Health Futures

is a government relations, public policy and strategic development firm representing clients in the dynamic new world of predictive and personalized health care. We specialize in navigating the labyrinth of legislators, regulators, health care providers, patient advocates, third-party payers, and journalists who will ultimately determine if innovation succeeds or fails.

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Mystery solved…sort of

02-08-2012

An expert panel of physicians gather three times a year to determine how much Medicare will reimburse their peers for their work.

Until I began attending the meetings of the American Medical Association (AMA) Resource Based Relative Value Update Committee, RUC for short, over 5 years ago, how doctors were reimbursed for services was a mystery to me.  I’ve since learned that for the past 20 years the RUC has played an integral role in setting physician reimbursement rates for Medicare.

In 1992, a Resource Based Relative Value Scale, or RBRVS, was created that bases a doctor’s payments on the resource costs that go into providing services to beneficiaries, including: physician work, practice expense (the cost of running the physician’s office), and professional liability insurance.  (Physician work accounts for just over 50 percent of the relative value of a service.)  These inputs are then multiplied by a conversion factor determined by CMS and adjusted to account for geographic differences.   The relative values determined by the RUC essentially sets the relative worth of one physician service versus another.

Historically, CMS has accepted over 90 percent of the RUC’s recommendations, giving it a large, some say disproportionate, role in determining reimbursement rates.

The RUC, which until recently worked in relative anonymity, is facing increased scrutiny. As health care costs continue to grow, some say Medicare reimbursements should be based on the value of services to the patient, not the resource costs to the physician, forcing the RUC to consider how it remains relevant as new payment models are developed. 

A recent Wall Street Journal article stoked the public’s interest when it noted that physician services were paid too generously, “in some cases because fees were based on out-of-date assumptions about how the work is done.”  The American Academy of Family Physicians, which holds a seat on the RUC, has asked the panel to reexamine its structure, process and procedures to retain its credibility in making relative value recommendations.  Primary care physician groups argue that the composition of the RUC and its processes have contributed to historically low pay for primary care physicians, which ultimately led to the primary care workforce shortage.

It was in this environment where the RUC wishes to maintain its relevancy and influence that it met for three days in January to value approximately 60 codes.  Until major changes are made to determining physician reimbursement, the RUC will continue to wield considerable influence.  Understanding this process and the data needed to determine resource use will remain critical for physician specialties looking to maintain and increase reimbursement for their service codes. 

Erika Miller
Vice President & Counsel


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