Medicare reimbursement process considered top AAO priority

March 15, 2006

Baltimore?The Medicare reimbursement system may seem like a bowl of alphabet soup, but physicians can't afford to ignore what lies behind the acronyms because of the enormous impact on their practice bottom lines, said Michael X. Repka, MD, secretary for federal affairs for the American Academy of Ophthalmology (AAO).

The Resource-Based Relative Value Scale (RBRVS), the physician payment scale for Medicare, is fundamental to understanding the reimbursement process. RBRVS was enacted more than a decade ago to address specialty payment differentials and eliminate imbalances between work and payment. Relative value units (RVUs), which form the basis of RBRVS, incorporate physician work, direct and indirect practice expenses, and malpractice, continued Dr. Repka, who is also professor of pediatric ophthalmology, The Wilmer Eye Institute, Johns Hopkins University School of Medicine, Baltimore.

To compute the payment for a service, the Centers for Medicare and Medicaid Services (CMS) multiplies the combined costs of that service by an annual conversion factor or dollar amount, and then adjusts the result to reflect different costs for different geographic areas.

Many factors have an impact on the fee schedule, which is updated annually, Dr. Repka said. Some of the most significant factors include new technology, physician-administered drugs, and the gross domestic product. As the first two factors increase, payment per service is likely to go down. In the future, linkage to a pay-for-performance system and a practice expense reallocation will also have a significant effect on the fee schedule, Dr. Repka said. The practice expense calculation is an item that ophthalmology organizations will be watching closely, he added.

"The academy feels that this is an important area of continuing risk and is planning a survey to develop our own data on practice expenses, so that we can monitor a new AMA or CMS study to be certain that the data make sense. It's expensive to provide ophthalmic care, as you know, and we certainly don't want to underestimate that," he said.

An urgent concern

An equally urgent concern is the upcoming 5-year review of work RVUs. When Congress created RBRVS, it mandated a review every 5 years to reevaluate procedures that may be performed differently, warranting a change in reimbursement, Dr. Repka said. A "near crisis" for ophthalmology was averted in the previous two reevaluations, performed in 1997 and 2002, and fears have been raised again, he added.

Physician time and work are the basis of these concerns; what matters is how many minutes the physician spends with patients, not how many minutes a technician spends with patients or time the patient spends performing tests. The standard is that high-intensity tasks pay more per minute, Dr. Repka said.

For this review cycle, the AAO submitted a list of 15 codes that it believed were undervalued, and CMS drew up a list of 14 codes it thought might be overvalued, resulting in a total of 29 at-risk codes. The academy later presented survey work data on 25 of these codes to the AMA/Specialty RVS Update Committee (RUC), a physician panel that weighs the relative value of physician work involved in these procedures. The RUC's recommendations were forwarded to the CMS, which will release a preliminary rule later this year. The ultimate outcome of the review will be announced in November 2006, and any changes in reimbursement for specific procedures will be implemented on Jan. 1, 2007.

The AAO has been concerned that CMS seemed to target high-volume ophthalmology codes for the 2007 review as well as some codes that had already been considered in earlier review cycles, Dr. Repka said.

In theory, volume alone should not trigger a review, nor should codes be reviewed unless there has been a substantial change in the service, such as a difference in technology or a difference in type of patients being served. However, that does not appear to be always the case, Dr. Repka said.

Some of the codes identified for reevaluation are: