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.


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.


That’s why we have the MPPRS.

Here's the eureka moment....

What this means is that for the second and subsequent units of therapy, the practice expense is reduced by 50% in that sum and all units after the first are paid at the lower rate.

The net effect of this is that the reimbursement is reduced by 20-25% for all subsequent units. While the Medicare allowable amount is important, only a small fraction of your billing will ever be paid at that rate.

Far more important to successful practice management is the MPPRS rate.


To make it even more challenging, Medicare might not release the final rule until December 1, giving therapists precious little time to budget and plan for 2021. And... the MACs won't release their MPPRS Look-Up Tool until January...

so what can you do now?

If you want to find answers today, take a look at the new Medicare Fee Schedule & MPPRS Calculator & Budget Tool. The tool, developed by a COO of a large outpatient rehab facility, is available now for purchase by anyone (and at a substantially reduced rate for our ITA Members) and will:

  • Calculate your Fee Schedule based on your locality using the proposed fee schedule (not estimates);

  • Calculate your typical per visit projected revenue based on your average units and commonly used procedure codes allowing you to create "what if" scenarios;

  • Make revenue projections based on average number of visits that you perform weekly, monthly and annually;

  • And.. If you have details of how many procedures were billed during a year as the first or subsequent units, you will have a powerful budgeting tool to calculate even more specific projections.

It's awesome and worth every penny. Best of all, it comes with an automatic free update when the final fee schedule is released so you know it will benefit you for 2021.

There's still hope that the proposed fee schedule changes can be over-written in Congress (our membership associations are hard at work lobbying to try to make this happen) but, either way, it does feel better being prepared for whatever comes our way. Check out the video that shows the calculator in action and you can buy it here.