Practice expense comment period invites debate
Some suggest HCFA start over in calculations
The numerous comments filed by various medical groups in response to HCFA’s proposed practice expense regulations reflect the wide-ranging and often opposed points of view about the rule and how the agency should proceed with the implementation process.
Below are summaries of the comments filed with HCFA on the Aug. 18 deadline by two of the leading physician organizations representing opposite positions in the debate: the Practice Expense Coalition (PEC), which generally opposes the way the proposed rule is being written, and the American Society of Internal Medicine (ASIM), which supports it.
• Summary of PEC’s comments.
According to comments filed with HCFA by PEC, the agency’s proposed rule "suffers from two fatal flaws" that prevent the practice expense rule from reflecting the true cost of specific procedures in various practice settings.
First, PEC contends, HCFA fails to collect enough actual physician data to accurately develop a relative value scale. Therefore, "no valid method of cost allocation can be performed." Additionally, "unsubstantiated assumptions and data manipulation rules (proposed by HCFA) marginalize the cost differences experienced by different specialists performing specific procedures in various settings."
More specifically, PEC contends:
The methodology used to determine indirect costs is defective because it does not rely upon actual data reflecting indirect costs for specific procedures performed in various practice settings.
The proposed rule violates the Administrative Procedures Act because HCFA has not released, and in cases not yet collected, the data that will form the basis for determining the final, actual physician fee schedule.
The proposal makes unsupported assumptions in estimating direct costs. For instance, the proposed rule underestimates the per-procedure cost of equipment for many procedures by assuming a uniform 50% equipment utilization rate for certain equipment, which is unrealistically high.
Data collected by the Clinical Practice Expert Panels (CPEPs) and Abt Associates (the outside contractor HCFA used to help gather data used in the practice expense proposal) to determine direct costs by linking them to data from other panels is based on incorrect assumptions that drastically change the outcome and produce inaccurate relative values.
Capping the time of nonphysician clinical personnel at 1.5 times the physician time for providing medical services, regardless of the time actually required, is unrealistic and unfair because it penalizes highly complex procedures such as those used in neurosurgery and tissue transplants.
Proposals to "scale" the CPEP results on equipment, supplies, and staff by using data supplied though the American Medical Association’s Socioeconomic Monitoring Survey are unsound because the AMA’s data are not appropriate for this use. Also, the proposed rule misuses the data by using average rather than specialty-specific data.
The proposed rule fails to recognize how physicians actually practice medicine by not accounting for expenses related to the use of nursing and other staff in hospital settings.
Applying the multiple procedures rule currently used for surgical procures to nonsurgical procedures done in an office setting is unsound and baseless.
Assuming that indirect costs constitute 45% of all practice expenses is unfair and inaccurate because it does not take into account the cost structures of various physician specialties.
The proposed allocation of indirect practice expenses is unacceptable and illegal because it is not based in generally accepted accounting principles (GAAP). Until HCFA can develop actual indirect cost data and properly allocate these expenses according to GAAP, no changes should be made in the relative value units being used.
• Summary of ASIM’s comments.
"This proposed rule represents a sound starting point for the development of valid PE-RVUs," ASIM wrote HCFA in its Aug. 18 response to the practice expense proposal. "The methodology and data can and should be improved and refined, however, and the one-year delay in implementation should provide sufficient opportunity to make the necessary improvements."
ASIM also "strongly rejects the view that the data and methodology presented in the proposed rule are so fundamentally flawed that HCFA needs to start over and use other sources of data," the comments state.
Instead, ASIM contends, "what is needed is a good-faith effort on the part of HCFA and physicians to work together to improve the proposed methodology, rather than replacing it entirely with some other untried approach."
More specifically, ASIM says HCFA should:
Build upon, but not replace, the methodology used to develop this notice of proposed rule-making in developing the new PE-RVUs mandated by the Balanced Budget Act of 1997.
Continue to use the CPEP data, as refined further by the refinement panels, as a principal source of data in constructing the proposed new practice expense RVUs.
Supplement the CPEP data with data on actual costs and utilization of procedures, to the extent that it is practicable to obtain such data within the time frame mandated by the Balanced Budget Act. HCFA’s assumptions on utilization should be considered the default estimates should better data not be available.
Consider all compelling arguments for correcting errors or anomalies in the CPEP data and make corrections, as needed, including recommendations on specific codes.
Statistically link the CPEP data, using the CPEP 7 estimates on evaluation and management services as the common link, while being open to consideration of alternative statistical models for achieving appropriate linkages.
Publish models of how different linking methodologies would affect the PE-RVUs.
Modify the indirect PE calculations by using specialty-specific shares of indirect costs.
Reject the view that the five-year review and the CPEPs resulted in duplication of the physician and nonphysician work of E/M services.
Desist from implementing the proposed redefinition of actual charges.
Maintain the separate budget neutrality adjuster for the work RVUs, rather than implementing HCFA’s proposal to replace it with a reduction in the conversion factor that would also require an increase in PE-RVUs.
HCFA should not implement an across-the-board increase in PE-RVUs that would have the unintended consequence of increasing the number of procedures and the amount of the reduction required under the 110% (of work RVUs) limit on PE-RVUs mandated by the Balanced Budget Act of 1997.
Calculate the new practice expense RVUs and specialty impacts without applying a behavioral offset adjustment. The PE-RVUs that are implemented on 1/1/99 should not be subjected to a behavioral offset adjustment.
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