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We need greater accuracy for physician work components

December 7, 2015

We need greater accuracy for physician work components

The Government Accountability Office (GAO) issued a report urging the Centers for Medicare and Medicaid services (CMS) to improve the process for determining the value of physician work under the Resource Based Relative Value System (RBRVS) used to determine Medicare physician fee schedule payments.

CMS relies on the AMA specialty society Relative-value Update Committee (RUC) to make recommendations on how to value services covered by Medicare. The RUC sets Relative Value Units (RVU’s) for each service, which are then multiplied by the conversion factor (CF) that is set in the annual Medicare physician fee schedule. The RVUs are comprised of three components: physician work, practice expense (overhead) and malpractice – the RUC factors.

The report’s recommendations focus on action that can be taken by CMS, not the RUC. CMS could improve documentation and publication of its processes for reviewing RUC recommendations and potentially mis-valued services identified by the RUC. It also recommends CMS should develop a plan for using funds appropriated for the collection and use of information on physician services in the determination of relative values. Why?

The GAO report found the RUC process for regularly reviewing work values is in need of improvement. The RUC relies on surveys of physicians – by specialty – who have, in the GAO’s opinion, an inherent conflict of interest and tend to overinflate values. Additionally, the RUC surveys have low response rates and large ranges in responses – all things that make the survey less accurate.

The GAO report also takes issue with the CMS internal process for reviewing the RUC recommendations. CMS is required to review all Medicare service RVUs every five years. However, it does not keep a database to track when the service was last valued or have a standardized process for prioritizing its reviews. GAO does not consider the CMS process to be fully transparent because the agency does not publish the potentially mis-valued services that are required to be identified by the RUC. Stakeholders are then unaware the services will be reviewed and payment rates may change. CMS also does not publish information on the methods it uses to review specific RUC recommendations. The GAO report also points out that CMS accepts the majority of the RUC’s recommendations, but participation by other stakeholders is limited.

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