How unbundled maternity care codes could change OB/GYN pay in 2027

Starting Jan. 1, prenatal care, delivery and postpartum care will no longer be reported as a single global package under the Current Procedural Terminology code set maintained by the American Medical Association (AMA).

The 2027 restructuring splits maternity care into antepartum care, labor management, delivery and postpartum care, with each prenatal and postpartum visit billed as its own evaluation and management visit. In all, it deletes 17 codes, adds 12 and revises six.

In its proposed 2027 Medicare Physician Fee Schedule, released July 14, the Centers for Medicare & Medicaid Services (CMS) proposed adopting the new codes but also sought comment on 15 G-codes that would keep the bundled structure in place for Medicare. The AMA has urged CMS to finalize the new code set without the G-codes. Comments closed Sept. 14, and CMS has not yet released the final rule.

Carol Carden, CPA, ABV, ASA, CFE, says employers that pay obstetrician-gynecologists (OB/GYNs) on work relative value units (RVUs) will feel the change most.

She is managing principal of compensation valuation, planning and design at PYA, a Knoxville, Tennessee-based health care accounting and advisory firm, where she has worked for 31 years. In April, the American Health Law Association elected her president-elect designate, making her the first non-attorney nominated to that role in the organization's history.

PYA's modeling of an uncomplicated vaginal delivery found 4.03 fewer work RVUs under the new codes than the 37 credited to the global code, according to a September firm webinar.

Medical Economics spoke with Carden about what changes Jan. 1, how the shift affects laborists, advanced practice providers (APPs) and midwives, how employers are handling the first year and what employed OB/GYNs should ask for in their contracts.

Our conversation, lightly edited for length and clarity, follows.

Before we get started, could you explain a bit about PYA and your work there?

Carol Carden: Sure, happy to. We're an accounting and advisory firm. Our advisory practice is about three-quarters of what we do, which is a little different for CPA firms, and our advisory practice is focused solely on the health care industry. That's the sole industry we focus on.

We break it into three big areas of advisory service. Valuation is one of them, and that's one of the areas where I'm one of the firm's leaders: compensation valuation, business valuation and hard asset valuations.

Then we have a compliance team that does coding and documentation, serves as an IRO [independent review organization], and handles cost reports, managed care services, things like that. And then we have a transactions group that does strategic planning, financial due diligence and anything in the value-based care space.

We serve clients across all 50 states, we've been in business about 43 years and I've been here for 31 of them.

In plain terms, can you walk through what changes Jan. 1 for how OB/GYN work gets counted and what that means for physicians?

Sure, happy to. It is potentially a big change. We're waiting for the final rule, but in a nutshell, right now prenatal care, delivery and postpartum care are all paid via a single code, like a bundle. Starting in January, those services are all being separately accounted for and billed by the individual provider.

What that will mean in a given practice, from a workflow standpoint: Let's say you're using a mid-level provider to do some of the prenatal visits or the postpartum visits.

Those visits will now be billed by that mid-level provider, not by the physician. Right now, all of those work RVUs would be attributed to the physician, so that will be broken apart, and those mid-level providers will bill directly for that, which could potentially change physician compensation. It certainly changes reimbursement levels as well.

Additionally, for those services, there are different levels of complexity available to bill them at, which doesn't really exist right now in the global package.

There are specific guidelines as to what constitutes complexity, so practices will need to familiarize themselves with those guidelines.

That way, as they're providing those in-office services, they're getting the appropriate documentation in the record, so they don't inadvertently code a level of complexity the record doesn't support and increase their compliance risk, or leave money on the table by billing a lower level of complexity when they could have billed a higher level. Those are some of the things they'll have to work through as these changes come into place.

Have you already been hearing from clients or physicians ahead of January?

Definitely, we are, especially from hospital employers of OB/GYNs, because it will be different in the private practice setting. Private practices tend to compensate themselves on more of a collections or revenue attribution model, not a work RVU model.

But in the employment setting, when hospitals employ OB/GYNs, there tends to be at least some component of their compensation that's driven by work RVUs. Breaking apart all these services that previously came in bulk to the physician is going to have implications for compensation levels.

So clients are trying to figure out what that means and how they're going to handle it, so as not to be disruptive to the physicians, while at the same time making sure they protect themselves from a compliance standpoint.

With CMS still deciding whether Medicare will adopt the new codes or keep a bundled approach, how should organizations be planning for this ahead of January?

We're suggesting that people assume this is going to go forward. Yes, Medicare has not said for sure what it's going to do, and Medicare in and of itself is not a big payer of OB services. However, many commercial payers tend to follow Medicare.

So assume this is going to happen. Think through what this means for your individual practice and your workflow. If something were to change and it didn't go through, then it's status quo, and you're already prepared for that.

But I would not want to see a provider put their head in the sand, not think through this and then come Jan. 1 be faced with some pretty fundamental changes in how they have to bill for these services.

If Medicare, commercial insurers and Medicaid handle maternity care differently, which numbers should an organization use to measure productivity for an OB/GYN?

Again, this will be primarily in the employer space, so hospitals that employ OB/GYNs, and it could get a little bit messy. You could have a situation where commercial payers adopt the new billing codes and maybe your state Medicaid stays on the global package.

What we think people will probably do in that instance is track all the productivity at the individual, personally performed level for the payers that adopt.

Then, if you had state Medicaid still paying on the global package, perhaps you pool all that and do an allocation, so that at the end of the day you've got all your work RVUs divvied out among whoever personally performed them. But that could get a little messy to do.

Again, it's not really impacting the private practice side so much, because theirs will flow through in collections. But for employers, it could get a little dicey if all the payers don't adopt at the same time.

The AMA expects the change to be budget neutral overall. What could that mean for an individual OB/GYN's numbers?

They have attempted to do this in a way that they say is budget neutral. However, what providers need to understand is that budget neutral doesn't mean it will be budget neutral for each individual provider. It means on the whole, it's intended to be budget neutral.

Let me back up for a second. When they say budget neutral, they're making some assumptions about how many prenatal visits and how many postpartum visits will happen.

For an uncomplicated vaginal delivery, in their assessment of budget neutrality, they've assumed eight prenatal and two postpartum. So in and of itself, if you have more or fewer, that's going to impact whether this is truly budget neutral to you.

But even on the whole, we've done some modeling for just an uncomplicated vaginal delivery, and even when we model it out with the eight and the two, the totality of work RVUs available is four fewer than the current 37. So there will be some implications that you can feel now.

The levels of complexity could also change that. Maybe you have the eight and the two, but some of your visits are more complex, and that could offset it some.

So a lot of things are up in the air right now. Their intent is to be budget neutral, but that doesn't mean it will be budget neutral for individual providers.

Does the impact vary for physicians who focus on prenatal care, those who do a lot of deliveries, laborists, OB hospitalists, APPs and midwives?

All of those constituencies will be impacted in some way, so let's take them one by one.

Physicians who do a lot of prenatal care now have these levels of complexity available to them.

First of all, they'll bill for those services separately, whereas now those services just come in at the end of the pregnancy when the delivery happens. Now they'll be able to bill for them, and they'll have to be familiar with the guidelines to make sure they get the complexity level correct when they bill.

For physicians who do a lot of deliveries, like laborists and OB hospitalists, one of the things that's changed is that there are now labor management codes available to them. Previously, they only billed for the delivery itself. Now, if you have a woman who's in for 24 or 48 hours before she gives birth, they can bill for those services.

When we first started looking at this, we thought it could have an impact on subsidies. If you're not familiar with the laborist program, many times those programs are subsidized by the hospital, because laborists take all deliveries, even for women who don't have insurance coverage.

Many times there aren't enough collections available to pay the physicians at a fair rate where they'll do the work, so the hospital steps in to fill the gap. So when we first looked at this, we said, OK, now they can bill these additional labor management codes, so perhaps that will reduce subsidies.

But when we modeled it out, we saw that one of the things they changed was the delivery code itself, and the delivery code's work RVU attribution is lower now. So it didn't really look like it was going to have a material impact on subsidies after all.

The final category was APPs and midwives. Typically in a practice, they might be used more to cover some of the prenatal or postpartum visits. Now they'll be able to bill individually for that, whereas before, all of that would have been attributed to the physician in the global package.

So all the constituencies will be impacted in some manner, and it will be very much facts-and-circumstances specific to individual practices and how they utilize APPs, midwives, laborists or OB hospitalists, both in what way and to what degree they'll be impacted.

How should practices and health systems handle the first year? Should they revise pay formulas, guarantee pay for a period or wait and see how it plays out?

Honestly, we're seeing a little bit of all of that. We're seeing some employers say they think they're just going to freeze everything at 2026 levels, let 2027 play out, then look at individual productivity levels and make any adjustments to comp formulas. Most likely, that would happen in the conversion rate.

You might adjust the conversion rate, because one of the challenges for hospital employers in particular is making sure that even with a change as fundamental as this, if the physician is providing a commensurate level of effort, they're getting a commensurate level of pay.

You may have to adjust conversion rates to make that work. Typically, you want to do that on the front end, before a change happens, but in this instance, it's very difficult to figure out what the impact is going to be in order to do that.

So we're seeing some that are saying they'll freeze at 2026, let 2027 play out, then make the necessary adjustments. We're seeing some that are saying they don't think it's going to be that material, so they're going to let it flow through and see what happens. It's individual decisions about where you think the risk is.

What fair market value and compliance guardrails should organizations revisit come January?

This is where freezing at 2026 might be a good approach, because you don't run the risk of inadvertently overpaying or underpaying in 2027 with all these changes going on.

What we are suggesting is that if clients decide to go ahead and adjust the conversion rate based on their best estimate of what the impact will be, they put some additional reconciliation guardrails in place. Maybe at six months and nine months, they're reconciling: Here's what the productivity looks like, here's the commensurate compensation, does it still make sense?

That way you don't get a full year in and find out you adjusted by the wrong amount and this physician has actually been overpaid or underpaid, and then you get retention and physician satisfaction issues.

The other thing I'll mention, because as a compensation valuation professional I would be very remiss if I didn't: One of the things we typically use to help providers evaluate compliance, and that hospitals use internally to evaluate their own compliance, is survey data.

A change of this magnitude is going to impact survey data for probably several years. In 2027, the survey data will be based on 2026, which had a completely different way of paying for these services, and in 2028 it will be based on 2027.

But we know some providers are freezing at the 2026 level, so it's going to take several years for that to flow through and for providers, and advisers to providers, to be able to rely on the survey data without having to stop and think through what kind of noise might be in there.

This is something we've dealt with before. We dealt with it during and after COVID-19, because COVID-19 was so disruptive to compensation levels, higher or lower depending on the specialty.

And we dealt with it in 2021, when CMS changed the work RVU weights pretty significantly to more heavily value office-based E/M services. So it's not something we're not accustomed to dealing with, but it will take a few years to make its way into the survey data in a way that's useful and meaningful from a compliance standpoint.

What contract language should employed OB/GYNs look for, and what should they ask their employer before January?

I would say one of two things. If you're an employed OB/GYN and you're concerned this is going to negatively impact your compensation, perhaps ask your employer to consider freezing at 2026 levels and letting this play out, so you don't have a temporary disruption.

If that's not an option or they're not willing to do that, then I would probably ask for some interim reconciliation language: an amendment that says, at least for 2027, at these intervals, whatever they are, three, six, nine months, we'll take a look at this and make sure it's not too detrimental, or too rich and robust. Either way, there's going to be a reconciliation guardrail in place to protect providers.

Is there anything else about these upcoming changes that we didn't talk about that you think is important to keep in mind?

Again, we are suggesting that people think through it now and assume it's going to happen, because we won't know for sure until probably the end of November or early December.

If you get into December and find out it is going to happen, and Medicare is going to adopt too, so pretty much all payers will likely adopt, and you haven't begun to make preparations, you're going to put yourself in a difficult situation. So assume it's going to go through now.

I will also say we did a webinar where we walked through several scenarios. I've mentioned the uncomplicated vaginal delivery briefly here, but we walked through several scenarios of what it might look like if you use a laborist, a midwife or an APP.

That's free on our website if anyone is interested in watching it and learning a little more about how to think through the potential workflow implications.