GAO Doubts Accuracy of RUC Data Used to Set Medicare Pay

May 29, 2015

A government watchdog agency has joined the chorus of critics who say Medicare bases its reimbursement rates for physicians on flawed recommendations from a committee of the American Medical Association (AMA).

In a report issued last week, the US Government Accountability Office (GAO) said recommendations from the AMA committee "may not be accurate due to process and data-related weaknesses." It said the Medicare program should find additional sources of information on what is fair pay for a physician's work.

The AMA body's full name is the Specialty Society Relative Value Scale Update Committee, or RUC for short. RUC makes recommendations to the Centers for Medicare & Medicaid Services (CMS) on the relative value of physician work — reflecting its time and intensity — for roughly 7000 services. On the basis of this input, CMS plugs a work value into its formula for calculating a particular service's overall relative value unit (RVU), which is part and parcel of the resource-based relative value system for setting fee-for-service rates.

The CMS formula also factors in the practice expense associated with a service, as well as the cost of medical liability insurance. RUC submits data for those two value categories as well, but the GAO report focused primarily on the value of physician work.

For physicians who feel underpaid by Medicare, the RUC acronym is almost as notorious as SGR, which refers to the agency's sustainable growth rate formula for physician compensation. Congress repealed the SGR formula earlier this year in a plan to gradually shift Medicare from fee-for-service to pay-for-performance reimbursement.

As a part of Medicare's fee-for-service system, RUC may go the way of the SGR, but in the meantime, it continues to generate controversy. In 2011, for example, a group of Georgia primary care physicians sued the government in federal court over RUC, saying the committee's bias toward procedure-oriented specialists, problematic surveys, and lack of transparency tilts Medicare rates in favor of specialty care at the expense of primary care. As a result, the nation has too many proceduralists and not enough family physicians, general internists, and pediatricians.

The Georgia physicians lost their suit, but a 2013 story published in the Washington Post put RUC on the hot seat again: RUC estimates of the time needed for various surgical procedures, the paper reported, were sometimes more than double the actual time physicians spent on them. These inflated time estimates in turn inflated Medicare reimbursement for surgeons.

Conflict of Interest Undermines Accuracy of RUC Data, Says GAO

The GAO report on RUC picks up where the Washington Post story left off. It warns that "the accuracy of Medicare payment rates for physicians has major implications for the healthcare system."

"For example, financial incentives could induce some physicians to oversupply overvalued services and undersupply undervalued services," the report said. "Moreover, if categories of services are systematically overvalued, the accompanying financial incentives could affect individuals' decisions to become trained in certain specialties."

The RUC survey data underlying Medicare payment rates, the GAO said, may not be so reliable, given the conflict of interest inherent in physicians who treat Medicare patients putting a value on their own work. A physician who performs a service, for example, tends to exaggerate how hard it is in terms of time and intensity. RUC attempts to compensate for this bias, according to the GAO, but may not completely eliminate it.

The GAO said the accuracy of the surveys, done in cooperation with organized medicine, also may suffer from low response rates, low total number of responses, and large ranges in responses. The response rate for 2015, for example, was only 2.2% for RUC's surveys on 231 physician services, and the median number of responses per survey was 55. Almost 10% of surveys had fewer than 30 respondents.

How CMS acts on RUC recommendations casts more doubt on the accuracy of the RVUs it eventually sets for physician services, according to the GAO. Documentation of its review process is sketchy, and it is nonexistent when it comes to methods for evaluating RUC recommendations for a particular service. The GAO said CMS lacks other data sources to validate RUC proposals, which it typically adopts. CMS could obtain more outside comment, but there is one problem: When RUC identifies services that may be misvalued, CMS does not alert industry stakeholders who may have something to say about those reimbursement rates. However, the GAO credited CMS with taking steps to rely less heavily on RUC survey data.

The GAO noted in its report that the Department of Health and Human Services agreed that CMS should better document its process for reviewing RUC recommendations and setting RVUs as well as incorporate information and expertise from other stakeholders. However, HHS "does not plan to inform the public of services identified by the RUC as potentially misvalued," the GAO said.

The GAO report also summarized the response of the AMA to its findings: "Overall, the AMA agreed with our recommendations," although the association added that the GAO underestimated the challenges of collecting solid survey data, particularly for infrequently performed services, according to the report. The AMA called RUC's survey methods, coupled with follow-up review by multiple medical specialties, "the best available approach."

In an email to Medscape Medical News, the AMA addressed the subject of conflict of interest.

"Ultimately, there is no substitute for input from experienced physicians on the time and resources that go into specific medical services," the association said. "The [RUC's] valuable expertise is balanced with the oversight of government officials who have the final say."

A copy of the report is available on the GAO website.

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