Catalyst for Payment Reform

Good news! CMS will continue to provide oversight on physician fee schedule

Good news! CMS will continue to provide oversight on physician fee schedule

In July 2017, the Centers for Medicare and Medicaid Services (CMS) issued the 2018 Medicare Physician Fee Schedule Proposed Rule, suggesting how it planned to update its payment policies and payment rates for 2018. CPR, and many other health policy experts, noticed a provision that would reduce CMS oversight of the Relative Value Scale Update Committee (RUC), a panel of physicians—mostly specialists—convened by the American Medical Association that determines the amounts Medicare pays physicians for various services.  CPR and others, including MedPAC, opposed this proposal, and we think it’s really important for our audience to understand why!

What’s the problem? The RUC is largely made up of specialists who have a stake in the Medicare Physician Fee Schedule (PFS) payment amounts. Many of these amounts are too high (e.g., wart removals are priced based on the assumption that it takes 23 minutes of a physician’s time) or too low (e.g., paying a primary care physician for evaluation and management–cognitive–services) and, in some cases, there aren’t fees established for services we want physicians to provide (e.g., care coordination or phone communications with patients). If CMS were to reduce its oversight of the RUC, the RUC would have free reign to adjust the PFS, which could mean the relative amounts Medicare pays physicians for different services could get farther and farther from producing the mix of services that would best benefit patients.

The Medicare PFS impacts the entire health care system, including the commercial sector. Private payers often start with the PFS when negotiating prices with health care providers. Therefore, if the PFS mis-values particular services, the commercial sector is likely to carry over those mis-valuations in the fees it pays to providers.

Good news. The call against CMS’s proposed change was loud enough that the agency now plans to maintain oversight. In the Final Rule released November 2, 2017, CMS responded to the critique from CPR and others, “We will continue to thoroughly review and consider information we receive from the RUC…” (page 225). 

CMS also responded to comments about the mis-valuation of services under the PFS, and has begun work with the Urban Institute “…to develop empirical time estimates based on data collected from several health systems with multispecialty group practices.” This is a step in the right direction.  CPR will continue to speak out about the need to scrutinize the PFS and get the commercial sector on board.

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