Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

CMS’s Transparency Gaps Yield Invalid Medicare Payment Rates

By Jacqueline DiChiara

- The overall accuracy of Medicare payment rates significantly impacts the collective healthcare system. Medicare payment rate haste makes waste. Improved data and transparency efforts will dramatically improve accuracy within the healthcare industry, maintains the US Government Accountability Office’s (GAO) recent report to congressional committees, GAO-15-434.

Medicare payment rates

According to GAO, 2013 payments for Medicare physicians’ services were approximately $70 billion. Although the Centers for Medicare & Medicaid Services (CMS) establishes payment rates for almost 7,000 physicians’ services based upon relative values assigned to individual services, such relative values are merely vague estimates of estimated data confirming physicians' work and practice expenses, says GAO.

Flaws within the American Medical Association/Specialty Society Relative Value Scale Update Committee’s (RUC) value recommendation process and accompanying data hinder the accuracy of Medicare payment rates, says GAO.

Possible biases require active mitigation, confirms GAO. “First, physicians who serve Medicare beneficiaries — including members of the RUC and specialty societies — may have potential conflicts of interest with respect to the outcomes of CMS’s process for setting payment rates for Medicare physicians’ services,” GAO maintains.

Shortcomings within the data require further addressing. “Second, we found some of the RUC’s survey data to have low response rates, low total number of responses, and large ranges in responses. While we acknowledge it is difficult to collect sufficient and reliable data, especially for low-volume Medicare services, these challenges nonetheless undermine the reliability of the RUC’s recommendations to CMS,” GAO explains.

“Furthermore, because CMS relies on the RUC’s recommendations when establishing relative values, these challenges may also result in CMS setting inaccurate Medicare payment rates for physicians’ services,” says GAO.

The method of evaluating the amount of time and level of intensity required to successfully execute a service requires greater transparency through enhanced data accumulation, GAO explains. CMS’s process for establishing relative values for Medicare physicians’ services can be improved in four ways:

  • Improve the documentation procedures utilized to establish relative values
  • Invent a process to educate the public about potentially misvalued services via the RUC
  • Incorporate physician and stakeholder data into the process
  • Develop a timeline and plan for fund use, as appropriated by the Protecting Access to Medicare Act of 2014 (PAMA)

GAO encourages CMS to take action. “CMS should better document its process for establishing relative values and develop a process to inform the public of potentially misvalued services identified by the RUC,” GAO recommends. “CMS should also develop a plan for using funds appropriated for the collection and use of information on physicians’ services in the determination of relative values.” GAO additionally confirms its recommendations are not merely restricted to rulemaking.

According to GAO, financial incentives may encourage more physicians to oversupply overvalued services and undersupply undervalued services. Such incentives could influence individuals’ decisions to become trained in certain specialties, GAO maintains. “Thus, it is important for CMS to establish accurate Medicare payment rates for physicians’ services to promote prudent spending of taxpayers’ and beneficiaries’ money and to promote a workforce that provides appropriate care for patients,” GAO adds.

The Department of Health and Human Services (HHS) concurs with GAO's above recommendations, with the exception of the use of rulemaking to inform the public about RUC-identified services.

The healthcare industry needs greater transparency and accuracy to keep Medicare payment haste from creating unnecessary waste.


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