Update #3 Medicare 2021 – “Final” Reimbursement For Psychological Services

With the passage of the Consolidated Appropriations Act December 21, 2020, signed into law six days later, the Medicare Physicians Fee Schedule received an unexpected pardon from the planned, unprecedented 10.2% reduction in the Conversion Factor governing all fees. Instead, the CF was increased from 32.4085 to 34.8931. An additional $3 Billion was allocated to pay for the difference, and the 2% sequester that had been scheduled to resume 1/1/21 was delayed through the first quarter of the year. The new and improved CF nevertheless continued to represent a 3.32% reduction from 2020, the fifth largest reduction since 1992, rolling back this key factor to a level not seen since 2013.

This seems likely to be the “final” revision for Medicare reimbursement in 2021, but I would be surprised if I were not surprised a lot.

The impact of the CF the reimbursement for individual procedures is not direct if there are changes in the underlying components of the procedures. That is the case in 2021 for a number of the services typically provided by psychologists. National Payment Amounts for 2021 compared to 2020 are shown in the following table for the ten services most commonly provided to Medicare beneficiaries.

Almost coincidentally, utilization data for 2018 were recently posted to cms.data.gov, so additional views of practice patterns for psychologists (and others) in Medicare through 2018 have become available. Further analysis will soon be posted here, particularly pricing data and also RVU data explaining the procedure-specific gains and losses in reimbursement occurring because of changes in the “work” component of these services. At this point, it is worth noting that the above “ten most frequent” services provided are determined based on the 2018 data, and that the pattern of service provision has remained remarkably consistent for a number of years. Here is some preliminary information.

These ten services accounted for 96% of all units of service provided by psychologists in 2018, with the top three services accounting for 68% of all service units, and 90% of all units accounted for by the top seven of these codes.

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