The past and future of Medicare physician payments

Earlier this week, Aaron posted about the JAMA Internal Medicine paper by Christine Sinsky and David Dugdale. He compared the Relative Value Scale Update Committee (RUC) estimates for hourly revenue with actual hourly revenue for three types of services, cognitive (history taking, clinical assessment, care coordination, chronic conditions management), colonoscopy, and cataract extraction. He kindly linked to my prior posts on the RUC (herehere, and here). If you’re already lost, you can click back to these to refresh your memory.

Accompanying the Sinsky and Dugdale paper is a commentary by Paul Ginsburg, in which he very briefly summarizes some (hardly all) of the history of Medicare physician payments and looks toward the future. It’s worth quoting.

First, a look back:

Congress enacted the Medicare physician fee schedule in 1989, which was implemented beginning in 1992. In a concession to the American Medical Association, which supported the reform, the organization was given a role as a convener of specialty societies to refine and update relative work values.

Analyses showed that the reform led to large shifts in payment away from procedures and toward primary care. From 1991 to 2002, Medicare payment rates for primary care services increased in excess of 40% in relation to rates for physician services overall. Over time, Medicaid programs and most commercial insurers adopted the relative value scale used by Medicare, so the influence of this reform has been very broad. Along with the rapid growth in managed care,which at the time used gatekeeper models extensively, the incomes and status of primary care physicians increased significantly. [Bold added.]

It’s astonishing to realize that as recently as 2002* primary care physicians were benefiting, relative to specialists, from the Medicare payment system. That certainly has not been the case more recently, as Aaron and I (and many others) have documented.

Looking forward:

The shortcomings of today’s relative value scale in general and the update process in particular were recognized by Congress, which included in the Patient Protection and Affordable Care Act steps that had been under discussion for some time. Section 3134 (Misvalued Codes Under the Physician Fee Schedule) requires review by the Centers for Medicare & Medicaid Services (CMS) for services most likely to be misvalued, such as those with the most rapid volume growth, new technologies for which relative values were recently established, and multiple codes that are frequently billed in conjunction with provision of a single service. The provision authorizes CMS to use analytic contractors to identify services for review, collect data, and make recommendations for changes in relative values. The level of attention at CMS to refine the relative value scale has clearly increased as a result of these provisions.

I consider Section 3134 to be a continuation of the approach of using science to develop physician payment policies. Those who worked on the provision, which included staff from both parties and both houses of Congress, had a good understanding of the failings of the update process. How effectively these reforms will work is not known, although changes likely will not come quickly. [Bold added.]

Well, that’s depressing, though not surprising. Taking money away from physicians, even to give it to other physicians, is no simple matter.

* I recognize that 2002 seems like a long time ago to some people. Shut up.


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