Doc Pay on the Docket

Will Congress replace the sustainable growth rate (SGR) factor with an alternative spending target? Or will it scrap the whole system, including the resource-based relative-value scale (RBRVS) on which the Physician Fee Schedule is based?

The Medicare Payment Advisory Commission (MedPAC) just released the report that Congress requested through the DRA, exploring some alternative mechanisms for controlling Medicare’s physician costs. According to an article in Imaging Economics, the commission was divided on whether or not to replace the SCR’s Gross Domestic Product with a different expenditure target, but MedPAC did suggest that Congress pursue one of two recommended pathways.

Path 1 would repeal the SGR and offer no new system of target expenditures. Instead, it would change payment incentives to reward quality and reduce inappropriate use; invest in the ability to collect and disseminate information pertaining to appropriateness of care and develop authoritative guidelines and build consensus around them; and intensify efforts to identify and prevent fraud, abuse, and misuse of resources, through he use of quality standards.

Path 2 would pursue the suggestions in Path 1, but include one of a handful of proposed alternative target expenditures. To that end, MedPAC recommends that all fee-for-service Medicare be included; that pressure be highest in the regions where service usage is highest; that providers be given the opportunity to share savings from improved efficiency; that efficient physicians are rewarded; and that feedback be provided via state-of-the-art communications tools and in collaboration with private payors.

In the current reimbursement atmosphere, it is likely that even such sacred cows as the RBRVS will be scrutinized. An article by Ginsburg and Berenson in the New England Journal of Medicine, Revising Medicare’s Physician Fee Schedule—Much Activity, Little Change, noted that during the 15 years since the RBRVS was initiated, the relative values have only risen or stayed the same, rarely going down. Relative values are determined by estimates of physician work (time and intensity), practice expenses, and malpractice insurance, and CMS is required by Congress to update the relative values every five years to take into consideration any increases or efficiencies. The 2007 MPFS contained such an update from the American Medical Association’s Relative Value Scale Update Committee (RUC). The authors applauded the proposed increases for evaluation and management codes, but intimated that radiology would have received further cuts beyond the overall 5% reduction levied on radiology—the second largest cut behind anesthesiology—if the RUC had not been aware of the hit the specialty took as a result of the DRA.