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Is the Relative Value Update Committee still relevant?

From the October ACP Observer, copyright 2005 by the American College of Physicians.

By Robert B. Doherty

Despite all the attention being paid in policy circles to pay for performance, most physicians continue to be paid under a system that bases payments on relative work and practice expenses, not quality. Medicare pays physicians according to a fee schedule that multiplies relative values for work and practice expenses—the Resource Based Relative Value Scale (RBRVS)—by a dollar conversion factor.

Payments are then made on a per-visit or per-procedure basis as defined by Current Procedural Terminology (CPT) codes. Most private insurers base physician payments on the value scale and CPT coding system, but apply their own conversion factors.

Over the next several years, payment systems may evolve to the point where many if not most physicians will be paid based on quality. Bundled or retainer payments for physician-guided care coordination may replace per-visit or per-procedure coding and payment systems.

For now, however, the RBRVS and CPT will continue to have a major impact on how—and how much—physicians are paid. As a result, policy-makers are taking a hard look at whether the existing processes for determining relative values are equitable and appropriately serve the best interests of physicians, patients and taxpayers. ACP is likewise seeing if improvements are needed, and is considering the role of the Relative Value Update Committee (RUC) in making recommendations to Medicare on new and revised relative values.

The RUC and relative values

Under legislation enacted by Congress in 1989, the RBRVS was based on a Harvard study of how physicians rated the relative work—defined as mental and physical effort, time and iatrogenic risk to the patient—of their services against equivalent cross-specialty "reference" services. The law mandated a continual update of relative values but did not specify how Medicare should determine those updates.

Organized medicine established the RUC in 1990 to make recommendations on updated relative value units to the Centers for Medicare and Medicaid Services (CMS). The American Society of Internal Medicine—which several years later merged with ACP—and the AMA worked together to draft the committee's initial proposal. Our reasoning was that medicine would be better off creating its own advisory process to recommend relative values than cede this responsibility to the government or hired consultants.

We decided early on that committee membership would consist of individuals selected by invited surgical and medical specialty societies that represented each specialty, while the AMA would appoint the committee chair. However, not all subspecialties were offered a seat.

Because surgical specialties stood to lose the most under the new relative value scale, a political decision was made to offer surgical societies a greater proportion of committee seats. Although the overall RUC composition has since expanded to include more medical and surgical subspecialties, surgical specialties continue to be over-represented.

Over the years, the RUC has developed sophisticated rules and processes for recommending relative values. Specialties present recommendations for new or revised relative value units to the committee and must justify proposed increases based on survey data and "additional rationale."

Recommendations need a two-thirds vote of approval before they're submitted to the CMS. Medicare can accept, reject or modify recommendations, but it accepts most of them.

Will the RUC evolve?

Today, the committee's basic functions, composition and structure are not much different than they were in 1991. What is different is that Medicare policy-makers are beginning to question whether the committee is doing a good enough job in meeting the program needs.

Those concerns were evident at a recent meeting of the Medicare Payment Advisory Commission (MedPAC), which advises Congress on Medicare. The commission suggested that the committee contained too many surgical societies—and that it was not doing enough to address ongoing reimbursement inequities between surgery and primary care.

MedPAC also expressed dissatisfaction with the committee's unwillingness to recommend reductions in work relative values for technologies that may have required substantial physician skill when first introduced, but should require less skill over time. Some commissioners even suggested that the RBRVS itself needs to be re-examined, in light of the fact that basing payments on relative physician work does not recognize quality or the societal value associated with patients having a primary care physician.

The College is also re-examining the role and relevance of the RUC. At ACP's Medical Service Committee meeting last month, committee members echoed MedPAC's concerns.

At the committee's direction, College staff is now developing recommendations on how the RUC's composition, process and rules should be changed. Those recommendations may include alternatives to the RUC if it is unable or unwilling to make the changes needed to maintain its credibility with the College, MedPAC, the CMS and Congress.

One test will be how the RUC and the AMA respond to a College-backed resolution that the AMA's House of Delegates recently referred to its board of trustees. That resolution called on the AMA to reconsider the balance and composition of committee membership.

An even bigger test will be the RUC's ability to objectively address reimbursement inequities in its five-year review of the value scale, which was taking place at press time. Medicare must re-evaluate the entire relative value scale once every five years, with the RUC advising the CMS on which relative value units should be changed.

To make five-year review recommendations, specialties must provide "compelling evidence" to justify an increase, which is a higher standard than ongoing updates for new and revised codes. An ACP-led alliance of primary care and medical specialty societies has provided compelling evidence that the work and complexity of office and hospital visits and consultations have increased substantially since the committee last reviewed them. It remains to be seen if the RUC will recommend value increases commensurate with that evidence.

The committee has served an important role in bringing all the specialties to the table and making sure medicine has a voice in defining the value of physician work. However, political and policy imperatives have changed dramatically since the RUC's inception 15 years ago.

The best case scenario would be for the RUC to re-examine its composition and processes and make the changes needed to restore its credibility with policy-makers and its own members. Otherwise, the committee risks being replaced by another advisory process that MedPAC or CMS might think better meets society's needs—but which could diminish the roles of specialty societies and the AMA in influencing payment policy.

Robert B. Doherty is ACP's Senior Vice President for Governmental Affairs and Public Policy.

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