RUC Alternative Might Address Lagging Primary-Care Pay: Report

National Report Also Aims to Elevate Visibility

Kerry Dooley Young

May 05, 2021

Tucked within a new National Academies report on the future of primary care is a challenge to an influential panel whose approach to valuing US physician pay has been criticized for being skewed toward specialists.

The Centers for Medicare & Medicaid Services (CMS) should independently value physicians' services, given the limits of the existing Relative Value Scale Update Committee (RUC) of the American Medical Association, according to a new report from the National Academies of Sciences, Engineering, and Medicine (NASEM).

The report, "Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care," released on May 4, also recommends raising the profile of primary care in the eyes of policymakers and the public.

With respect to the valuation of services, the authors of the report say it will not be possible to overhaul the current makeup of the RUC to fully overcome what they see as its deficiencies. Currently, the RUC plays an outsized role in divvying up the funds that Medicare, the nation's largest purchaser of healthcare, spends on clinicians' services, according to the report. CMS has had to rely too heavily on the findings of the RUC, which has "drifted away from science-based estimates toward interest group input," the report says.

There is no regulatory or institutional block that would prevent CMS from valuing physician services independently of the RUC, the report says. Building such a base of knowledge within CMS would help move Medicare payments toward a system that does more to peg payments to patient outcomes, according to the report.

"In fact, it is hard to imagine that it could do so in the absence of an independent valuing mechanism within or external to the agency, such as the Medicare Payment Advisory Commission," the authors of the report write.

Building this capacity would require "a relatively modest level of resources and staff" and would not prevent the RUC from continuing to make recommendations to CMS about physician pay, the report says.

Person-Centered, Relationship-Oriented Care

The recommendation regarding CMS's need to develop new expertise in Medicare pay for clinicians was a specific recommendation included in the wide-ranging report.

Primary care should be promoted as a "common good," the report stresses. It argues for making efforts to allow more Americans to build a partnership with a primary care clinician, which the authors depict as a bedrock of improving outcomes in the United States.

"Everyone in the country should have easy access to high quality primary care that is person-centered, relationship-oriented, and responsive to the needs of the community," said Christopher Koller at a Tuesday press conference announcing the report. Koller is president of the Milbank Memorial Fund, an endowed foundation, and is a member of the committee that produced the report.

The wide-ranging report also offers many suggestions for elevating the profile of primary care within federal policymaking circles. These include a call for the creation of an Office of Primary Care Research at the National Institutes of Health and a recommendation that the Department of Health and Human Services establish a Secretary's Council on Primary Care.

The report also says CMS should continue policies instituted during the COVID-19 pandemic that allowed greater use of telehealth and virtual visits.

At the press conference, Koller argued for a dramatic shift in how advocates for primary care seek funds for their field.

Too often, attempts are made to justify spending money on primary care on the view that doing so would lead to future savings in healthcare costs. Studies have not backed up such claims, which detract from more relevant arguments for expanding access to primary care, he said.

"We think it's an unreasonable ask" to demand savings, Koller said.

Instead, advocates for primary care should argue that the field's ability to increase life spans and preserve health is worth the investment, he said.

Challenge to AMA's RUC

Many of the report's recommendations center on ways to boost pay for primary care specialists.

It calls on CMS to shift away from the fee-for-service (FFS) payment model to hybrid models, which could be part FFS and partly capitated. This approach would reward clinicians who secure better outcomes and would grant payment per patient, rather than per visit or procedure, which would make them the default payment method over time. CMS should aim to increase physician payment rates for primary care services by 50%, to identify overpriced healthcare services, and to reduce their rates to accomplish this.

A key component of efforts to boost pay for primary care would be to change Medicare's approach to reimbursement for different specialties, the report argues.

Over the years, the RUC has tilted in favor of directing higher pay to specialists who perform procedures, in part because of the composition of this panel, the report says.

"These deficiencies in the RUC process compound over time because changes to Medicare's fee schedule must be budget neutral. As a result, primary care services generally, and evaluation and management [E/M] codes specifically, have become passively devalued in the PFS [physical fee schedule] as their relative prices fall as a result of other service prices (including new technologies) increasing."

Primary care and other fields of medicine that focus on managing complex conditions scored at least a partial win last year when CMS opted to stick with its plans for an overhaul of Medicare's E/M codes. The E/M overhaul reflected changes made through the AMA's RUC. The panel responded to long-standing criticism about pay disparities.

Over the objections of many specialty groups that focus on procedures, such as surgeries, CMS finalized a 2021 payment rule intended to raise pay for primary care while making compensatory cuts in other fields.

But Congress then took steps to delay some of these changes, said Bob Phillips, MD, co-chair of the NASEM committee that wrote the report. Thus, it's unclear at this time how meaningful the E/M overhaul will prove in addressing claims of pay disparity between primary care and procedure-focused specialties.

"There's an embedded tragedy there and then as the rest of the RUC community thinks they've solved our problem…. The appetite for reopening conversations about how to redistribute resources to primary care may not be there," said Phillips, who is also director of the Center for Professionalism and Value in Health Care at the American Board of Family Medicine.

That could leave primary care starved of resources and "anemic in its capacity to improve health and health equity," Phillips told Medscape Medical News.

Primary care receives less than 5% of the money spent on healthcare but provides more than one third of all healthcare visits. Boosting compensation for primary care is critical to maintaining the workforce for this field of medicine, he said. Many clinicians who might otherwise stay in the field switch career paths to boost their income.

"It's not just physicians. It's physicians and nurse practitioners and physician assistants," Phillips said. "The evidence shows that trainees in those areas are choosing other careers because they've got loans. They've got kids they want to put through college. They've got homes to buy, and the difference in income potential and the risk of burnout are both just such powerful messages to them that they're not coming into the field, and some are leaving."

Sean Cavanaugh, a former director of the Center for Medicare at CMS in the Obama administration, reviewed the NASEM report at the request of Medscape. In an interview, he recalled how CMS officials would try to counter the imbalances in physician payment introduced by the RUC.

He credits CMS with having begun to raise pay for primary care through the E/M overhaul. Like Phillips, he says more work is needed. He expects there will be a drift back toward distributing money from the Medicare physician fee schedule with a bias toward specialties that focus on procedures.

"I don't think we can leave it to the RUC. We need a fundamentally different process," said Cavanugh, now chief policy officer and chief commercial officer at Aledade, a firm that helps independent physicians participate in accountable care organizations.

When asked about the new report's recommendation to move away from the current RUC-based system, the American Medical Assocation said in a statement, "The RUC process is credible and transparent, and relies on an evidence-based approach for making fair and objective recommendations that the government may consider in establishing Medicare payment policies. For decades, the RUC has offered recommendations that led to improved primary care payment, such as the recently implemented significant increases in payment for office visits."

However, in an interview with Medscape Medical News, George M. Abraham, MD, president of the American College of Physicians, emphasized support for having CMS more directly assess the value of clinician services.

There's widespread agreement in healthcare policy circles about a need for better coordinated medical care and for a reduction in the delivery of fragmented, often expensive services. Having a more "neutral" entity such as CMS review the data on costs would likely produce better outcomes, Abraham said. CMS could still consult with RUC, but it would also be taking into account the interplay of medical services and the larger goal of coordinated patient care.

"CMS could look at its overall priorities and drive the final decision in terms of how to prioritize resources," Abraham said. He noted that Medicare has a pool of funds for paying clinicians.

"The pie is the same size. It's just how the slices are cut," Abraham said. "CMS is probably in the best position to decide this, because CMS sees how resources are currently spent and what all the expenses are that CMS pays for."

ACP was among the funders of the NSEM research that led to the report. Other backers were the Academic Pediatric Association, the Agency for Healthcare Research and Quality, the Alliance for Academic Internal Medicine, the American Academy of Family Physicians, the American Academy of Pediatrics, the American Board of Pediatrics, the American Geriatrics Society, Blue Shield of California, the Commonwealth Fund, Family Medicine for America's Health, the Health Resources and Services Administration, the New York State Health Foundation, the Patient-Centered Outcomes Research Institute, the Samueli Foundation, the Society of General Internal Medicine, and the US Department of Veterans Affairs.

Kerry Dooley Young is a freelance journalist based in Washington, D.C. She earlier covered health policy and the federal budget for Congressional Quarterly/CQ Roll Call and the pharmaceutical industry and the Food and Drug Administration for Bloomberg. Follow her on Twitter at @kdooleyyoung.

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