The Centers for Medicare and Medicaid Services (CMS) has published an update on the economic factors that are used to calculate the Medicare O&P fee schedule. The annual Medicare fee schedule increase for O&P services is based on a combination of change in the Consumer Pricing Index for Urban Areas (CPI-U) from June to June of the previous year combined with the annual Multi-Factor Productivity Adjustment (MFP).
CMS recently announced that the CPI-U for June 2019 through June 2020 is 0.6% and the annual MFP adjustment is -0.4% for a net increase of 0.2%. While CMS has not officially announced the 2021 update to the Medicare O&P fee schedule, the announcement of the CPI-U and MFP adjustment lead to relative confidence in the 2021 increase of 0.2%.
The 0.2% increase in the O&P Medicare fee schedule for 2021 is slightly lower than the 2020 increase of 0.9%. While the Medicare 2% sequestration-based reduction to all Medicare payments has been suspended through dates of service through December 31, 2020 as a result of the CARES Act, continued suspension of sequestration-based fee reduction will require additional legislative action. AOPA is following this issue closely and supports the continued suspension of sequestration-based fee reductions.