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After 10 years, has RBRVS helped your bottom line?

From the January ACP-ASIM Observer, copyright © 2002 by the American College of Physicians-American Society of Internal Medicine.

By Robert B. Doherty

On Jan. 1, 2002, Medicare's resource-based relative value scale (RBRVS) was finally fully implemented. It was a milestone in the evolution of Medicare payment policy, one in which ACP-ASIM has been involved from the beginning.

Twenty-two years ago, the American Society of Internal Medicine (ASIM)—now part of ACP-ASIM—published a landmark white paper. It called for reducing the payment disparity between what were called "cognitive" services (non-procedural physician services such as office visits and consultations) and surgical and other procedural services. ASIM was the first medical organization to call for payments based on the relative differences in physician services' resources costs.

In 1989, Congress heeded that plea by enacting legislation that required Medicare to calculate payments using resource-based relative values. While the transition to RBRVS began in 1992, the government for 10 years continued to calculate payments by blending charge-based and resource-based relative values. It is only now, in 2002, that Medicare payments for each service are totally based on the relative differences in physician work, practice expenses and liability, as measured by RBRVS.

Now that RBRVS has been fully implemented, it is fair to ask the question: Does it meet original expectations for a fairer, more rational physician payment system?

Unmet expectations

Based on the rates Medicare began paying on Jan. 1, 2002, most internists would likely conclude that RBRVS has been a disappointment. Many would note that the big increases in payments for their office visits, consultations and evaluation and management (E/M) services—what used to be called "cognitive" services—never fully materialized.

While RBRVS did help level the playing field for internists' services, the transition was marred by government-mandated payment policies and divisions within medicine.

RBRVS has increased Medicare payments for internists' E/M services, but not as much as originally hoped. It is important to note, however, that because of RBRVS, Medicare is spending more on E/M services today than it did under the old charge-based payments system.

In 1991, for instance, an internist would have had to perform 72 mid-level office visits to equal the payment for a single coronary artery bypass graft. In 2002, that internist would have to perform only 38 office visits to equal that payment.

A similar effect can be found when you compare E/M services to most other procedures. Without RBRVS, internists in 2002 would face substantially lower fees for office visits—the specialty's bread and butter—and other E/M services. The result would be lower overall Medicare revenue.

RBRVS has also given the medical profession a direct voice in determining relative values. Despite the initial opposition from surgical groups, nearly every specialty has given its tacit support to RBRVS by participating in the RVS update committee (RUC).

The RUC is a multi-specialty committee, chaired by the AMA, that makes recommendations to Medicare on relative values for physician services. Medicare accepts 80% to 90% of the RUC's recommendations each year. It is difficult to find another situation where physicians have been granted as much influence in federal health policy decisions.

Negative impacts

On the negative side, payment gains for internists did not materialize to the degree many expected for several reasons. For one, RBRVS determines the relative values of physician services, not the absolute values. The amount paid for any given service is constrained by Medicare's insistence on budget neutrality.

Budget neutrality means that value increases for one service category, such as office visits, automatically produce across-the-board reductions in values for all other services. As a result, budget neutrality has limited the gains for evaluation and management services—and exacerbated the losses for procedures. It has also made the transition to RBRVS far more contentious within the profession, because the gains for some physicians come at the expense of others.

Differences over methodological issues have also caused a split in medicine. Until recently, one group of specialties was actively lobbying Congress to halt the implementation of resource-based practice expenses, a key but extremely controversial piece of the RBRVS transition.

Another group, which included ACP-ASIM, argued that the practice expense transition should continue, but with methodology improvements. Ultimately, Congress decided to allow the transition to continue.

The 10 years that physicians spent fighting among themselves drained energy from issues that affect the entire profession, such as assuring that aggregate payments for all services are adequate.

The primary reason gains from RBRVS have fallen below expectations, though, is the dollar conversion factor. While RBRVS determines relative payments, actual payments are determined by the dollar conversion factor, which Medicare applies to its relative values.

Congress and the Medicare program have repeatedly subjected the conversion factor to arbitrary budget-driven limits. The "sustainable growth rate" (SGR), for instance, which triggers conversion factor increases or decreases, is based largely on how well the economy is doing and other factors.

Because of the recent economic slowdown, Medicare was expected to cut the conversion factor 5.4% beginning this month. (See "Using strength in numbers to fight a Medicare pay cut," next page.) At press time, ACP-ASIM was lobbying to block the cut, but the outcome had not yet been decided.

The future

When the clock struck midnight on Dec. 31, 2001, it marked not only the culmination of the transition to RBRVS, but the beginning of the next stage in the fight to improve physician payments.

Our future challenge is to learn lessons from what went right and wrong over the past 10 years. One of our top priorities must include changing how the dollar conversion factor is determined so physicians are not subjected to arbitrary payment cuts.

We must also find a strategy to increase the size of the physician payment pie. We need to stop fighting about redistributing payments in a budget-neutral world and work to ensure that the total payments for all services are adequate. This means working together instead of splintering into competing factions to protect each specialty's interests.

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

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