Back to Annual Meeting Page		American Public Health Association 133rd Annual Meeting & Exposition December 10-14, 2005 Philadelphia, PA

Abstract #114560

Stephanie L. Maxwell, PhD, Robert Berenson, MD, and Stephen Zuckerman, PhD. Health Policy Center, Urban Institute, 2100 M Street, NW, Washington, DC 20037, 202-261-5825, smaxwell@ui.urban.org

Objective: In 1992, Medicare implemented a resource-based relative value system (RBRVS) for determining the "work" (time and effort) component of physician payments, replacing a payment system based on physician charges. By 2002, about half of service codes used in the Medicare Fee Schedule (MFS) were new since 1992 or had their work relative value units (RVUs) reviewed and revalued. Resource-based methodologies for physicians' practice expenses and malpractice costs were phased in during 1999-2002 and 2000-2002, respectively. This study assessed whether and how the distribution of work volume and total payments (or revenues) across service types changed after 10 years of operation of the MFS.

Data and Study Design: The study used 1992 and 2002 Medicare physician claims and files of Medicare RVUs, new codes, and reviewed codes. Changes in prices, work volume, and total payments were analyzed over the period by service type.

Results: Overall, the distribution of total payments by service type varied little between 1992-2002. Of MFS codes in 2002, 47% were new or reviewed under a 5-year comprehensive review or annual update process. These codes reflected 78% and 80% of work volume and total payments, respectively. Major Procedures (particularly Cardiovascular) and Other Procedures comprise 67% of work volume associated with new codes. Evaluation/Management Services (E&M) reflect 72% of 5-year reviewed code volume. The first 5-year comprehensive review affected prices and payments of mainly E&M, raising them by 20% on average. The second 5-year review impacted services across all service types, and also raised prices and payments by about 20% on average. A much higher proportion of codes' RVUs were raised under the second than the first 5-year review (92% and 31%, respectively), but the shares of work volume associated with these increased RVUs are more similar (82% and 69% in the second and first reviews, respectively).

Conclusions: While roughly 50% of service codes, reflecting 80% of payments, have undergone new or revised work RVU valuations since 1992 and resource-based PE and malpractice RVUs have been implemented, the distribution of payments by service type in 2002 is remarkably similar to the distribution reflected in the initial MFS. The findings suggest that an original objective of the MFS (redistribution of Medicare physician payments by service type) has been effectively frozen at 1992 distributions. Policymakers can determine whether preserving the status quo in distribution of revenues is consistent with their goals for physician payment policy.

Learning Objectives: At the conclusion of this presentation, the learner will be able to

• list the major reforms to Medicare's resource-based relative value system for physician payment since its implementation in 1992; and
• describe the level and type of impact the changes have had on Medicare physician revenues by type of service.

Keywords: Medicare, Policy/Policy Development

Presenting author's disclosure statement:

I wish to disclose that I have NO financial interests or other relationship with the manufactures of commercial products, suppliers of commercial services or commercial supporters.

Recorded presentation