Will Payers Follow Medicare’s Lead?

Will Payers Follow Medicare’s Lead?

How E&M Code Changes Will Impact Reimbursement Discussions

By Michael Shipley and Morgan Atkins

Beginning in Q1 2021, significant adjustments went into effect for how payments are calculated for physician services. These changes are the result of modifications to the Calendar Year 2021 Medicare Physician Fee Schedule (MPFS).

These updates will particularly help both primary care providers (PPC) and specialists that bill high volumes of Evaluation and Management (E&M) codes. It will hurt specialists who bill mostly for procedures rather than E&M visits. Consider these specialist examples:

  • An orthopedic surgeon who derives the majority of their income from surgeries, and bills few E&M visits. Their surgery reimbursement will go down, and the increase in E&M reimbursements may not be enough to cover the difference.
  • An endocrinologist who bills a lot of E&M visits for the management of diabetes will benefit from these code changes, receiving more for each E&M billed visit.

As summarized by Gist Healthcare, the implication of these changes will result in “higher pay for some primary care physicians and medical specialists, but reduced payment for many proceduralists.”

Our partners at Ancore Health provided a helpful summary of how reimbursement is calculated, and the impact of this update, in this blog post.

How will Payers Respond?

These changes, which make E&M coded visits more financially valuable, were a significant move by CMS to prioritize primary care and increase the focus on value-based interactions. The clear goal is to encourage more facetime with patients, which can give physicians the opportunity to catch health issues in earlier stages. Quality primary care patient interactions can happen when quantity isn’t the priority.

iStock-1080386550While CMS’s intentions may be clear, what’s still to be determined is how payers will respond. Historical patterns point to payers following the lead of CMS, but only time will tell if that will be the case here. As they consider their moves, payers will need data that outlines how the market is being reshuffled, like what’s available in Stratasan’s Market Reimbursement Analyzer (MRA), so they can stay competitive in their reimbursement offerings.

It will be important for providers to be empowered with data from MRA to track reimbursement patterns year over year—by market, by payer, and by service line—and enter payer negotiations equipped with the right insights that can lead to needed reimbursement adjustments. 

The Expected Impact on Reimbursement Discussions

Fee schedule rates don’t typically change this drastically. Additionally, it’s unprecedented to see such significant adjustments to extremely high volume codes. Even so, these are adjustments that will have a notable impact, and it’s worth preparing for the discussion between payers and providers that will inevitably occur in the wake of these updates. 

In this playbook, we share three steps we recommend providers and payers take before a reimbursement negotiation to ensure a more favorable outcome for all parties involved. These steps include gathering the right data, creating a tactical plan, and preparing for a win/win outcome. These steps translate well as payers and providers plan to address the latest MPFS changes. 

Gathering the Right Data, Creating a Plan, Preparing for a Win

Providers 

While there’s no way to know for certain how payers will respond to these fee schedule changes, providers can still come prepared for their next negotiation. The most current, trustworthy insights will be necessary to support negotiation efforts. Providers must be informed and aware of where to push for a higher rate.

  • For providers who set contracts based on a percentage of the MPFS current at the time the procedure is billed, it’s likely their E&M reimbursements will go up, while reimbursement for other codes will go down. It will be important to hone in on the codes now getting lower reimbursement as well as defend reimbursement rates for the codes that have increased. Many specialties will need to more aggressively negotiate over non-E&M rates that will go down.
  • Additionally, for providers who’ve negotiated at a specific dollar rate or based on a particular year’s MPFS, it’ll be key to focus on the percentage of Medicare they are receiving for the current year, not a past year’s schedule. 

Payers

While payers determine how to respond, they can be pulling helpful data intelligence to ensure they make the best decisions.

  • Medicare has realigned its priorities, putting more financial emphasis on value-based care. Payers may want to assess how to follow suit and alter payments to reinforce these same priorities. Payers will need a clear picture of market reimbursement rates by provider and service line to do so.
  • It’s reasonable to expect a reshuffling of the market in light of these reimbursement changes. Payers need insight into how their competitors are adjusting so they can continue to (or start to) provide the best rates in the market.
  • Payers should expect providers to come to their negotiation ready to adjust their rates. They’ll want to gain access to reliable data insights ahead of time, anticipate what providers will be asking for, and have data to support their position.

The Takeaway

Stratasan’s Market Reimbursement Analyzer (MRA) is the only tool on the market that has the data providers and payers need to enter their reimbursement discussions with confidence.  MRA is loaded with data that is already tracking the impact of these rate adjustments—showing Q1 data currently, and with Q2 data coming in September. 

MRA always contains three full calendar years of data, plus any additional “complete” quarters of the current year. Currently, full calendar years of 2018, 2019, and 2020 are available. This can provide valuable insight into how rates have changed over time.

Specific years can be filtered by selecting those years from a drop-down, illustrated in the screenshot below.

MRA delivers market-specific data so providers and payers can see how rates compare across the market. These insights will help both parties better prepare for their rate negotiations. 

Schedule time with one of our product and data experts today, and access a demo of the capabilities of the MRA tool.

Article by Morgan Atkins, VP of Product & Innovation and Michael Shipley, Senior Product Manager for Stratasan 

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