A Health Affairs Study on Medicare Spending and the RUC

Chris Fleming

Posted 5/7/12 on the Health Affairs Blog

©2012 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

To calculate physicians’ fees under Medicare—which in turn influence private payers’ decisions on how they will pay doctors—the Centers for Medicare and Medicaid Services (CMS) relies on the recommendations of a controversial advisory panel known as the RUC (the Relative Value Update Committee), which mainly represents a broad group of national physicians’ organizations. In recent years physicians in primary care have expressed concerns that this committee has too little representation from their ranks and is partly responsible for increasing the pay gap between primary care providers and specialists. Other research has shown that increases in physician service prices brought about by committee recommendations contribute to increased costs of services used by Medicare enrollees.

In the May issue of Health Affairs, a study by Miriam Laugesen, of Columbia University’s Mailman School of Public Health, and colleagues examines these issues. The authors analyzed CMS’ decisions between 1994 and 2010 and found that CMS agreed with 87.4 percent of the committee’s recommendations on how much physician time and effort is associated with various physicians’ services. However, Laugesen and coauthors also found that CMS’ decisions are less likely to lower fees for evaluation and management services, which account for a large percentage of primary care providers’ income, than for work values of medical specialists.

“This is encouraging for providers in primary care and other specialties that bill the greatest proportion of these services,” write the authors. “However, it does not explain why there has been no reduction in the income gap between primary care providers and specialists.” If policy makers or physicians want to change the update process but keep the Medicare fee schedule in its current form, the authors suggest that Congress and CMS strengthen the agency’s ability to analyze issues such as how the effort and time associated with different physician services are determined.

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