not superseded by anything proposed in the rule. In the proposed rule, CMS recommends expanding coverage of telehealth through the addition of new services to the Medicare telehealth list. Additionally, CMS proposes adding several more services to the telehealth list on a temporary basis through the end of the calendar year during which the PHE ends. CMS is not recommending extending coverage of audio-only telephone E/M services beyond the PHE; however, CMS is seeking comment on how to reimburse for this type of work. 


  • Your Academy recognizes that the proposed 2021 conversion factor cut of 10.6 percent cut would be devastating to physiatrists, particularly given the financial challenges associated with the pandemic. Working towards a legislative solution to this proposed cut is a key area advocacy for AAPM&R.
  • We are working to provide education on the new E/M codes for office visits. On Saturday, November 14, during the 2020 virtual Annual Assembly, two of our member coding experts will be offering a live session on this important topic.

More Information

The complete rule is available on the Federal Register website.

A detailed CMS fact sheet is available on the Medicare website.

About MPFS

Medicare payment for physicians, and some non-physician practitioners (NPPs), is based on set rates under Medicare Part B. The system for payment, known as the Medicare Physician Fee Schedule (MPFS), is used when paying for: professional services of physicians and some NPPs; covered services incident to physicians’ services (other than certain drugs covered as incident to services); diagnostic tests (other than clinical laboratory tests); and radiology services. The MPFS also addresses various quality issues, fraud and abuse issues, and other issues that impact physicians. CMS updates the MPFS regulations annually, with comment periods open prior to implementation of the final rule.