In 1992, Centers for Medicare and Medicaid Services (CMS) adopted the resource-based relative value scale (RBRVS) as a means of determining value for Medicare-covered physician services. This formula is based on three key components:
- Practice expense
- Malpractice values
Work includes both a) the time to prepare for, perform the procedure and post-op; and b) intensity, which refers to mental effort and judgement, technical skill, physical stress, and psychological stress. Practice expense includes overhead costs, and the malpractice component reflects the portion of the service practice expense attributable to the cost of physician liability insurance. The value of each component is represented as a relative value unit (RVU).
A physician’s reimbursement for a service is the sum of the three types of RVUs multiplied by the annual conversion factor. In addition, CMS makes certain geographic-based adjustments.
The conversion factor is the critical component in the determination of physician reimbursement under the fee schedule. The conversion factor, determined annually, is a national monetary multiplier that applies to all services and translates RVUs into payment amounts. Reimbursement will rise or fall annually with the conversion factor because it is subject to adjustment each year. In addition, the conversion factor is affected by statutory requirements of budget neutrality. Any changes in RVUs in the Medicare fee schedule cannot cause expenditures to increase or decrease by more than $20 million for each adjustment. The conversion factor will be adjusted accordingly to meet this requirement.
When RBRVS was introduced, the American Medical Association (AMA) formed a committee, known as the AMA/Specialty Society RVS Update Committee (RUC), to provide medical subspecialties a voice in shaping Medicare relative values. RUC comprises representatives from all specialties, including ophthalmology, and is charged with providing input to CMS with respect to resources required to perform all procedures.
The RUC makes RVU recommendations for each procedure by reviewing survey data collected by specialty societies. These surveys are sent to practicing physicians who are providing the service under review and include questions about the time, intensity, and practice expense required to furnish the service. ASCRS has an advisory seat at the RUC and works with the American Academy of Ophthalmology (AAO) to survey members and present the data to the RUC.
RVUs are reviewed and reassessed at varying intervals. Generally, RUC seeks to review services every five years, but that can vary. The RUC review of a code can be prompted by many different factors, including changes in the volume of the service, Current Procedural Terminology (CPT) edits to the service, and requests for review from CMS.
The RUC makes recommendations on RVUs, but ultimately, CMS makes the final decision on the code’s value. Previously, CMS typically accepted RUC’s recommendations, but in recent years has made further modifications to the final value.
What does this mean for Ophthalmology?
Within the RBRVS, with respect to ophthalmology in particular, the change in the RUC value for time has had a profound effect on the work RVU for cataract surgery. Surveys conducted as part of the RUC process indicate that ophthalmologists are reporting they spend less time performing cataract surgery and furnishing fewer post-op visits. In addition, technology, for example, has helped surgeons become much more efficient with respect to cataract surgery. Fortunately, for purposes of the formula, while procedures are often faster than years ago, the level of intensity is unchanged; cataract surgery remains one of the most complex and life-changing surgeries. This reality has helped to somewhat offset the reduction in the RUC values due to the decrease in time and fewer post-op visits.
Next Steps: Perspective from ASCRS President Nick Mamalis, MD
Despite reflecting a decrease, the rule is responsive to input provided by anterior segment surgeons and continues to reflect the intensity of this complex surgical procedure.
ASCRS remains committed to advocating for ophthalmologists, advancing policies that protect the interests of its members and the patients they serve. The comment period provides ASCRS the opportunity to effect change or provide support depending on the proposal.
While the values for the cataract surgery code reflect the survey data collected that demonstrated a reduction in time and fewer post-operative visits, it is important to note that Medicare reimbursement is essentially a zero-sum game. As primary care reimbursement goes up, specialty medical care reimbursement goes down. This is simply the reality of the environment within which we operate today.
As these trends play out over the long term, however, through ongoing collaboration with AAO and other ophthalmic subspecialties, ASCRS will continue to ensure that ophthalmologists are adequately represented within RUC, providing recommendations and input into the process. And, through their strategic partnership, ASCRS and ASOA are uniquely suited to empower members of both societies to understand and navigate the implementation of any new Medicare reimbursement rules as they are finalized.
Addressing the CMS Reimbursement Changes
Bruce Maller, CEO and Founder, BSM Consulting
As we contemplate the financial impact of the changes in Medicare reimbursement, it is important that practice leaders focus on what is within their span of control.
For most ASCRS members, this is not the first time you have had to confront changes in how you are paid from CMS for professional services. In the past, those practices that have been most successful have addressed reimbursement changes in a proactive manner.
Here are some recommendations to assist with this process:
- Measure the financial impact of the changes. We have provided an easy-to-use spreadsheet tool that will allow you to estimate the financial impact of the proposed reimbursement changes on your practice. Download the Medicare Fee Change Analyzer
- Meet with your leadership team to review the analysis and to discuss areas of opportunity to manage the economic impact on your practice. Keep in mind that although we are discussing changes implemented by CMS, many commercial payers tie their reimbursement to the Medicare fee schedule.
- Focus on the following opportunities:
- Benchmark key production and efficiency metrics.
- Identify areas of opportunity to enhance provider production.
- Modify doctor schedules to enhance patient flow.
- Leverage your investment in staff and technology to drive increased production and efficiency.
- Enhance staff and patient education to improve lead capture and patient conversion to cash-pay services.
- Review operating expenses to eliminate costs that are not driving value to the practice.
The key to success is to take a disciplined and organized approach in meeting these challenges in a thoughtful and deliberate manner.
Glossary of Associated Terms
AMA/Specialty Society Relative Value Scale Update Committee (RUC): A body composed of physician members of representative specialties that reviews and recommends RBRVS values for each CPT code to CMS.
Centers for Medicare and Medicaid Services (CMS): A federal agency within the United States Department of Health and Human Services charged with administering Medicare and working with states to administer Medicaid and associated programs. CMS receives recommendations from RUC and has the authority to accept these recommendations or institute other values at their discretion.
Resource-based relative value scale (RBRVS): The formula used to determine Medicare-covered physician services based on the total resources required to perform each service. The three main components of the formula include work (time and intensity), practice expense (overhead), and malpractice values. The formula was developed to in the 1980s by William Hsiao, a Harvard economics and health policy professor.
Relative value unit (RVU): A measure of worth associated with each RBRVS component. Typically, the RVUs are reassessed every five years.
Current Procedural Terminology (CPT) codes: A medical code set that is used to report medical, surgical, and diagnostic procedures and services used in conjunction diagnostic coding during the electronic medical billing process.