The rel­a­tive worth­less­ness of rel­a­tive value

Needed changes in­clude more rep­re­sen­ta­tion for pri­mary-care doc­tors, lower pay­ments for stan­dard­ized pro­ce­dures and pay for re­sults, not meth­ods

Modern Healthcare - - OPINIONS COMMENTARY - Dr. Joel Shalowitz Dr. Joel Shalowitz is a clin­i­cal pro­fes­sor of health in­dus­try man­age­ment at North­west­ern Univer­sity’s Kel­logg School of Man­age­ment and pro­fes­sor of preven­tive medicine at the Fein­berg School of Medicine.

In 1989, the Om­nibus Bud­get Rec­on­cil­i­a­tion Act man­dated use of the re­source-based rel­a­tive value scale method­ol­ogy for physi­cian pay­ments un­der Medi­care Part B. Re­cent me­dia at­ten­tion has fo­cused on its in­ac­cu­racy and the Amer­i­can Med­i­cal As­so­ci­a­tion’s ap­par­ent con­flict of in­ter­est. Re-ex­am­i­na­tion of this mat­ter is long over­due.

The RBRVS was es­tab­lished to re­place a pay­ment sys­tem cal­cu­lated from pre­vail­ing physi­cian fees. While the fed­eral govern­ment wanted to in­volve physi­cians in the process of for­mu­lat­ing the new method, the Fed­eral Trade Com­mis­sion had an­titrust con­cerns.

In a com­pro­mise, the govern­ment gave the task to Wil­liam Hsiao and col­leagues at the Har­vard School of Pub­lic Health. Ac­cord­ing to the AMA: “Un­der terms from its sub­con­tract from Har­vard, the AMA’s ma­jor role in the RBRVS study was to serve as a li­ai­son be­tween the Har­vard re­searchers, or­ga­nized medicine and prac­tic­ing physi­cians.” Thus, the AMA was never meant to as­sume an im­por­tant, di­rect role in rate-set­ting.

The RBRVS as­sesses the nec­es­sary re­sources for a par­tic­u­lar ser­vice by adding the value of the work, prac­tice costs and mal­prac­tice ex­penses—each weighted and ad­justed with its own ge­o­graphic mod­i­fier. Ev­ery unique re­source cost is mul­ti­plied by a con­ver­sion fac­tor ($34.0230 in 2013) to de­ter­mine ac­tual pay­ment.

Of the three com­po­nents, the value of the work has the ma­jor­ity of weight and is the most open to sub­jec­tive in­ter­pre­ta­tion. Ac­cord­ing to the Hsiao group’s orig­i­nal re­search, this com­po­nent is “a func­tion of four di­men­sions: time (pre-ser­vice, in­traser­vice and post-ser­vice); men­tal ef­fort and judg­ment; tech­ni­cal skill and phys­i­cal ef­fort; and stress.” Cur­rently, the AMA’s Rel­a­tive Value Scale Up­date Com­mit­tee, known as the RUC, as­signs work val­ues. The CMS ac­cepts 95% of its rec­om­men­da­tions, ac­cord­ing to the AMA.

As of April 28, six of 25 so­ci­ety rep­re­sen­ta­tives on this com­mit­tee of 30 mem­bers come from pri­mary-care spe­cial­ties. How­ever, pri­mary-care physi­cians pro­vide about half of Medi­care physi­cian vis­its. Al­though re­cent RUC eval­u­a­tions have ad­justed some pro­ce­dural “over­val­ued ser­vices,” cog­ni­tive ser­vices have not gen­er­ally in­creased.

The sub­jec­tive na­ture of the work com­po­nent and the ap­par­ent con­flict of in­ter­est of the RUC in­vite at least sev­eral be­gin­ning rec­om­men­da­tions for im­prove­ment:

Change the weighted rep­re­sen­ta­tion on the RUC. While all med­i­cal spe­cial­ties should be rep­re­sented, pri­mary care should have a vote that is weighted based on vol­ume of ser­vices.

Re­duce pay­ments over time for stan­dard­ized, well-es­tab­lished pro­ce­dures. One of the me­dia’s crit­i­cisms is that pro­ce­dure times ob­served in sur­gi­cal cen­ters are less than the times in the rel­a­tive-value unit, or RVU, cal­cu­la­tion, re­sult­ing in over­pay­ment. In fair­ness to the RUC, times in­clude pre- and post-pro­ce­dure work, which was not ob­served. That said, es­tab­lished pro­ce­dures hav­ing high vol­umes, grow­ing in­di­vid­ual ex­pe­ri­ence and more pro­fes­sion­als trained to per­form them should be paid grad­u­ally less as the rel­a­tive work also de­creases. For ex­am­ple, re­search on car­dio­vas­cu­lar ser­vices with high rates of vol­ume growth found that work RVUs for th­ese ser­vices have tended to stay the same or, in the case of echocar­dio­grams, in­crease.

Sim­plify work cal­cu­la­tions and pay for re­sults, not meth­ods. A sur­geon who re­moves a le­sion gets paid more if it turns out to be ma­lig­nant than if it is be­nign. (Fol­low- up con­sul­ta­tion for ad­di­tional treat­ment of ma­lig­nancy can be billed sep­a­rately). A sur­geon who re­moves an ap­pen­dix sus­pect­ing a pa­tient has ap­pen­dici­tis gets paid the same whether or not it is nor­mal on sub­se­quent patho­log­i­cal ex­am­i­na­tion. A der­ma­tol­o­gist gets paid the same re­gard­less of the method cho­sen to re­move a wart. A gas­troen­terol­o­gist is paid dif­fer­ent amounts for re­mov­ing a polyp de­pend­ing on the tech­nique. Do th­ese dif­fer­ences re­ally make sense? Elim­i­nate the ge­o­graphic prac­tice ad­just­ment for the work com­po­nent. Does it make sense that the time, ef­fort, judg­ment and stress are dif­fer­ent for the same ser­vice just be­cause it is per­formed in dif­fer­ent parts of the coun­try? The ad­just­ment ra­tio­nale for work comes from econ­o­mists who noted ge­o­graphic dif­fer­ences in hourly earn­ings of work­ers in pro­fes­sional oc­cu­pa­tions with five or more years of col­lege ed­u­ca­tion. They used th­ese dif­fer­ences as prox­ies to ad­just the physi­cian work com­po­nent. The con­cept is ir­ra­tional and should be elim­i­nated.

Why the rush for change? Newer pay­ment schemes rely on RBRVS pay­ments. For ex­am­ple, global rates use cur­rent RBRVS cal­cu­la­tions as a start­ing point and the Physi­cian Qual­ity Re­port­ing Sys­tem pays re­wards based on a per­cent­age of Medi­care pay­ments. Both of th­ese meth­ods will con­tinue to un­der­pay pri­mary-care physi­cians at a time when they are in short sup­ply.

What if the AMA balks at change? The CMS could set its own rates as it does for cer­tain pro­ce­dures and tan­gi­ble goods. An al­ter­na­tive is that af­ter Oct. 1, 2014, ICD-10 will be in gen­eral use; it comes with a list of pro­ce­dures as well as di­ag­nos­tic codes. Op­tions cer­tainly ex­ist, if we have the will to ex­er­cise them.

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