SHM intensified its advocacy efforts over the past several months in support of proposed changes to the Medicare physician fee schedule that would significantly increase payments to hospitalists for many services next year, if adopted by the Centers for Medicare and Medicaid Services (CMS). In June, CMS proposed to make the largest increase in the work relative value units (RVUs) assigned to evaluation and management (E/M) services since Medicare implemented the physician fee schedule in 1992. E/M codes, which represent the time and effort that physicians spend to evaluate patient conditions, have long been viewed as undervalued. Since the release of the proposed rule, SHM has voiced its strong support for CMS’ proposed changes. (See “Calculating the Future of Medicare Payments,” Oct., p. 1).

In an August 18 letter, SHM joined the American College of Physicians (ACP) and 12 other physician groups in urging CMS Administrator Mark McClellan, MD, to include in the final rule the proposed increases in the RVUs assigned to office and hospital visits, and consultations. The groups applauded CMS’ decision to accept the recommendations made by the AMA Relative Value Scale Update Committee (RUC) regarding the evaluation and management codes under the five-year review. “We support the decision to include them in this proposed rule and we strongly urge CMS to include the same proposed work relative value units (RVUs) in the final rule,” the letter stated.

The RUC was careful to ensure that these codes went through the standard survey process and that the data supporting the changes was very strong. The letter emphasized: “The RUC approval of these recommendations, which requires support from at least two-thirds of the RUC members, indicates wide recognition of the work changes in evaluation and management in the 10 years since CMS last reviewed the codes. During our investigation into the increased intensity of evaluation and management services and throughout the RUC process for determining accurate, current work RVUs, we became increasingly aware that enormous changes in patient and physician practice characteristics necessitated these changes.”

In addition, the letter urged CMS to make the required budget neutrality adjustments that result from the five-year review to the conversion factor rather than by an adjustment to the work RVUs. CMS is required by law to offset increases in costs with a mandatory adjustment to keep 2007 expenditures roughly equal to their 2006 level. In the proposed rule, the agency recommended cutting work RVUs by 10% in order to achieve budget neutrality.

SHM joined the AMA and more than 70 other physician organizations in a separate letter. That letter asked CMS not to apply a 10% cut to the work component of the fee schedule, but instead to make an adjustment to the Medicare conversion factor.

“Applying budget neutrality to the work RVUs to offset the improvements in E/M and other services is a step backward and we strongly urge CMS to instead apply any necessary adjustments to the conversion factor,” the organizations said in an August 21 letter to CMS.

When the agency reduced the work RVUs in the past, it created confusion among private insurers, the letter said. Since 1998, similar reductions have been applied to the conversion factor. “CMS does not explain why it proposes to alter this long utilized method and move backward to an approach that the agency itself remarked was inappropriate.”

SHM and the physician community have also lobbied Congress to block a 5.1% cut in the Medicare physician fee schedule that will take effect on January 1, 2007, unless lawmakers take action this fall.

For more news on the five-year review, the 2007 update, and other issues, visit the advocacy and policy section of the SHM Web site at www.hospitalmedicine.org.

Allendorf is senior advisor of Advocacy and Government Affairs for SHM.

Advocacy Efforts Continue in Support of Proposed E&M Increases