AMA-convened expert panel benefits Medicare

The Relative Value Scale Update Committee provides Medicare with fair and objective advice on gauging the resource cost of physician work.

Posted Aug. 5, 2013

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A special message to all physicians from the AMA.

The future success of Medicare depends in part on accurately assessing the constant evolution of science and technology and its impact on patient care. The explosion in health care advances changes the work of physicians over time, so Medicare physician payments need to mirror the change.

However, no system for assigning payments to medical services can rely solely on well-intentioned government staff and paid consultants to gauge the hard work and resources that go along with being a skilled healer. Ultimately, there is no substitute for relying on input from experienced physicians when gauging how much time and resources go into one medical service compared with another. No one knows more about what is involved in providing services to Medicare patients than the physicians who care for them.

The need for physician input into government rulemaking has turned an American Medical Association-convened panel of expert physicians, known as the Relative Value Scale Update Committee, into an undeserving lightning rod for critics. Although everyone is free to respond to the government's call for public feedback on Medicare, only physicians are criticized for doing so in a manner so organized, thorough and accurate that our recommendations often are accepted.

Medicare holds the advice of the 31 volunteer physicians who comprise the update committee in high regard because they apply an evidence-based approach that produces fair and objective recommendations. By tapping into the front-line knowledge of physicians, Medicare gains credible insights into the complexities of patient care, and at no cost to taxpayers. As Medicare's ultimate decision maker, the Centers for Medicare & Medicaid Services has a seat at the table during all of the committee's discussions, but it is not obligated to accept any of the committee's recommendations.

In recent years, the government has counted on the committee to spearhead an initiative to recommend adjustments to Medicare. When CMS' initial efforts to identify potentially misvalued services were unable to obtain reliable data from government contractors, physicians took on this important task.

Working through the committee, more than 300 experts in medicine and research have focused on more than 1,500 medical services. To date, the committee has reviewed about 1,300 potentially misvalued services and recommended reductions or deletions to more than 750 services, freeing more than $2.5 billion in Medicare funding to be redistributed to primary care and other services.

Recommendations made by the update committee must follow Medicare's payment principles, which were established by economists at Harvard University and required by federal law and regulations. This is one of many factors beyond the control of the committee that contribute to the current income differentials between primary care and specialty medicine.

Despite this, there has been strong support for primary care within the committee. The March 2011 Medicare Payment Advisory Commission's report to Congress stated that Medicare payments for services often performed by primary care physicians had increased 20% in the past five years due in part to the committee's recommendations. In the end, more than $6 billion was redistributed to these primary care services from elsewhere.

The update committee's complicated work has long garnered the praise of government officials from both sides of the aisle. CMS has acknowledged the committee's contribution in developing recommendations for innovative delivery models, including medical homes and chronic care coordination, which improve patient care and provide greater value for taxpayers. According to the American College of Physicians, the committee's work on this project “is an important step in defining and quantifying the work that is associated with this new model of care.”

While the main work of the update committee is focused on providing recommendations to the government on how to divide the fixed Medicare budget, of far greater concern to patients and physicians is ensuring adequate funding for Medicare physician payment overall.

Medicare payments have not kept up with the cost of providing care, and CMS has estimated that in 2014, Medicare fee schedule payments will cover, on average, less than 55% of physician direct practice costs. The annual growth in Medicare physician services has been at a historical low for each of the past three years — less than 1%.

Key to Medicare's success is ensuring that program funding and payments keep pace with the cost of caring for patients — and promote sustainable practice environments that allow physician investment in new ways of improving patient care.

Physicians want to work constructively with the federal government, and the expert contributions of the update committee are a prime example of AMA-led efforts for building a more sustainable Medicare system.

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The potentially misvalued services project

To provide Medicare with reliable data on how physician work has changed over time, the Relative Value Scale Update Committee is examining more than 1,500 potentially misvalued medical services accounting for $38 billion in Medicare spending. The update committee has recommended reductions to more than 500 services, helping redistribute more than $2.5 billion. Here are the outcomes for the committee's review of 1,553 codes:

State of services studied No. of codes (percentage of total)
Decreased 565 (36%)
Reaffirmed (no change) 400 (26%)
Codes under review 272 (18%)
Deleted 203 (13%)
Increased 113 (7%)

Source: American Medical Association

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