How Medicare Fee Schedule Modeling Helped Reduce the Impact of CMS Reimbursement Changes
A not for-profit, community-oriented multi-specialty medical group in the Midwest.
In 2020, the Centers for Medicare and Medicaid Services (CMS) released news of a drastic change to how physicians would be reimbursed for their evaluation and management services, set to go into effect in 2021. As physicians at this multi-specialty medical group were compensated based on Work RVUs, increases in this metric due to the CMS changes would have negative financial consequences for the group unless mitigated. Impacts on the Work RVU component ranged from 0% to 46%, while reimbursements were increasing at most 15%. The CMS update, combined with how physicians in the group were compensated, created a perfect storm of increased costs and reduced reimbursements for the same amount of work.
MMG was engaged to assess the true financial implications of the changes and provide recommendations to minimize the impact on physicians and the medical group overall. MMG first modeled how the CMS updates would impact the group’s financials from both a cost and revenue perspective, utilizing an appropriate base year to avoid skewing the data with 2020 volumes impacted by COVID-19. The MMG team modeled multiple scenarios to determine the impact if commercial payors adjusted their reimbursements to mirror CMS in 2021 and provided detailed reports to the client showing a physician view of the extent of the changes to promote transparency around the financial impacts. Finally, MMG provided feedback on benchmarking being utilized for physician compensation and made recommendations for adjustments to account for the proposed changes.
Based on MMG’s reimbursement model and feedback, the medical group was able to adjust their 2021 budget to account for the potential impacts, as well as review the impacts on service lines to better balance the needs of their community with the financial implications of those services.
On an ongoing basis, the client is actively reviewing their compensation methodology to determine if adjustments should be made to their contracts and conversion rates, as well as actively reviewing their commercial contracts to ensure the CMS payment methodology does not impact them across their payor mix.
MMG’s model armed the client with immediate insights to optimize their reimbursement, as well the tools and information needed to maintain those improvements over time.