New Medicare RVUs Would KO Psychiatrists

August 1, 1998
Volume 15, Issue 8

Psychiatrists would fare considerably worse than anticipated if the Health Care Financing Administration (HCFA) sticks with its recently-announced intention to use a 'top-down' methodology in rearranging new practice expense relative value units (RVUs) for 1999. The new methodology would yield a 4% increase over the four years 1999 to 2003, compared with the 'bottom-up' methodology HCFA had previously chosen, where psychiatrists would have received a 19% increase.

Psychiatrists would fare considerably worse than anticipated if the Health Care Financing Administration (HCFA) sticks with its recently-announced intention to use a 'top-down' methodology in rearranging new practice expense relative value units (RVUs) for 1999. The new methodology would yield a 4% increase over the four years 1999 to 2003, compared with the 'bottom-up' methodology HCFA had previously chosen, where psychiatrists would have received a 19% increase.

Shelley Stewart, deputy director of federal relations for the American Psychiatric Association, said that the APA had not established an official position on the issue yet. Comments on the new RVUs and the top-down methodology are not due at the HCFA until Sept. 3. Stewart did say, however, that she was disappointed that HCFA seemed to ignore some of the data the APA helped develop on the direct costs to psychiatrists of staff time for items such as claims and billing.

Stewart put HCFA proposal in perspective by noting that some specialties could see their Medicare reimbursement drop as much as 14% over four years. Psychiatry will still get a 6% increase, one roughly equivalent to that of family practice. But the fact that HCFA had projected a 19% gain for psychiatry under a modified bottom-up methodology left Stewart feeling as if "we were one step away from winning the lottery."

HCFA had announced its decision to use bottom-up methodology in June 1997, and then revised that methodology in the fall. Under the revision, psychiatrists would have seen their Medicare reimbursement increase 19% over the four-year period beginning Jan. 1, 1999. When the 1997 Balanced Budget Act passed in the summer of 1997, Congress told the HCFA to make changes in its methodology so that surgeons would not be decimated by the practice expense revisions. For example, under the modified bottom-up methodology, cardiac surgeons would have lost 37% over four years. Under top-down, they lose "only" 14%.

In March 1998, HCFA switched gears under pressure from surgical groups. Under the top-down methodology, no surgical specialty loses more than 14% over four years. That is a big change, and a welcome one for the surgical specialties.

However, use of the top-down methodology results in psychiatrists netting only a 4% increase, a turnaround of 15%. Only two oncology subspecialties would lose so large an amount as a result of the top-down methodology.

When asked about the top-down methodology, Stewart declined to comment, citing the nearly 200-page Federal Register notice accompanying the proposal.

Generally speaking, the top-down methodology relies on estimates of practice expenses on a per-hour basis for each specialty. That estimate is based on data from the American Medical Association socioeconomic monitoring system survey and the 15 clinical practice expert panels (CPEPs) which were structured along specialty lines. That per-hour estimate is then multiplied by the number of hours worked by physicians in that specialty according to Medicare claims data. This determines the total pool of practice expense payments for that specialty. Medicare then allocates this pool to the procedures performed by that specialty, using the CPEP data.

Medicare bases payment for each CPT code on relative values assigned to each code for practice expense, work and malpractice. Practice expense RVUs have been based on historical costs. That favors surgeons and specialists who do much of their work in hospitals. In 1994, Congress told HCFA to base them on resources used by each specialty. Part of the objective was to better compensate primary care physicians, such as internists and family practitioners, as well as specialties such as psychiatry, which are predominantly office based- SB