Getting a Twofer
There is a quick fix to the inequity of Medicare and Medicaid payments to primary care physicians. It is hidden in the Conversion Factor. So bear with me.
It is generally conceded that medical care reform in our country depends on redeveloping a strong primary care base. At the present time payments for primary care physicians services are not competitive with those of specialties that perform procedures. Not only does that reward doing procedures whether they are indicated or not but it overvalues the time spent doing procedures as compared with time spent in personal, comprehensive and coordinated care. Furthermore it has driven downward the interest of medical students to choose the primary care specialties for their careers, a decrease of 50% in the last16 years. The result is the expectation that we are going to have to add 52,000 to the expected number of primary doctors over the next 12 years.
The Affordable Care Act does little to address this problem. Recent rules by the Centers for Medicare and Medicaid Services (CMS) to provide separate payment for transitional care (care from facility back to community) are pitiful and loaded with extra paperwork and bureaucracy. The same is true of the three proposed Complex Chronic Care Management payments to begin in 2015.
Medicare’s formula for calculating the physician payment schedule is complex. It starts with the hundreds of CPT codes which describe all reimbursable doctor patient encounters (office visits, surgeries, etc.) Then each code is given a composite RVU (Relative Value Unit) made up of three basic RVUs, (1) the Physician Work RVU, (2) the Practice Expense RVU, and (3) the Malpractice RVU. Additionally, each of the basic RVU’s is assigned a modifier based on the geographic area (the GPCI) where the service is billed. Each RVU is then multiplied by its GPCI. The three results of these three actions are then added together to produce the composite RVU. This result is then multiplied by a conversion factor (CF) to convert the composite RVU into a dollar amount. This conversion factor is updated annually by a formula prescribed by Congress and it is the key. However, before CMS can use this conversion factor it has to apply a “budget neutrality” to it in order to insure that it does not exceed its annual budget by more than $20 million. Now we come to the Sustainable Growth Rate (SGR). This was enacted by Congress in1997 and is designed to add a final revision of the Conversion Factor for the next year’s payments. Since 2003 Congress has voted annually to postpone the calculated fee cuts.
Much attention is being paid to the whole fee-for-service problem and there are many ideas about what to do. They range everywhere from abandoning fee-for-service to totally revising the codes, definitions, and values in the present system. Any and all of these could take years to accomplish if Congress could ever agree on what to do. As noted above, the formula for the Conversion Factor is a statutory prescription.
The Fix: Only Congress can change it. It would only take a simple bill to direct CMS to use two different conversion factors, one for primary (Evaluation & Management) codes and one for procedural codes. The RVU calculations could remain the same but at the end the RVU’s could be split into two groups and the Conversion Factor for E&M increased to a level to provide a 25% increase in primary care payments. The Conversion Factor for procedures could be reduced proportionally to maintain budget neutrality. An even better twofer would be to combine this with wording to eliminate the SGR.
Admittedly, this quick fix would not solve the cost and quality problems of our present system but at least it would help put the brakes on the loss of our primary care infrastructure. It would have the secondary benefit of improving accessibility and thereby enjoying the documented decrease in medical spending created by a stronger primary care base.