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ACP urges fundamental changes in RBRVS, CLIA

From the March 1995 ACP Observer, copyright © 1995 by the American College of Physicians.

By Howard B. Shapiro, PhD

Four issues of substantial concern to practitioners form a central element of ACP's federal policy agenda. Physician work values under the Medicare fee schedule, clinical laboratory regulations and liability reform are on center stage in Washington. And preparatory work has begun for changes to the practice costs component of RBRVS, which will take effect in 1998.

Fix it: Physician work values

HCFA's plan to review physician work values, which make up about half of the Medicare payment under the RBRVS-based fee schedule, is an important opportunity to correct values derived from the original Harvard study of physician work.

The College examined work per time for 4,000 CPT codes; this is a measure of work intensity that allows services to be compared. We were astonished and distressed to find that the intensity scores for all evaluation and management (E/M) services cluster at the 3.5 percentile. That is, the current Medicare fee schedule places about 96% of all services and procedures at a higher intensity level than E/M services.

These findings raise fundamental questions about the Harvard study underlying the fee schedule. For whatever reasons--perhaps having to do with the instructions they were given--physicians in the study viewed E/M in a different manner than they viewed procedures. This bias is reflected in Medicare payments. Consequently, the College has proposed to HCFA that 29 E/M codes, including the codes used by internists for much of their inpatient and outpatient services, be evaluated in the five-year review.

Other medical societies are suggesting only a limited number of services for review. The College does not believe that the Medicare fee schedule can be improved by tinkering. We are urging HCFA to fundamentally re-examine how the work involved in E/M services is conceptualized separate from procedures.

This year and next, physician work will be analyzed and new work values recommended. ACP, which is a member of the AMA/Specialty Society RBRVS Update Committee (RUC), will suggest new values based on surveys of physicians, analysis of clinical content and comparison to a reference set of services. HCFA will make final decisions in 1996, relying on Medicare carrier medical directors and physician "refinement" panels, which HCFA will convene. The new work values will take effect in the 1997 fee schedule.

The College is urging other medical societies that are RUC members to make sure that the RUC fully evaluates all the E/M services that are so seriously undervalued. You can help make that happen by contacting organizations of which you are a member.

Repeal it: Laboratory regulations

ACP is seeking outright repeal of the portions of the Clinical Laboratory Improvement Act (CLIA) applying to physician offices; we do not think those provisions can be improved. The College is asking internists to urge organizations of which they are members to join a unified effort to exempt physician labs.

The College is urging key committee chairs to relieve the CLIA burden on physicians, as part of congressional anti-regulatory initiatives. CLIA, the College believes, takes a punitive approach, casting a very wide net to catch a few problems. The cost compared to the payoff is staggering, and few federal actions have aroused as much anger among internists. We are surveying members so that we can present information to Congress on the onerous effects of this law.

Reform it: Liability

Substantial progress on liability reform seems likely in the new Congress. ACP seeks passage of traditional tort reforms, based on California's MICRA law, including caps on non-economic damages. These reforms may come as part of the proposed Common Sense Legal Reform Act (part of the Contract with America), a freestanding bill or a component of scaled-back health care reform legislation.

Liability reform was a top priority of ACP chapter leaders who came to Washington on March 1 for our annual Leadership Day on Capitol Hill. Representatives from the Utah Chapter and ACP officers discussed ACP's recommendations for reform with Sen. Orrin Hatch (R-Utah), longtime supporter of tort reform and now chair of the Senate Judiciary Committee. In a new position paper, ACP calls for moving beyond tort reform to alternatives that have a greater chance of lowering the threat of lawsuits and resulting defensive medicine. The new position paper, and an accompanying editorial, appear in the March 15 Annals of Internal Medicine.

Revise it: RBRVS practice costs

Preparatory work has begun on revising the overhead or practice cost component of the Medicare fee schedule, although the changes won't take effect until 1998.

The practice cost component is the second major determinant of fees, accounting for about 43% of the total payment. In a change long sought by ACP and legislated by Congress last year, this component will be recalculated based on actual costs or resources used, rather than on historical charges. Basing this element of the calculation on actual costs could shift payments in favor of the office-based services of internists.

HCFA is seeking proposals for a research project to collect data on practice costs associated with specific services. While the data collection may be fairly straightforward, there are crucial judgments to be made--for example, what are considered direct and indirect costs.

Physician involvement throughout this process will be essential. While the AMA and others have proposed that the RUC be the vehicle for physician involvement, ACP has opposed expanding the RUC's role, because the RUC is heavily weighted to non-internal medicine societies. There are alternate mechanisms for specialty society involvement. We encourage physicians who may also be members of other medical groups to urge those societies to consider options for a physician role in this area.

Collectively, these four issues constitute a substantial ACP commitment to the practice of internal medicine. We believe these actions are fully in accord with the best interests of our members. As always, we welcome your comments.

Comments may be addressed to the ACP Washington office, 700 13th St. NW, Washington, D.C. 20005, or to ACP Observer, Independence Mall West, Sixth Street at Race, Philadelphia, Pa. 19106; fax 215-351-2644, or e-mail Executive Editor Paula S. Katz.

Howard B. Shapiro is Director of Public Policy and the ACP Washington, D.C., office.

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