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6 Georgia doctors sue Medicare over low primary care pay

They say CMS has violated federal statutes by relying on a panel to set payment rates and a process that favors specialists.

By Charles Fiegl — Posted Aug. 22, 2011

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A lawsuit filed by physicians against the Centers for Medicare & Medicaid Services aims to reverse the trend of specialists earning increasingly more over time than primary care doctors.

The 74-page complaint filed Aug. 8 in the U.S. District Court for the District of Maryland by six physicians with the Center for Primary Care in Evans, Ga., alleges that CMS has violated federal law and the U.S. Constitution by using a panel of doctors' recommendations when establishing values for Medicare-covered services. The 29-member panel, convened by the American Medical Association and representing a wide range of physicians, has recommended thousands of pay changes since 1992.

Federal statute requires CMS to consult with health professionals on adjusting relative value units, or RVUs, used to calculate payments for Medicare services. Values are adjusted based on costs associated with physician work, practice expenses and medical liability. CMS considers the recommendations by the AMA/Specialty Society Relative Value Scale Update Committee, or RUC, but the Medicare agency is not obligated to accept them. Medicare law also requires a major review of RVUs at least every five years to identify services that might be overpaid or underpaid by Medicare, a process also initiated by the RUC.

Adjustments made to RVUs maintain overall budget neutrality, meaning if the program pays more for a certain service, it will need to pay less for one or more other services. Some primary care physicians have complained that the process historically has favored specialists.

The lawsuit is against CMS and not the RUC, said Paul Fischer, MD, one of the plaintiffs from the Center for Primary Care. But the complaint faults the Medicare agency for relying on the panel, he said. The lawsuit alleges that the arrangement violates statutes governing federal advisory committees and is responsible for physician shortages in primary care. The defendants are harmed because they cannot meet the primary care physician needs for their community, he said.

"I believe that the RUC for 20 years has disadvantaged primary care, overpaid many specialists and contributed to the crisis in primary care today," Dr. Fischer said.

CMS has proposed accepting only 51% of the RUC's recommendations for relative value changes to physician services set to go into effect Jan. 1, 2012, according to a June 6 notice in the Federal Register. However, CMS has agreed with more than 90% of RUC recommendations in previous years.

"The RUC is an independent panel of physicians from all medical specialties, including primary care, who make recommendations to CMS as all citizens have a right to do," Barbara Levy, MD, the RUC's chair, said in a statement responding to the lawsuit. "These volunteers provide physicians' voice and expertise to Medicare decision-makers through their recommendations."

Medicare fees for primary care services have increased during the last several years. For instance, the rate for a midlevel evaluation and management office visit for an established patient has increased 31% to nearly $70 since 2005. The RUC had recommended increasing RVUs for primary care services during that time period.

A CMS spokeswoman said the agency does not comment on pending litigation.

The American Academy of Family Physicians was asked to be a party to the complaint against CMS, but the academy declined, said AAFP President Roland Goertz, MD. AAFP does not want to replace the RUC as Fischer and others have advocated, he said. Although Dr. Goertz said he sympathized with the frustration felt by the Georgia physicians, the AAFP has decided to pursue alternative options to address payment fairness for primary care physicians.

AAFP has called for more seats for primary care on the RUC board, including a permanent seat for geriatric medicine, and greater voting transparency on all RUC votes. AAFP has created the Primary Care Valuation Task Force to make recommendations to CMS about more accurately paying for primary care services. The new group of 22 physicians, health care policy analysts and others is scheduled to hold its first meeting on Aug. 22 in Washington. The task force meeting will not be open to the public.

The latest RUC recommendations

The June 6 CMS notice proposed revisions to physician work RVUs for Medicare payments in 2012. CMS accepted only 89 of the 173 recommendations that the RUC made in its most recent assessment, a decision that has angered some physician organizations.

AAFP wrote a July 25 letter criticizing the Medicare agency for not accepting RUC recommendations to increase work RVUs for outpatient observation care billed by doctors, including family physicians. "We are extremely disappointed by CMS' proposal in this regard, which parallels its treatment of the subsequent observation care codes that were new in 2011," wrote Lori Heim, MD, AAFP's board chair.

The AMA and the American College of Cardiology also urged CMS to accept the recommended values for observation services. CMS officials said they rejected the increases because they believe the acuity level of the typical patient receiving outpatient observation services is lower than that of a patient receiving similar services as an inpatient.

"Patients in observation status or admitted to the hospital usually require the same physician work," wrote AMA Executive Vice President and CEO James L. Madara, MD, in a July 25 comment letter. "Whether a patient is classified as 'inpatient' or 'outpatient' does not necessarily equate to patient acuity."

The Medicare Payment Advisory Commission has criticized the overall RVU review process for focusing on undervalued physician services instead of on services for which Medicare is paying too much. Specialty societies have had an incentive to propose RVU increases for the services they provide, MedPAC Chair Glenn Hackbarth said in a comment letter to CMS.

However, the most recent review "shows that it is possible to reorient the process so it is focused less on underpriced services and more on services that are overpriced," he said.

Of the 173 services cited in the latest RUC assessment, Medicare is proposing to pay less for 54 services and more for 57 services. The rest would remain unchanged.

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