MARCH 1, 2006 -- "The SGR" and "P4P" may be the hottest issues in the arcane world of Medicare physician payment, but "RVUs" are sexy too, says a report given to Congress on Wednesday by the Medicare Payment Advisory Commission (MedPAC).
Jargon aside, the first two issues relate to the method of calculating the yearly Medicare payment rate to doctors and the effect that the quality of a doctor's care should have on payment, while RVUs are all about "fair" payment—and concern that payments for primary care may be falling too far behind.
At a breakfast meeting with reporters Wednesday, MedPAC Chairman Glenn Hackbarth said the commission is urging changes in the way Medicare figures out how much to pay for one type of care compared with another. The technical procedure for doing that is assigning "Relative Value Units," or RVUs.
The units measure the amount of resources that are needed to provide a particular type of care. For example, RVUs for brain surgery would be higher than RVUs for a much simpler procedure such as cataract surgery. The higher the RVU, the higher the payment rate for the particular service involved. RVUs are part of the Relative Value Scale (RVS).
The way RVUs are assigned leads to relatively low payment for primary care compared with various types of specialty care, Hackbarth said. The concern is not just about income for today's primary care doctors but also about maintaining an adequate supply of primary care doctors in the United States in the future, he said.
The number of medical students seeking residences in primary care has recently seen "a pretty precipitous drop-off," Hackbarth said. Doctors "may opt not to furnish undervalued services, which can threaten access to care," the MedPAC report notes.
The Centers for Medicare and Medicaid Services review RVUs every five years, relying in large part on the recommendations of a private sector advisory group called the RVS Update Committee (RUC). Formed by the American Medical Association, the RUC also recommends values for new services.
MedPAC said the five-year process "does not do a good job of identifying services that may be overvalued." By relying too much on the RUC, "CMS has relied too heavily on physician specialty societies to identify services that are misvalued," the report says. The work of the RUC tilts toward recommending higher values for specialty care.
Five-year reviews have led to "substantially more increases in RVUs than decreases, even though many services are likely to become overvalued over time," MedPAC's report says.
Because the process of assigning values is budget-neutral, increased values have to be offset in some way. Some RVUs have become too high because medicine has found more efficient ways of providing the service involved. To the extent that excessive RVUs are identified and lowered, Medicare has less need for across-the-board reductions of all RVUs that lead to lower payment rates for primary care.
To counter the problem, MedPAC urges the creation of "a standing panel of experts to help CMS identify overvalued services and to review recommendations from the RUC," the report says. "The group should include members with expertise in health economics and physician payment, as well as members with clinical expertise."
Hackbarth said CMS has authority to create the panel on its own. But operating the panel would entail significant added expense, he said. "Funding is an important issue," he said. "We would like to see Congress support this appropriate work."
The report features a variety of payment recommendations widely reported earlier this year that would lead to reductions compared with current law in spending for hospital, home health, skilled nursing, and other care.
The Bush administration has seized on the recommendations to justify cuts in spending growth proposed in its fiscal 2007 budget proposal.
Hackbarth emphasized, however, that such reductions aren't the same thing as actual cuts. For example, even though MedPAC has recommended a cut in hospital spending compared with current law, hospitals would still see a 2.95 percent increase in payment rates in fiscal 2007.