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New Medicare physician pay plan could affect labs too.

It looks like a mixed bag for the clinical laboratory community, but Medicare implementation of a resource-based relative value scale (RBRVS) would generally prompt physicians to spend more time "thinking" about patients and perhaps less time ordering diagnostic tests and procedures.

Beyond the uncertain effects on overall testing, an RVS payment system would have a direct impact on physician revenues. In theory, the recently unveiled proposal would decrease Medicare reimbursement for pathology by an average of 25 per cent, although certain individual services performed by professionals in that specialty would be compensated at higher payment levels.

For example, Medicare paid a mean rate of $35 for cytologic examination of a bronchial aspirate in 1986, the most recent charge data analyzed by researchers. That would rise to $58 under the RBRVS. Examination of a frozen section on breast biopsy would increase from the 1986 rate of $87 to approximately $114.

The RBRVS study, initially funded by the Health Care Financing Administration (HCFA) and led by William Hsiao, Ph.D., of the Harvard University School of Public Health, was undertaken to reform the "inflationary, complex, and unpredictable" system Medicare now uses to pay physicians.

Ordered by Congress three years ago, the study attempts to measure the relative value of health services based on resource use required by physicians. The resources evaluated include the skills, training, and practice costs of different doctors, time doctors spend before, during, and after a service, and the difficulty and intensity of each service.

The proposal concludes that current payment arrangements are "distorted," paying too much for various types of diagnostic tests and surgical procedures and too little for "cognitive" skills generally associated with office visits and consultations.

According to the study released in late September, the new RBRVS "could provide a [morel fair and equitable approach to compensating physicians for the services they deliver." In addition, the proposal would reduce unnecessary procedures and "ameliorate the manpower shortage in some primary-care specialties."

The Harvard team concluded that family practitioners would see an average 65 per cent hike in Medicare reimbursement under their plan, with internists gaining about 35 per cent.

Among other affected specialties, allergists and immunologists would gain 55 per cent on average, while Federal payments to thoracic, cardiovascular, and ophthalmic surgeons would drop 45 per cent. Relatively unaffected: urologists, orthopedic surgeons, OB/GYNs, and psychiatrists.

Congress, the Administration, and the Physician Payment Review Commission will review the study during the next year. If Congress adopts the proposal, payment restructuring would be phased in over several years, according to HCFA Administrator William L. Roper, M. D.

During a press conference, Dr. Roper told reporters the study is "the product of years of public discussion of whether the prices we pay for doctors' services in the Medicare program are fair.

"There is a widespread perception, which I and [Health and Human Services] Secretary Bowen share. It is that so-called cognitive specialties-family practice, internal medicine, and in my case pediatrics-are relatively underpaid. And the so-called procedure specialties-surgery, radiology, and others-are relatively overpaid, on a per activity basis."

Dr. Roper warned, however, that the new pay structure proposal essentially only reallocate physician fees" and would not halt "the rapid growth in the volume and intensity of services." The only way to substantially cut health costs, Dr. Roper said, is through more managed health care systems such as health maintenance organizations and preferred provider organizations.

"This year Medicare payments for physicians are going to be about $25 billion," he noted. "Overthe last 12 years, Medicare physician payments per beneficiary went up about 15 per year each year. That's driven not only by price changes but by growth in the volume and intensity [of services provided]."

A relative value scale, he fears, could "worsen the volume and intensity problem if the resulting income redistributions encourage those physicians who face fee reductions to increase the volume or intensity of services."

Washington officials with the College of American Pathologists (CAP) had not issued any formal comment on the plan at press time. Analysts explain it will be some time before the true impact of an RBRVS on the specialty could be judged. They note, for example, that the raw data used to calculate the effects was not initially released and was not expected to become available until midNovember.

Further, officials observe there have been significant changes in payment levels for some procedures since the 1986 base year. Therefore effects on income and practice patterns may not be completely valid.

The American Medical Association urged the Government to conduct the study in 1984. But AMA spokesmen declined to endorse the results until their analyses are complete. Findings were, as might be expected, greeted with warm praise by the American Society of Internal Medicine.

A statement from the latter group said the system woul"allow doctors to spend more time with patients, who will know in advance precisely what they will have to pay for medical services. RBRVS is a system that also offers equity and rationality in payment levels, one that promises to have an impact on physician behavior and moderate the rise in health costs as a result."

In the study, relative value was determined by measuring work for specific procedures in different specialties. To do this, Harvard researchers surveyed more than 100 physicians in 18 specialties for 20 to 25 procedures per specialty, resulting in a total of about 400 procedures analyzed.

Examples of the allegedly distorted payments are contained in the tables published with Dr. Hsiao's article in the Sept. 29 issue of the New England Journal of Medicine (publication authority was also granted early to the Journal of the American Medical Association).

Dr. Hsiao and colleagues wrote that office visits are "currently compensated at a lower rate than invasive, imaging, and laboratory services. Roughly speaking, evaluation-and-management services are currently compensated at less than half the rate of invasive services. This finding holds true whether the evaluation-and-management services are performed by surgeons, internists, or family practitioners."

Looking at the examples given, researchers suggest that cytologic examination of a bronchial aspirate requires about one-third less resource use than a general intermediate-length office visit for consultation. But in 1986, Medicare paid approximately 20 per cent more for the pathology service. Examination of a frozen section on breast biopsy is judged as requiring 24 per cent more resource use than the office visit but was reimbursed at a rate three times greater in 1986.

The proposed reshuffling of payments would have some uncertain effects on practice patterns. While conceding that some doctors might be tempted to perform more procedures in order to make up for the loss in Medicare revenues, researchers expect the higher relative compensation for certain consultation services will induce physicians to do fewer procedures and more evaluation and management.

Although some physician incomes might not go down, changes in practice patterns "could reduce rates of surgery, invasive diagnostic tests, and hospital use," authors of the study contend. "One possible outcome might be a reduction in the overall cost of health care."

An RBRVS-based payment system, Dr. Hsiao maintains, may ultimately influence the specialty choices of medical students and the geographic distribution of physicians. This, he asserts, would improve the availability, affordability, and quality of health care.

The study should receive lots of attention when the next Congress addresses escalating payments to doctors-the fastest growing segment of Medicare. RBRVS will be scrutinized by Reps. Henry Waxman (D-Calif.) and Fortney H. (Pete) Stark (D-Calif.), chairmen of the House subcommittees awaiting the report. Physician groups also will be closely scrutinizing the study methodology and raw data.

Researchers themselves admit there are limitations in the plan. For one, the RBRVS does not currently take into account the quality of services. Although they say that's unfeasible at this time, authorities say a quality index could be incorporated into the scale when accurate physician-specific data become available.
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Publication:Medical Laboratory Observer
Date:Nov 1, 1988
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