MedPAC Recommends Revision of Medicare Reimbursement System
The Medicare Payment Advisory Commission on Wednesday released to Congress a report that recommends CMS revise the system used to determine Medicare reimbursements for different forms of medical services, CQ HealthBeat reports. Under the current system, CMS assigns "Relative Value Units" to different forms of medical services based on the amount of resources required to provide the services, with higher reimbursements provided for services with higher RVU values.
CMS reviews the RVU values for different medical services every five years, based in large part on the recommendations of a private sector advisory committee formed by the American Medical Association called the RVS Update Committee.
In the report, MedPAC maintains that the five-year review system "does not do a good job of identifying services that may be overvalued" and that CMS has "relied too heavily on physician specialty societies to identify services that are misvalued." RUC in most cases recommends higher RVU values for specialty care, which has led to decreased reimbursements for primary care, MedPAC said.
MedPAC Chair Glenn Hackbarth said that the disparity raises concerns about the future supply of primary care physicians. He added that the number of medical students in primary care residencies has experienced "a pretty precipitous drop-off."
The MedPAC report recommends the establishment of "a standing panel of experts to help CMS identify overvalued services and to review recommendations from the RUC," adding, "The group should include members with expertise in health economics and physician payment as well as members with clinical expertise."
Hackbarth said that CMS can establish such a committee independently but added that Congress likely will have to provide financial support.
The MedPAC report also includes a number of recommendations released earlier this year that would reduce Medicare reimbursements for hospital care, home health care and skilled nursing care, among other medical services (Reichard, CQ HealthBeat , 3/1).
According to CQ HealthBeat, the recommendations are "at the heart of a proposal by the Bush administration to trim Medicare spending this year."
In a hearing on Wednesday, Rep. Nancy Johnson (R-Conn.) raised concerns that more than 50% of U.S. hospitals currently operate at a loss on care provided to Medicare beneficiaries.
Hackbarth said that the MedPAC recommendations are intended to compensate for an increase in reimbursements from private health insurers to hospitals. "We shouldn't gear Medicare policy to make sure they make a profit," he added (Reichard, CQ HealthBeat , 3/1).
In related news, representatives from the Alliance of Specialty Medicine on Wednesday told congressional aides that quality measures for specialty care are not prepared for use in the determination of Medicare reimbursements under a pay-for-performance system.
Nancey McCann, director of government relations for the American Society of Cataract and Refractive Surgery, also said that CMS should not take Medicare bonuses for physicians that provide higher-quality care from the overall pool of funds used to reimburse physicians. According to ASM, P4P systems in the private sector that provide such bonuses do not decrease reimbursements to other physicians.
In addition, Marilyn Heine, a spokesperson for the American College of Emergency Physicians, said the shift to a P4P system under Medicare could increase physician expenditures through the encouragement of use of previously underused medical services, a practice that would result in reimbursement reductions under the Sustainable Growth Rate formula.
The SGR formula decreases reimbursements to physicians when an annual target for expenditures is exceeded. ASM said that CMS must replace the SGR formula before a P4P system is implemented under Medicare (Reichard, CQ HealthBeat , 3/1).