Statement in Support of Fair Physician Reimbursement

Sep 16, 2005

The American Society of Hematology (ASH) is an organization of physicians who treat and provide expert consultative services for a wide range of patients with complicated blood diseases. ASH is committed to fair and appropriate Medicare reimbursement for the cognitive evaluation and management (E/M) services that physicians provide to patients.

Background

There are two basic types of physician services: “cognitive services,” also referred to as evaluation and management (E/M) services, and “procedural services,” such as surgery, endoscopy, or catheterization. Cognitive services include office visits, daily hospital care, office and inpatient consultations, emergency department services, critical care, and other services. These services entail substantial time expended by both physicians and their staff in: caring for patients, counseling patients and their families, responding to phone calls from patients and family members, personally reviewing primary clinical data such as x-ray imaging studies and peripheral blood and bone marrow slides, and providing coordination with other health care providers.

Depending on specialty, physicians provide a varying mix of procedural services and cognitive services. Hematologists treat patients with a wide range of complex conditions including leukemia, lymphoma, hemophilia, sickle cell anemia, HIV-AIDS, and many others. Like general internists and several other internal medicine subspecialties, hematologists provide mostly cognitive services, even when chemotherapy is given.

Medicare reimbursement depends on a variety of factors, including assignment of a relative value of the service, compared with the other medical services for which Medicare pays. Each service is assigned a number of “relative value units” (RVUs) and the number of RVUs is the basis of Medicare reimbursement. The American Medical Association’s Relative Value Update Committee (RUC) has the responsibility to review services and make recommendations on valuation to Medicare. The RUC’s composition is over-represented by procedure-oriented specialties.

By law, Medicare is required to review “at least every five years” all the RVUs in the Medicare Physician Fee Schedule and make any needed adjustments. Medicare has previously conducted two “five-year reviews” since the fee schedule’s inception in 1992. During the first review, a coalition of the principal users of cognitive services urged Medicare to increase substantially the RVUs for cognitive services. ASH was a member of this coalition. It was argued that the physician work involved in these services had increased and cognitive services were undervalued relative to procedural services. The RUC, nearly unanimously, recommended a substantial increase in RVUs for many cognitive services. Medicare chose not to use these recommendations and instead made a slight across-the-board increase in the RVUs for cognitive services. The second five-year review focused primarily on global surgical services that were claimed to be undervalued. The third five-year review currently is considering RVU recommendations for physician work. ASH has joined with other subspecialty organizations to work with Medicare and the RUC to accurately value E/M codes.

Distribution of available Medicare funds must occur in a budget neutral manner. That is, any increase in RVUs to a code or code family will result in negative adjustments to the rest of the fee schedule services. In addition to the distribution of available Medicare funds among competing physician services, there is another issue affecting physician reimbursement. Each year, Medicare compares actual reimbursement for physician services to their targeted rate of reimbursement and provides an update to the physician fee schedule. The targeted rate is called the “Sustainable Growth Rate”. When reimbursement exceeds the target, cuts to the physician fee schedule are triggered. These cuts are across the board, for both cognitive and procedural services.

Current Challenges

Since the implementation of the Medicare Fee Schedule in 1992, several issues concerning the valuation of E/M services have arisen and require due consideration:

  • The intensity, complexity, and duration of intraservice (service included in one visit) medical care has increased in the past ten years.
  • The intensity, complexity, and duration of pre- and post-service time has expanded.
  • Cognitive subspecialties are not adequately represented on the RUC.
  • The Sustainable Growth Rate does not accurately reflect the reality of increased complexity and expense of medical care.

ASH Policy

ASH supports fair reimbursement for physicians to enable them to continue to deliver high quality patient care. To achieve fair reimbursement, ASH supports implementing several changes to how Medicare services are valued and how the annual fee schedule is updated.

ASH strongly supports implementing changes in the RUC structure and process that would allow equitable representation of the cognitive subspecialties. The Subspecialty Advisory Group on Socioeconomic Affairs (SAGSA) of the American College of Physicians recommends the addition of three additional seats to the RUC for cognitive subspecialties, including one for hematology/oncology. ASH supports this recommendation. A RUC fairly balanced between cognitive and procedural subspecialties will yield a fair balance of reimbursement between cognitive and procedural services.

In addition, ASH believes replacing the SGR with a new payment system is critical for ensuring access to medical care for beneficiaries of the Medicare program. The current SGR formula has led to reimbursement lagging behind the expansion of medical service that is scientifically valid and appropriately expected by Medicare beneficiaries. In the absence of an administrative remedy, ASH supports legislation that will halt scheduled Medicare cuts in payments to physicians. Congress then would have an opportunity to design a payment system that appropriately reflects the costs of practicing medicine and permits Medicare providers to continue delivering high-quality medical care to our Medicare beneficiaries.

Founded in 1958, ASH represents over 14,000 clinicians and scientists committed to the study and treatment of blood and blood-related diseases. These diseases encompass malignant hematologic disorders such as leukemia, lymphoma, and myeloma; and non-malignant conditions including anemia and hemophilia; and congenital disorders such as sickle cell anemia and thalassemia. In addition, hematologists have been pioneers in the fields of bone marrow transplantation, gene therapy, and many drugs for the prevention and treatment of heart attacks and strokes.