June 2000
Volume 64 |
Number 6
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The RUC assigns work and practice expense values to
each code approved by CPT. Specialty societies may perform
surveys to acquire work value data. The goal of the survey
is to define physician work expended in the activity described
by the CPT code.
Between the RUC and a Hard Place
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Norman A. Cohen, M.D.
Committee on Economics
The American Medical Association's Relative Value Update Committee
(RUC) advises the Health Care Financing Administration (HCFA)
on updates to the resource-based relative value system (RBRVS).
The RUC's purpose is to assure equitable assignment of work value
and practice expenses for the thousands of codes in the Medicare
Fee Schedule (MFS). In the fall of 1999, I wrote an article for
the Montana Society of Anesthesiologists (MSA) about the RUC.
This article is an abridged update of the original. The full text
of the article can be found at the MSA's
Web site .
History of the RUC and the RBRVS
RBRVS dates back to the late 1970s when William C. Hsiao, Ph.D.,
and his colleagues at Harvard University began developing methods
to define the resources utilized and costs incurred in providing
physician services. Based on Hsiao's early research, HCFA awarded
Harvard a multimillion-dollar contract to develop the RBRVS. After
a period of refinement, HCFA began implementation of the RBRVS
in 1992.
The American Medical Association (AMA) formed the RUC in 1991
to advise HCFA on updates to the relative value units assigned
to each of the 8,000 codes in the MFS. From the beginning, organized
medicine recognized that RBRVS would need "refinement." In the
initial implementation of RBRVS, HCFA used Hsaio's estimates for
approximately 3,000 of the highest dollar volume codes in the
MFS. Approximately 2,000 work relative value units (RVUs) came
from existing relative value scales (including ASA's Relative
Value Guide). HCFA valued the remaining 1,000 codes internally.
HCFA placed total RVUs, with the exception of anesthesia, on a
common scale normalized to an established patient, intermediate
office visit (Current Procedural Terminology™ [CPT] code
99213), which was given a value of 1.0 (before adjustments for
budget neutrality).
RVUs consist of three components: physician work, practice expense
and malpractice expense. With initial implementation of the RBRVS,
only work values were resource-based. Practice expenses and malpractice
expenses were based on historical claims data. Congress mandated
that practice and malpractice expense be transitioned from historical
claims data to a resource-based system. This change has been controversial
both because practice expense data were lacking and implementation
was likely to be problematic. The initial effort to determine
practice expenses was the formation of consensus panels, known
as clinical practice expert panels, or CPEPs. Many specialties
believe that the CPEPs developed severely flawed data, resulting
in difficulties still requiring resolution.
The RUC assumed responsibility for advising HCFA on the transition
to resource-based practice expenses. To address the problems with
the CPEP practice expense data, AMA created the Practice Expense
Advisory Committee (PEAC), which reports to the RUC. The PEAC
collects data on direct expenses and then calculates indirect
expenses using established formulas. The PEAC must complete its
work by the spring of 2001.
Congress has required HCFA to annually review new and updated
codes. In addition, HCFA must review all codes in the Medicare
Fee Schedule every five years. The RUC serves as HCFA's primary
source of information from the medical community regarding these
tasks.
RUC Composition
The RUC has 28 members representing major specialty societies
(including ASA), two rotating seats for internal medicine subspecialty
societies and one rotating seat for other specialties not assigned
a permanent seat. In addition, the RUC has members representing
AMA, the American Osteopathic Association and the nonphysician
Health Care Advisory Panel. An advisory committee to the RUC has
representatives from every specialty represented in the AMA House
of Delegates. Representatives from HCFA attend all RUC and PEAC
meetings.
ASA's current representative to the RUC is Alexander A. Hannenberg,
M.D. Preceding Dr. Hannenberg as representative was L. Charles
Novak, M.D., who is currently chair of the ASA Committee on Economics.
Karl E. Becker, Jr., M.D., and Neal H. Cohen, M.D., represent
ASA on the RUC Advisory Committee and the PEAC, respectively.
The author began service as the alternate representative to the
RUC in January 2000. ASA staff members, particularly Karin Bierstein,
assist the RUC and PEAC representatives in their responsibilities.
Process
AMA's CPT editorial panel reviews each new code or coding change.
The RUC assigns work and practice expense values to each code
approved by CPT. Specialty societies may perform surveys to acquire
work value data. The goal of the survey is to define physician
work expended in the activity described by the CPT code. The RUC
considers time and intensity of work occurring during three periods:
pre-service, intra-service and post-service. "Intensity" represents
physical effort and skill, mental effort and judgment, and stress
from iatrogenic risk. With the advent of resource-based practice
expenses, the RUC survey also collects data on nonphysician expenses
incurred in the delivery of the service.
The RUC evaluates all survey data and other supplied information.
The RUC uses the expertise of its members to critically evaluate
the clinical plausibility of the work recommendations coming from
specialty societies.
Upon receiving the RUC's recommendations, HCFA reviews the proposed
RVUs utilizing a panel of their carrier medical directors and
employed staff physicians. The panel compares the proposed RVUs
to a reference set to assure consistency. Currently HCFA accepts
approximately 90 percent of the RUC recommendations without change.
HCFA publishes its annual update to the Medicare Fee Schedule
in the Federal Register as a proposed rule. After a public
comment period, HCFA reviews the information received, makes any
changes it believes indicated and publishes the Final Rule, which
becomes effective January 1 of the following year.
Current RUC Issues
1) Practice Expense
PEAC began meeting in 1999. PEAC's initial attempts to refine
CPEP generated practice-expense data received much criticism.
Members of the RUC were concerned about issues of fairness, data
integrity and process.
In September 1999, the RUC convened a workgroup, chaired by
Dr. Novak of ASA, to address these concerns. Two workgroup recommendations
stood out as being controversial and demonstrating areas of division
within the RUC.
First, surgical specialties pushed for early review of practice
expenses associated with evaluation and management (E&M) services.
Since all surgical global codes include bundled E&M services,
any change in E&M practice expenses will have a significant
impact on surgical reimbursement. Changes will impact nonsurgeons
as well, since most of this group's reimbursement comes from E&M
services. Due to budget neutrality issues, a decrease in E&M
practice expenses may actually increase practice expense allocation
to non-E&M services provided by surgeons. Based on the RUC
workgroup recommendation, the PEAC began reviewing E&M practice
expenses at its April 2000 meeting.
The second issue that garnered much discussion at the meeting
was whether the "typical" or "average" patient should be evaluated
when determining practice expenses. HCFA insists that practice
expense data be based on the "typical" patient. The RUC and the
PEAC argued that using the "typical" patient will not allow practitioners
to recoup expenses if their patient population has higher acuity
than is "typical." Since the workgroup met, HCFA's position has
prevailed. This decision cemented the significant reductions in
practice expense payments to anesthesiologists.
2) Five-Year Review
The second five-year review of the Medicare Fee Schedule has
begun. The planned date for completion is fall of 2001. Due to
the terrific workload involved in the five-year review, HCFA is
considering an ongoing rolling review of the MFS. This change
will allow the RUC to only review one-fifth of the codes in the
MFS each year, making this difficult task more palatable.
ASA will be presenting new information at this five-year review
regarding undervaluation of anesthesia work. At the last five-year
review, ASA was partially successful in increasing work values
assigned to anesthesia codes. This time, ASA is developing a "building-block"
analysis that utilizes nonanesthesia codes as proxies for the
services performed during an anesthetic. Anesthesia payments under
the MFS include payment for time and basic units, using a regionally
adjusted conversion factor. This system differs from the rest
of RBRVS in that each code does not have a work, practice expense
and liability expense value assigned, though these values can
be computed mathematically. Since the anesthesia payment system
differs from the rest of RBRVS, members of the RUC have significant
difficulty understanding it. Hopefully, presenting our work data
in a format familiar to the RUC will prove effective in achieving
increased reimbursement for anesthesiologists.
Final Thoughts
The participants in the RUC and PEAC are volunteers who expend
considerable time and effort to make RBRVS as fair as possible.
Although parochial interests are occasionally apparent, RUC members
clearly strive for consensus.
RBRVS has had a significant deleterious financial impact on
anesthesiology over the past decade. Our most likely avenue to
effect change is through the RUC. After four months on the job,
I believe that ASA leadership, staff and your representatives
on the RUC are doing everything practical, within the limitations
of the system, to achieve fair valuation for anesthesia work.
Norman A. Cohen, M.D., is in private group
practice in Billings, Montana. He is also Alternate Delegate to
the RUC, the ASA delegate from Montana and Webmaster for the Montana
Society of Anesthesiologists.
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