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Revising Medicare's Physician Fee ScheduleMuch Activity, Little Change
NEJM Perspective Examines Why Primary Care Specialties Continue to Get Short Shrift
FURTHER INFORMATION, CONTACT:
Since 1992, Medicare has used a resource-based relative-value scale (RBRVS) fee schedule to set payments for physician services on the basis of relative costs. The RBRVS relies on estimates of three components: physician work (time and intensity), practice expenses and malpractice insurance expenses, with geographic adjustments to reflect cost variation. A conversion factor is used to translate the relative values into dollar amounts for each service, according to the article.
"Keeping the relative values current requires an effective process that reflects changes in medical practice and trends in physician productivity. But during the 15 years since this system was implemented, relative values have defied gravity-going up or staying the same but rarely coming down. For example, in 2006, the Centers for Medicare and Medicaid Services (CMS) raised physician-work values for 227 services and lowered them for only 26," write Ginsburg, president of the Center for Studying Health System Change (HSC), a nonpartisan policy research organization funded primarily by the Robert Wood Johnson Foundation, and Berenson, an HSC senior consulting researcher and senior fellow at the Urban Institute.
Because private insurers and Medicaid programs often base their payment rates on Medicares relative valuesusing different conversion factorschanges in Medicares relative values can profoundly affect physician revenues, according to the article.
When CMS announced a final rule on Dec. 1, 2006, that updated relative work
values, a news release cited a 37 percent increase in the work values associated
with an intermediate office visit for an established patient. "Other visit codes did not fare as well, but overall, work values for evaluation
and management services increased by 20%. But because few services received
work-value reductions, the required budget-neutrality adjustment reduced the
increases in work values for evaluation and management services to 8%. Since
such services represent 46% of total spending on physician services, they absorbed
much of the reduction for budget neutrality," according to the authors.
To access the NEJM perspective, "Revising Medicares Physician Fee Schedule-Much
Activity, Little Change," go to www.hschange.org/CONTENT/919/.
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.