Practice expense battle intensifies as 1999 nears
Competing physician groups take one last stab
One of the hottest physician payment issues in years is heating up even further as the Jan. 1 implementation deadline looms closer.
Adopting an approach of "it ain't over till it's over," competing physician groups are taking their last best shots to get HCFA to revise its new resource-based relative value unit physician practice expense fee schedule yet again before it is officially implemented on Jan 1.
One of the key battlegrounds in the debate is a clash between two diametrically opposed accounting methodologies for implementing the practice expense changes: top down and bottom up.
The bottom line for primary care physicians is this: HCFA's June 18 proposed top-down way of calculating relative value units for the new Medicare fee schedule based on actual practice costs reported in the American Medical Association's Socioeconomic Monitoring System (SMS) favors surgeons and other hospital-intensive specialties, according to primary care physicians.
"HCFA's top-down approach is flawed," says Robert Doughtery, vice president for governmental affairs at the newly merged American College of Physicians-Society of Internal Medicine (ACP-ASIM) in Washington, DC. "We feel if HCFA goes ahead with this way of determining payments for physician practice expenses, the inequities in payment between primary care and surgical specialties this new system was created to abolish will just continue."
With so little time left before the January implementation date, primary care physicians are staking out the position that HCFA should only look at this top-down method as a starting point for determining the final practice expense RVUs. Meanwhile, "changes must be made during the transition that will meet the original intent of improving practice expense payments for undervalued primary care and other office-based services," says Doughtery.
In place of HCFA's proposal, ACP-ASIM wants to see a "bottom-up" approach to calculating practice expense costs based on sample data collected from specially organized physician panels, with this data projected to arrive at an estimated overall relative value baseline.
Meanwhile, primary care physicians are lobbying HCFA to consider a compromise approach that uses AMA/SMS data for indirect costs and physician panel data to calculate projected direct costs. They hope to then publish a side-by-side comparison of estimated practice expense relative value units by comparing the bottom-up, top down and hybrid methods for another round of public comment.
The AMA also likes the top-down idea. "The method is consistent with our view that practice expense values should better reflect data on physician's actual practice expenses," says AMA spokesman Timothy T. Flaherty, MD.
Under the top-down strategy, HCFA would use the aggregate practice costs for each physician specialty in the AMA's Socioeconomic Monitoring System to calculate practice expenses generated for every hour worked by a physician. The average practice expense per hour is then multiplied by the number of hours worked by that specialty to treat Medicare patients.
The total would then be allocated to six cost pools: administrative, clinical labor, medical supplies, office-related costs, equipment, and other. These costs are then reallocated down to specific procedures and codes performed by various provider specialties.
"By using aggregate specialty practice costs as the basis for establishing the practice expense pools, we are recognizing all of a specialty's costs, not just those linked with a specific procedure," HCFA said in the proposed rule.
HCFA's previously "bottom-up" approach estimated the actual costs for each procedure of staff time, supplies, and equipment, then used the estimates to build up to direct practice expense RVUs.
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