Expert Perspective

December 07, 2020

Valuable Insights: December Regulatory Updates

Kathleen Gravelle – CareAllies contributor

Final 2021 Physician Fee Schedule

On December 1, the Centers for Medicare & Medicaid Services (CMS) issued the final rule updating Medicare physician payment policies for calendar year 2021. The final policy changes expand covered Medicare telehealth services, make permanent some Scope of Practice allowances introduced under the COVID-19 public health emergency, and provide flexibility for renewing ACOs.

The final rule also makes changes to the Quality Payment Program (QPP) including changes to the category weights for quality and cost and finalization of the New advanced payment model (APM) Performance Pathway (APP) for Merit-based Incentive Payment System (MIPS) eligible clinicians in MIPS APMs. The rulemaking also updates payment rates for covered services, primarily through the application of a conversion factor, and the final CY 2021 PFS conversion factor is $32.41, a $3.68 (10.2%) decrease from last year, primarily due to budget neutrality adjustments required by statute.

2022 Medicare Advantage Advance Notice

Each year CMS provides an update of proposed changes to the current risk adjustment model and Star Rating methodology. The Advance Notice typically comes out in mid-February with the Final Rate Announcement being released by the first Monday in April, per statute. However, for 2022, CMS is working to allow additional time for bid formulation amidst the uncertainty that comes with COVID-19 so CMS has already released the Advance notice and intends to release the Final Rate Announcement in January 2021.

For 2021, CMS proposes to continue the transition from Risk Adjustment Payment System (RAPS) to Encounter Data System (EDS). CMS will calculate risk scores by adding 75 percent of the risk score calculated using diagnosis from encounter data, FFS claims, and RAPS inpatient data with 25 percent of the risk score calculated using RAPS data. CMS intends to fully transition to calculating risk scores from diagnoses from MA encounter data for CY2022. For 2022, the Advance Notice includes a 2.82 percent increase in payment, which is subject to change in the 2022 Final Rate Announcement as CMS acquires additional months of claims data. Please also note that individual plans will be affected by how policies influence rates in each individual county. 

Executive Branch Action: Public Health Emergecy

Secretary of Health and Human Services signed another extension to the public health emergency. The most recent declaration was set to expire on October 23, and the extension allows it to run through January 21. The extension allows for the continuation of resources including the telehealth service flexibilities and mitigation of losses for the shared savings program. In addition, the extension into January is important for Accountable Care Organizations because several policies in place at the beginning of a performance year will be applicable for the entire year. 

2020 Presidential Election Spotlight

A Look at the Next Administration


The election results begin a transition process where career staff begin to complete work for both administrations. The current administration typically releases a final President's Budget, while the new administration prepares to release its own budget laying out policy priorities and prepares for the first State of the Union Address.

President-elect Biden has indicated his top policy priority is a focus on COVID-19, and he has already put a panel in place to address the pandemic. In addition, he will focus on strengthening the Affordable Care Act (ACA), specifically expanding coverage, and initial actions will likely be to reverse the regulatory changes the Trump Administration made to the ACA. He is also expected to encourage congress to expand the ACA through increased eligibility and coverage options (President elect Biden does not support “Medicare for all”). In addition, President-elect Biden will likely continue testing how to better manage the FFS population. Other priorities include banning surprise billing and controlling rising drug prices. Finally, we may see additional “mandatory” demonstrations and an increased use of the Innovation Center authority.


Access the latest resources and information from CareAllies during this uncertain time:

COVID-19 by Numbers (Medicare COVID-19 Data Snapshot)

  • From January 1, to August 15, there were 1,004,903 cases of COVID-19 among Medicare beneficiaries (1,562 COVID-19 cases per 100K)
  • Over the same time period spending for Medicare fee-for-service hospitalizations associated with COVID-19 grew to $4.4 billion, or just under $25,000 per hospitalization
  • The rate of COVID-19 hospitalizations among Medicare beneficiaries was 444 hospitalizations per 100,000 beneficiaries
  • The rate of COVID-19 cases and hospitalizations grew the most among rural beneficiaries, Hispanic beneficiaries, and Medicare-only beneficiaries (not dually eligible for Medicaid)
  • Data on discharge status and length of stay for COVID-19 hospitalizations show that 31 percent of beneficiaries went home at the end of their hospital stay, and 22 percent died

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