MedPAC: Physician Reviewing Flawed


WASHINGTON — The current process for valuing physician services may result in inaccurate pricing and needs to be reviewed, researchers said during a meeting of the Medicare Payment Advisory Commission.

Relative value units (RVUs) are assigned to services in the physician fee schedule to determine how payment rates vary, one service relative to another. The Centers for Medicare and Medicaid Services reviews and modifies the RVUs for selected services based on recommendations from the RVS Update Committee (RUC), a panel made up of representatives of national and specialty medical societies. CMS usually accepts 90% of the committee's recommendations.

By law, RVUs are reviewed every 5 years. The next review is scheduled for completion in 2007.

There are problems with this review process, much of which involves the subjective nature of measuring physician work, Dana Kelley, a research contractor to the Medicare Payment Advisory Commission (MedPAC), told the advisory committee. “The physicians themselves are intimately involved in setting the RVUs [but at the same time] have a financial interest in how those services are weighted,” she said. This introduces the possibility of biased reporting.

Specialty societies, which have much to gain by RUC decisions, can submit “compelling arguments” that the values are incorrect, Ms. Kelley said. While the RUC has safeguards to make sure that some specialties don't dominate the review process, “specialization remains an important issue.”

Physicians who perform a specific service are often surveyed to determine the “weight” of a particular service. In answering these surveys, physicians obviously have a financial incentive to indicate that their service should be highly weighted, she said.

The assumption that current RVUs are accurate ignores the fact that they may change over time, Ms. Kelley said. “Even starting from the premise that it's set correctly, the way a service is performed can change its value.”

Also, there is a strong bias in favor of identifying and correcting undervalued codes, she said. “Previous 5-year reviews have led to substantially more increases than decreases in RVUs.” This results in passive devaluation of some codes.

Inaccurate payments for physician services can distort the market for health care services, said Kevin Hayes, Ph.D., a MedPAC research director. “It can boost volume for certain services inappropriately, undermine access to care, and make some specialties more financially attractive than others.”

A lot of news has circulated “on how maldistribution of payments is affecting the career choices of young physicians,” observed Ray E. Stowers, D.O., a member of the commission. “It really does create a long-term problem of decreasing the number of primary care physicians in the country, and eventually affecting the access to care of Medicare beneficiaries and increasing the cost of care to the Medicare system.”

While it's easy to criticize the RUC, several MedPAC members cautioned that there are few alternatives to the system. “We have to come up with an alternative. We have a chance of doing something a lot better,” Alan R. Nelson, M.D., a member of the commission, acknowledged.

However, even if you can get the pricing “exactly accurate that day,” the evidence for inaccuracies isn't going to come for a while, he said. Changes in the way medicine is practiced are going to create some distortion. “It's never going to be perfect because it's a rolling ball game. We need to measure that in our perceived criticism of the RUC.”

In light of concerns about inaccurate payments, Dr. Hayes said MedPAC plans to “address the topic of valuing physician services in detail,” along with other issues, such as adjusting payments geographically, revisiting the boundaries of payment localities, and determining practice expense payments in the fee schedule.

The RUC plans to make its recommendations on physician RVUs at the end of October, Ms. Kelley said. CMS would then issue a notice of the proposed rule-making next spring on the valuation of physician services, and a final rule would be issued in January 2007, to set values for the following review cycle.

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