Bill seeks outside review of relative values in Medicare services

Washington -- A Democratic lawmaker has proposed changing the way the Medicare program identifies physician services for which it pays too little -- or too much -- by requiring independent contractors to review doctor fees annually.

Since 1992, a panel convened by the American Medical Association and representing a wide range of specialties has recommended thousands of pay changes to the individual services doctors provide to Medicare patients. The bill would add a layer of review on top of the 29-member AMA/Specialty Society Relative Value Scale Update Committee, known as the RUC.

Critics of the committee say it lacks transparency and is responsible for continuing payment discrepancies between primary care physicians and specialists. But supporters, including the AMA, disagree. They say the use of outside contractors would be duplicative and add an unnecessary layer of bureaucracy to the process.

The Centers for Medicare & Medicaid Services is required to consult with health professionals on adjusting relative values for services. Because the process is budget-neutral, any value change that results in Medicare paying more for a service means it will pay less for one or more other services. CMS routinely accepts the majority of the RUC's recommendations, although it is not required to do so.

Rep. Jim McDermott, MD (D, Wash.), introduced the Medicare Physician Payment Transparency and Assessment Act of 2011 on March 30. The bill explicitly would require independent contractors to identify misvalued physician services on an annual basis and recommend adjustments. The national health system reform law already states that the Health and Human Services secretary "may use analytic contractors," but the new measure would make this mandatory.

"For two decades now, this panel has been dominated by specialists who undervalue the essential and complex work of primary care providers and cognitive specialists, while often favoring unnecessarily complex, costly and excessive specialty medical services," Dr. McDermott said. "The result is clear -- there is a shortage of family doctors, patients don't necessarily get the services they need and medical costs are increasingly driven higher."

In a letter to Dr. McDermott, AMA Executive Vice President and CEO Michael D. Maves, MD, MBA, noted that Medicare officials, relying in part on RUC advice, have raised payments to family physicians and other primary care doctors during the past several years.

Since 2006, Medicare payments for primary care have increased more than 20%, said Barbara Levy, MD, the RUC's chair, citing a recent Medicare Payment Advisory Commission report. Still, she said, Medicare represents only one piece of the payment picture for physicians.

"The RUC frequently recommends increases for primary care Medicare services, but the impact of RUC's recommendations on primary care physicians' total compensation is overblown; private insurance payments play a much larger role in primary care physicians' overall income," said Dr. Levy, a gynecologist from Federal Way, Wash.

The AMA and other organizations have called for Medicare reforms that pay all physicians based more closely on the costs of providing care. Changing relative values can serve only to shift more of a fixed pot of money toward some physician services and away from others, the AMA has said. That process invariably results in changes in pay for individual physicians.

Dr. McDermott faulted the RUC for holding its meetings behind closed doors. But the RUC receives no public financing. Its meetings also are attended by a wide range of interested parties, including CMS and the Government Accountability Office, Dr. Maves noted.

The RUC also has been criticized for not publicizing individual members' votes on recommendations.

"This is done to protect the independence of RUC members who are allowed to make judgments on the data submitted without undue pressure from their own or other specialties, industry representatives or others with a stake in the outcome," Dr. Maves said. "Making voting records public would only serve to interject politics into a process that is intended to be data-driven."

Physicians on both sides of the divide

The American Academy of Family Physicians and the Society of General Internal Medicine have endorsed Dr. McDermott's bill.

AAFP President Roland Goertz, MD, said the academy doesn't blame the RUC for relatively low payments to family doctors, but it supports seeking a second opinion. "It's not our position to do away with the RUC, but have a process that is complementary to the RUC that CMS can use."

The American College of Surgeons and dozens of other societies dispute the contention that outside contractors are needed. Bringing another group into the process would be duplicative, said Kristen Hedstrom, assistant director of legislative affairs with the college.

The agency overseeing Medicare has been unsuccessful turning to contractors, Hedstrom said. In 2007, for example, a contractor was hired to evaluate physician practice costs but could not fulfill its contract, she said. "They ended up turning to the RUC to fill in the gaps."

MedPAC has called for increases in primary care payments for the past several years. At the same time, the commission has been critical of the RUC for finding more services for which Medicare is paying too little than services for which it is paying too much. During the three five-year reviews of relative value units that it has conducted so far, the RUC recommended increases in work relative value units for 1,050 services and decreases for only 167 services, MedPAC said in its comments to the 2011 proposed Medicare fee schedule.

Still, no other group has been able to identify overvalued services successfully, Dr. Levy said. CMS tried to use contractors to evaluate codes but failed. The RUC, on the other hand, has identified more than 900 overvalued services since its inception, she said.

A call for replacement

Paul Fischer, MD, a family physician in Augusta, Ga., and Brian Klepper, PhD, a health care analyst and consultant, are among those who want to go one step further when it comes to the RUC. They want the committee shut down completely.

Dr. Fischer and Klepper recently launched a website devoted to replacing the RUC, which promotes the contention that Medicare's payment system favors specialists over primary care physicians. They urge physicians representing primary care on the RUC to withdraw from it, thus delegitimizing the process and prompting CMS to go elsewhere for advice on revising rates for services.

Though Dr. McDermott's bill would not replace the RUC, Dr. Fischer said it certainly would help create a more transparent review process.

Klepper said he favored a more diverse panel to review physician services. In addition to physicians, such a new panel would include representatives from other sectors of the health care system -- purchasers, patients, actuaries and economists, he said.

Defenders of the RUC point out that CMS ultimately makes the final decisions on relative Medicare pay and already has the power to seek additional input from economists and others. In an April 6 letter to House Speaker John Boehner (R, Ohio), the American Osteopathic Assn., the American College of Surgeons and more than 40 other surgical and specialty societies said they oppose Dr. McDermott's legislation and other calls to add a new layer of review.

"While no payment process is flawless, our organizations strongly believe the RUC exists to provide relative valuation of medical services," the organizations wrote. "No other entity has the expertise to decide if a service provided is relatively more complex, relatively more intense or relatively more risky than the collective deliberative panel of the RUC."

The letter also notes, "Each time a primary care organization has asked the RUC to assist and evaluate their requests, the RUC has, with few exceptions, provided the changes."