Medicare Physician Payments: Need to Refine Practice Expense Values During Transition and Long Term
HEHS-99-30
Published: Feb 24, 1999. Publicly Released: Feb 24, 1999.
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Highlights
Pursuant to a congressional request, GAO reviewed the Health Care Financing Administration's (HCFA) ongoing efforts to develop resource-based practice expense relative value units (RVUs), focusing on: (1) whether the new methodology is an acceptable approach for revising Medicare's fee schedule; (2) questions about the data, assumptions, and adjustments underlying the new methodology that need to be addressed during the 3-year phase-in period; and (3) the need for future updates to the practice expense RVUs to reflect changes in health care delivery and for ongoing assessments of the fee schedule's effect on Medicare beneficiaries' access to physicians' care.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Health Care Financing Administration | The Administrator, HCFA, should use sensitivity analysis to identify issues with the methodology that have the greatest effect on the new practice expense RVUs and to target additional data collection and analysis efforts. One clear example of where HCFA should evaluate different policy options for revising the methodology is in the use of physician time, instead of physician work, to allocate indirect expenses. |
CMS contracted with the Lewin Group to review the practice expense methodology and make recommendations, many of which have been adopted. Furthermore, CMS reported that it completed refinement of practice expense RVUs representing 85 percent of allowed charges. Regarding indirect expenses, the Lewin Group indicated that CMS' approach was reasonable, based upon which CMS plans to take no further action on this issue. GAO continues to believe, however, that further study of indirect allocation methods is warranted.
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| Health Care Financing Administration | The Administrator, HCFA, should develop plans for updating the practice expense RVUs that address how to: (1) assign practice expense RVUs to new codes; (2) revise the RVUs for existing codes; and (3) meet the legislative requirement for a comprehensive 5-year review of the resource-based practice expense RVUs. |
CMS has developed a process to obtain physician input on development and refinement of practice expense relative values through the AMA's Relative Value Update Committee (RVUC) and the Practice Expense Advisory Committee (PEAC). CMS will further develop plans for the first 5-year review of practice expense values for 2007.
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| Health Care Financing Administration | The Administrator, HCFA, should monitor indicators of beneficiaries' access to care, focusing on procedures with the greatest cumulative reductions in Medicare payments, and consider access problems when evaluating the physicians' payment system. |
CMS stated that although it is not aware of any barriers to access that are a result of the current resource-based practice expense methodology, its Office of Research and Demonstrations Information is currently studying any access to care issues that might have arisen as a result of the resource-based practice expense methodology.
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