Why (Y)Our 9% is Different

If you are a therapist, then I hope by now you have heard about the proposed 9% fee cut to PT/OT/SLP services that is planned under Medicare Part B for 2021. Nine percent will be a hard blow to all of us, but realize that 9% is only an estimate and the actual impact to your reimbursement could be higher, lower, or equal to mine.


Why?


Understanding how Medicare reimbursement is calculated is not for the faint at heart and certainly not something I learned in school (or I'm sure I would never have graduated). Here's the basic explanation and then I'll try to make more sense of it.


 

The Medicare conversion factor is multiplied by the Geographical Practice Cost Index and then added together to determine your Medicare allowable amount.


 

Yep. Clear as mud. Let's break it down.


We Share the Conversion Factor


The conversion factor is the base rate for calculating the Medicare Fee Schedule. We (all providers) share the same conversion factor and, for 2021, CMS is proposing to reduce the conversion factor by 10.61%.

CY 2020 PFS conversion factor: $36.09

CY 2021 PFS conversion factor: $32.26 (- $3.83)


What We (probably) Do Not Share

Step two in the calculation is knowing your Geographical Practice Cost Index (GPCI). The GPCI includes three different value rates (work, practice and malpractice expenses) that are adjusted for locality. That is why therapists, even in the same State, can have different reimbursement.


Wait... there's more.

If that was not enough, CMS has determined that the costs that make up your GPCI actually decrease after the first 15 minutes of service.


Really.