Value of Primary Care Drives MedPAC Discussion

Commission Seeks Ways to Correctly Value Time Spent in Patient Care

October 15, 2014 05:02 pm Michael Laff Washington –

Determining an actual value for medical services performed by family physicians has long been a point of contention, with those services too often being reimbursed at a lower rate than those offered by subspecialists. Now, one government commission is exploring ways to make the Medicare payment system more balanced.

[Male doctor sitting at desk with senior female patient]

Members of the Medicare Payment Advisory Commission (MedPAC) acknowledged this disparity during a recent meeting, when they discussed how to reduce the gap in Medicare payment between primary care physicians and their subspecialist colleagues.

In a report to the commission(, MedPAC staff noted that the Medicare fee schedule contains distortions in value that lead to underpayment for primary care. The report recommended repealing the sustainable growth rate formula and replacing it with an updated fee schedule that includes higher payments for primary care.

To gauge the size of the payment gap, MedPAC began collecting survey data from a small number of physician practices regarding the number of hours worked compared with their recorded fee schedule time. Six different specialties participated in the survey: family medicine, cardiology, orthopedics, oncology, urology and radiology.

Story Highlights
  • Members of the Medicare Payment Advisory Commission (MedPAC) recently acknowledged that the method for determining payment for physician services needs to be updated.
  • MedPAC contracted with a research agency to analyze the number of hours a physician actually spends working compared with the Medicare physician fee schedule time.
  • The commission is seeking alternate ways to determine the real value of a physician's services.

Initial results revealed that the ratio of fee schedule time versus hours worked per day was the lowest for family medicine and urology. Cardiology and orthopedics reported a nearly 2:1 ratio, which implies that the time assigned by the fee schedule was twice that of hours actually worked.

Medicare payments to physicians are largely guided by one body, known as the AMA/Specialty Society Relative Value Scale Update Committee (RUC). Comprising 31 members, most of whom are subspecialists, the RUC is a private entity that advises Medicare on the value of all physician services. The cost of a medical procedure as calculated by the RUC is based on several factors, including an estimated time required for the procedure to be completed, that together form what the RUC terms relative value units (RVUs). CMS is not legally bound to follow the RUC's recommendations, but one study indicated it adopts the committee's recommendations about 90 percent of the time.

Critics of the method said that the calculation does not account for technology updates that have reduced the time required for many procedures. Even though the technology makes it more efficient to provide the service, they say, the payment levels for such services remain largely unchanged.

Noting that the overall intent is to make the relative value scale more accurate, MedPAC Chair Glenn Hackbarth, J.D., said CMS should develop an internal resource that could provide advice and make recommendations on relative value measurements. Yet despite such calls for change, the commission does not plan to make a formal recommendation about reforming the scale for RVUs at this time, he stated.

According to MedPAC policy analyst Kevin Hayes, Ph.D., the disparity between the value of primary care services versus those provided by other specialties began in the 1990s. By 2000, he said, there was a rapid rise in the volume of imaging and testing being conducted for less invasive procedures.

When Commissioner Katherine Baicker, Ph.D., asked what quality control method could be used to track a physician's time, Hayes suggested the commission could use daily logs but acknowledged that doing so could lead to possible bias because physicians might make adjustments knowing their hours were being closely monitored.

Complicating the picture is the fact that Medicare has 7,000 codes for medical services, so evaluating the merits of every procedure presents an overwhelming task for the commission. "I think what we learned is to not focus on 7,000 services, but focus on 700 or 70 and be more efficient," Commissioner Jack Hoadley, Ph.D., observed.

Several commission members professed to be skeptical about assigning a relative value to physician services, given the ongoing changes in the delivery of care.

"RVU methodology works in today's world," said Commissioner Craig Samitt, M.D. "As we move to value-based delivery of care, paying for primary care based on RVUs quickly becomes an unsustainable model. In a value-based world, there are different services that we are not reimbursing for."

Other members agreed that a simple calculation using time as a measurement of efficiency often fails to capture the actual value of a particular procedure. Yet previous attempts to identify a replacement method have met with limited success.

"I feel like Rip Van Winkle," said Commissioner Jay Crosson, M.D. "Years ago, we came up with the idea that we should look at efficient physicians, ones who are on salary and are not working on a fee-for-service basis. It seemed simple, but it wasn't."