HSG Develops a Strategy for Healthcare Systems to Address the 2021 Medicare Physician Fee Schedule (MPFS) Final Rule.

HSG Develops a Strategy for Healthcare Systems to Address the 2021 Medicare Physician Fee Schedule and Prepare for the Future of Value-Based Care and Reimbursement

National Healthcare Consultancy Firm Dubs MPFS Final Rule a Catalyst for Comprehensive Compensation Redesign

Louisville, KY (March 24, 2021) – HSG, a national healthcare consulting firm, has outlined a process to help healthcare executives and their organizations address the significant modifications made to the 2021 Medicare Physician Fee Schedule (MPFS). In addition to the Final Rule’s recognition of the increased administrative burden placed on direct care providers, the 2021 MPFS also creates an opportunity for health systems to shift their compensation philosophy and structures to be less dependent on volume and more prominently recognize value. This shift will more closely align provider incentives and payer reimbursement and promote greater long-term financial sustainability of health care organizations.

The Consolidated Appropriations Act (signed into law on December 27, 2020) ultimately lessened the degree of adverse financial impact related to the decreased conversion factor (3.4% decrease instead of10.2% decrease). However, the 2021 MPFS will still create significant issues related to provider coding changes and eliminations, the level of wRVU credit afforded to many E/M codes, and actual Medicare reimbursement. It isn’t possible to predict the impact on each organization’s compensation and reimbursements; an analysis must happen on a case-by-case basis.

“Many health care organizations talk about the need to move towards value, but few really walk the walk. They procrastinate based on current health care dynamics, day-to-day workload, or fears of upsetting the current applecart,” said Neal Barker, a Partner at HSG. “While the move to value-based reimbursement and its level of maturity varies by market, we believe that its imminent for previously untouched markets. Health systems must eventually address the shift to value. Now is actually a good time to do this with the 2021 MPFS Final Rule catalyzing change.”

Since the release of the Final Rule in early December of last year, the healthcare consultants at HSG have been working with hospitals and healthcare systems to vet the three significant variables impacting financial futures. They include coding documentation changes, compensation impact, and reimbursement projections. Embarking on simultaneous changes with three major interdependent financial influencers that affect provider compensation and organizational reimbursement is a significant challenge. The total impact is difficult to predict. Temporizing measures that maintain 2020 compensation variables through 2021 will allow determination of the actual impact of these changes over the first 6-9 months of 2021, leading to a comprehensive re-assessment and revision of provider compensation models heading into next year.

To learn more about HSG’s process, read the full report authored by Neal Barker. Healthcare networks can work with the experts at HSG to customize a strategy to address changes created by the 2021 MPFS. Emerge from 2021 having addressed this unexpected catalyst for change and be firmly prepared for the future of value-based care and reimbursement. Contact Neal Barker at 502-814-1189 to determine how to best address the needs of your hospital or healthcare system and its compensation plans.


About HSG

HSG builds high performing physician networks so health systems can address complex changes with confidence. From boosting market power and financial strength to preparing for value-based care, HSG can help you define your strategy, implement that strategy, and manage your physician network short or long-term. HSG, a Louisville-based, national healthcare consultancy firm, can be reached via their website, LinkedIn, by emailing info@hsgadvisors.com, or by calling (502) 814-1180.

Neal D. Barker

Partner and Managing Director, Compensation and Compliance