Medicare Physician Fee Schedule
CMS Needs a Plan for Updating Practice Expense Component Gao ID: GAO-05-60 December 13, 2004Medicare's payments for the costs physicians incur in operating their practices are based on two sets of estimates: total practice expenses and resource estimates for individual services. Total practice expense estimates were derived from American Medical Association (AMA) physician surveys, which the Centers for Medicare & Medicaid Services (CMS) refines with supplemental data submitted by medical specialty societies. Resource estimates for individual services were developed by expert panels and refined by CMS with recommendations from another expert panel. In response to a mandate in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, GAO evaluated CMS's processes for updating total practice expense and resource estimates and whether CMS will have the data necessary to update the fee schedule at least every 5 years as mandated by law.
CMS reviews supplemental data from medical specialties on total practice expenses to determine whether it should use the data, but aspects of CMS's review may result in its not utilizing the best data. CMS's review is necessary because it helps protect against perceived or actual bias in the estimates. Risk of bias exists because only specialties that believe their Medicare fees are too low are likely to submit supplemental data, and the data are not audited. CMS, however, may still use certain data submissions that are not representative of physician practices within a specialty. CMS also may reject some data that are more representative of a specialty's total practice expenses than the data currently used for that specialty. In addition, CMS reviewed a 2002 data submission for accuracy, which is an important additional check, yet when the data did not meet the accuracy test, CMS did not reject the data. CMS has not stated whether it will review the accuracy of all supplemental data submissions. Stakeholders such as specialty societies and AMA said the expert panel improved resource estimates for individual services because of the rigor of its evaluation process. CMS and specialty societies generally accepted the panel's estimates because the panel represented a broad range of specialties and its collaborative evaluation process became increasingly systematic. CMS implemented almost all of the panel's estimates but appropriately changed some estimates that conflicted with Medicare coverage rules and changed others to make them consistent across services. In modifying other estimates, however, CMS did not always rely on adequate data or explain its rationale. Certain physician groups told GAO that this had diminished their confidence in the process for updating Medicare's fees, and physicians' confidence in the process is important to ensure their continued participation in Medicare. CMS does not have a plan for developing and using appropriate data for the mandated review of the fee schedule. CMS reported that it is in the process of obtaining a contract to collect practice expense data from the major physician and nonphysician specialties but did not provide specifics. A plan for the data collection is important for several reasons. Data sources that had been used no longer exist or are insufficient. The AMA physician survey that provided total practice expense data was last conducted in 1999 and was modified in 2000 such that it no longer collected the necessary data. Data submitted voluntarily by specialties to update these estimates are not an appropriate substitute for a systematic data collection effort. In addition, the expert panel that reviewed resource estimates for individual services completed its work in its final meeting in March 2004. CMS indicated that an ongoing AMA committee would continue to develop estimates for new and revised services. While CMS officials told GAO they believe CMS can complete the review of the fee schedule as required by 2007, without a specific plan CMS cannot ensure that it will be able to collect the data and update the fee schedule in a timely manner.
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
December 2004:
Medicare Physician Fee Schedule:
CMS Needs a Plan for Updating Practice Expense Component:
GAO-05-60:
GAO Highlights:
Highlights of GAO-05-60, a report to congressional committees
Why GAO Did This Study:
Medicare‘s payments for the costs physicians incur in operating their
practices are based on two sets of estimates: total practice expenses
and resource estimates for individual services. Total practice expense
estimates were derived from American Medical Association (AMA)
physician surveys, which the Centers for Medicare & Medicaid Services
(CMS) refines with supplemental data submitted by medical specialty
societies. Resource estimates for individual services were developed by
expert panels and refined by CMS with recommendations from another
expert panel. In response to a mandate in the Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000, GAO evaluated
CMS‘s processes for updating total practice expense and resource
estimates and whether CMS will have the data necessary to update the
fee schedule at least every 5 years as mandated by law.
What GAO Found:
CMS reviews supplemental data from medical specialties on total
practice expenses to determine whether it should use the data, but
aspects of CMS‘s review may result in its not utilizing the best data.
CMS‘s review is necessary because it helps protect against perceived or
actual bias in the estimates. Risk of bias exists because only
specialties that believe their Medicare fees are too low are likely to
submit supplemental data, and the data are not audited. CMS, however,
may still use certain data submissions that are not representative of
physician practices within a specialty. CMS also may reject some data
that are more representative of a specialty‘s total practice expenses
than the data currently used for that specialty. In addition, CMS
reviewed a 2002 data submission for accuracy, which is an important
additional check, yet when the data did not meet the accuracy test, CMS
did not reject the data. CMS has not stated whether it will review the
accuracy of all supplemental data submissions.
Stakeholders such as specialty societies and AMA said the expert panel
improved resource estimates for individual services because of the
rigor of its evaluation process. CMS and specialty societies generally
accepted the panel‘s estimates because the panel represented a broad
range of specialties and its collaborative evaluation process became
increasingly systematic. CMS implemented almost all of the panel‘s
estimates but appropriately changed some estimates that conflicted with
Medicare coverage rules and changed others to make them consistent
across services. In modifying other estimates, however, CMS did not
always rely on adequate data or explain its rationale. Certain
physician groups told GAO that this had diminished their confidence in
the process for updating Medicare‘s fees, and physicians‘ confidence in
the process is important to ensure their continued participation in
Medicare.
CMS does not have a plan for developing and using appropriate data for
the mandated review of the fee schedule. CMS reported that it is in the
process of obtaining a contract to collect practice expense data from
the major physician and nonphysician specialties but did not provide
specifics. A plan for the data collection is important for several
reasons. Data sources that had been used no longer exist or are
insufficient. The AMA physician survey that provided total practice
expense data was last conducted in 1999 and was modified in 2000 such
that it no longer collected the necessary data. Data submitted
voluntarily by specialties to update these estimates are not an
appropriate substitute for a systematic data collection effort. In
addition, the expert panel that reviewed resource estimates for
individual services completed its work in its final meeting in March
2004. CMS indicated that an ongoing AMA committee would continue to
develop estimates for new and revised services. While CMS officials
told GAO they believe CMS can complete the review of the fee schedule
as required by 2007, without a specific plan CMS cannot ensure that it
will be able to collect the data and update the fee schedule in a
timely manner.
What GAO Recommends:
GAO recommends that CMS modify its review of supplemental data
submissions, base changes to the expert panel‘s recommendations on data
analysis and a documented, transparent process, and develop and
implement a plan to develop data for the mandated updates. CMS said it
had taken or planned to take most actions recommended, but its actions
do not obviate the need for the recommendations. AMA agreed with the
findings but not with all of GAO‘s conclusions.
www.gao.gov/cgi-bin/getrpt?GAO-05-60.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Laura A. Dummit at (202)
512-7119.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Certain Aspects of CMS's Review Are Problematic:
Updating Process Improved Resource Estimates for Individual Services,
Although Certain CMS Changes Were Made without Adequate Justification:
CMS Has Not Specified a Plan for Developing Appropriate Data to Update
the Fee Schedule:
Conclusions:
Recommendations for Executive Action:
Agency and Industry Comments and Our Evaluation:
Appendix I: Medical Specialty Societies Interviewed for This Report:
Appendix II: Scope and Methodology:
Appendix III: Comments from the Centers for Medicare & Medicaid
Services:
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Tables:
Table 1: CMS Criteria for Evaluating Specialty Society Supplemental
Data Submissions:
Table 2: Supplemental Data Submissions by Specialty, CMS Decision, and
Reasons for Rejection, 2000 through 2002:
Abbreviations:
AMA: American Medical Association:
AOA: American Optometric Association:
ASCO: American Society of Clinical Oncology:
BLS: Bureau of Labor Statistics:
CMS: Centers for Medicare & Medicaid Services:
CPEP: clinical practice expert panels:
HCFA: Health Care Financing Administration:
OIG: Office of Inspector General:
PEAC: Practice Expense Advisory Committee:
RUC: RVS Update Committee:
SMS: Socioeconomic Monitoring System:
United States Government Accountability Office:
Washington, DC 20548:
December 13, 2004:
Congressional Committees:
Medicare pays for physician services using a fee schedule based on the
resources required to deliver each service. Under this fee schedule, a
single fee is paid for each of the more than 7,000 services (such as
office visits, surgical procedures, and tests) delivered by physicians
and certain other health professionals, regardless of the medical
specialty performing the service. The fee is made up of three parts
that recognize different types of resources required to provide each
service. The physician work component provides payment for the
physician's time, skill, and training to perform the service. The
malpractice component provides payment for the expenses of obtaining
professional liability insurance. The practice expense component
provides payment for the expenses incurred in operating a practice,
such as nurses' salaries, space, and equipment.[Footnote 1] Almost half
of the approximately $53 billion Medicare paid for services under the
physician fee schedule in 2003 compensated physicians for practice
expenses. The Centers for Medicare & Medicaid Services (CMS), the
agency within the Department of Health and Human Services (HHS) that
administers Medicare, is required to review and adjust the fees for all
physician services at least every 5 years to account for a number of
factors, including changes in medical practice.[Footnote 2]
Some medical specialty societies have raised concerns that Medicare's
practice expense payments do not cover their physicians' practice
expenses, in part because of inadequacies in the data used to establish
the payments. We previously reported that although the data used were
the best available at the time resource-based practice expense payments
were developed, they needed refinements to correct potential
weaknesses.[Footnote 3]
Practice expense payments are developed with (1) estimates of the total
practice expenses that physicians in each specialty incur to operate
their practices and (2) estimates of the resources required to perform
each of the individual services provided by the physicians in each
specialty. Total practice expenses were estimated originally using data
from American Medical Association (AMA) surveys of physicians. To
refine total practice expense estimates, CMS was required to establish
a review process to accept data submitted voluntarily by medical
specialty societies that were collected through a survey of physicians
practicing in that specialty to supplement the AMA survey
data.[Footnote 4] As of June 2004, six specialties had submitted
supplemental data,[Footnote 5] and CMS had accepted three submissions.
The resources required to perform individual services originally were
estimated by panels of clinicians convened by the Health Care Financing
Administration (HCFA).[Footnote 6] To refine these estimates, CMS made
its own changes but largely relied on recommendations from the AMA-
sponsored Practice Expense Advisory Committee (PEAC), which comprised
expert panels of physicians and other clinicians that developed
service-specific resource estimates based on information from specialty
societies.
The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000 directed that we review the processes and data used to
refine practice expense payments for all specialties.[Footnote 7] As
agreed with your offices, we (1) evaluated CMS's process for reviewing
the supplemental data submitted by specialty societies on total
practice expenses, (2) evaluated CMS's process for updating estimates
of resources required to perform individual services, and (3)
determined whether CMS will have the data necessary to review and
adjust the physician fee schedule at least every 5 years, as required
by law.
To conduct this work, we invited 50 medical specialty societies to meet
with us to discuss their experiences with developing and submitting
supplemental practice expense data and their views of the PEAC process.
We met with representatives of the 32 specialty societies that
responded and reviewed written materials they gave us. (App. I lists
the 32 medical specialty societies that responded.) We evaluated CMS's
review of the supplemental total practice expense data by examining
specialty societies' submissions and reports from the contractor CMS
hired to provide technical assistance to the specialty societies and
CMS on the supplemental data submission process. We also interviewed
CMS officials and the contractor about the process CMS uses to review
submissions. To evaluate CMS's process for updating resource estimates
for individual services, we interviewed the specialties'
representatives, attended PEAC meetings, and examined supporting
materials that specialties provided to the PEAC. To determine CMS's
decisions on PEAC recommendations and CMS's rationale for other changes
to resource estimates for individual services, we reviewed relevant
documents published in the Federal Register[Footnote 8] and an HHS
Office of Inspector General (OIG) report.[Footnote 9] We also discussed
with CMS staff CMS's rationale for decisions regarding the refinement
processes and its views about prospects for obtaining data to perform
the mandated reviews. We performed our work from November 2001 through
December 2004 in accordance with generally accepted government auditing
standards. (App. II provides details of our scope and methodology.)
Results in Brief:
CMS's review of supplemental data provided by medical specialties on
total practice expenses is necessary to protect against the risk of
bias inherent in a voluntary submission process, since only those
specialties that believe their estimates are too low are likely to
submit data. However, certain aspects of the review may result in CMS's
not utilizing the best available data. First, in assessing whether the
respondents to the supplemental data survey are representative of all
physician practices within a specialty, CMS may not be examining
physician practice characteristics that affect practice expenses. For
example, CMS does not consider whether the respondents are in
independent or hospital-based practices, which may have a greater
bearing on practice expenses than some of the more general
characteristics that are used, such as a physician's gender or number
of years in practice. Second, CMS's assessment of the
precision[Footnote 10] of the estimates based on the data from the
supplemental survey has led the agency to reject submissions that might
be more representative of a specialty's total practice expenses than
the data CMS currently uses to establish practice expense estimates--
particularly for specialties that were not represented in the original
AMA survey data, such as optometry. CMS also elected to assess the
accuracy, or reasonableness, of a 2002 submission by comparing the data
with benchmark data from other sources. Although specific expense items
were much higher than comparable benchmark data, CMS ultimately
accepted these data without revisions. These data were deemed
representative, even though they were influenced by certain high-cost
practices, indicating that CMS's test for representativeness is
problematic. Assessing submissions for accuracy is important; however,
CMS has not indicated whether it will assess the accuracy of all
supplemental data submissions.[Footnote 11]
Stakeholders such as AMA and specialty societies stated that the PEAC
recommendations CMS used to update resource estimates for individual
services improved these estimates, but certain specialty societies told
us that CMS modified estimates at times without adequate justification,
and our review of CMS's changes indicated that this had occurred. CMS
and specialty society officials expressed confidence in PEAC-
recommended estimates because the PEAC comprised representatives from
multiple specialties and a cross section of providers, and the PEAC's
collaborative process of developing estimates became increasingly
systematic from its inception in 1999. CMS implemented almost all of
the PEAC-recommended estimates for approximately 6,500 services but
modified certain original estimates and PEAC-recommended estimates at
times without adequate justification. For example, CMS decided to
remove expenses for clinical staff that certain surgeons bring to help
them in the operating room and elsewhere in the hospital before it
requested and received a study from the HHS OIG on this issue and
without evidence that other Medicare payments accounted for these
expenses. Because CMS indicated that it would not reverse this policy
decision, the PEAC did not have the opportunity to deliberate on this
issue. The success of the PEAC process depended on physician
participation and acceptance, and physicians told us that CMS's changes
to estimates without adequate data or explanation lowered their
confidence in the process and the resulting estimates.
CMS has not developed a plan for systematically acquiring and using
data to update total practice expense estimates. CMS reported that it
is in the process of obtaining a contract to collect practice expense
data from the major physician and nonphysician specialties but did not
provide specifics. A plan for the data collection is important for
several reasons. Data sources that had been used no longer exist or are
insufficient. AMA's Socioeconomic Monitoring System (SMS) survey, which
was the source of total practice expense estimates for each specialty,
was last conducted in 1999 and had been modified such that it no longer
collected data detailed enough for this purpose. Data submissions from
specialty societies are voluntary and therefore unlikely to be
comprehensive. In addition, the PEAC process concluded in March 2004
because, according to AMA representatives, it had successfully
completed its work. CMS indicated that AMA's ongoing resource review
committee would update estimates for new or revised services. While CMS
officials told us they believe they can complete the review as required
by 2007, they have not laid out a plan to ensure that the necessary
practice expense data are available.
We are recommending that the CMS Administrator consistently assess the
accuracy of all supplemental data submissions, modify the assessment of
representativeness to ensure that supplemental data submissions better
reflect the variation in practice expenses within a specialty, and
adjust the precision requirement so that supplemental data submissions
that would improve the information currently used to set fees are
accepted; base changes to resource estimates for individual services on
sufficient data analysis and a documented and transparent rationale;
and develop and implement a plan to acquire representative data on
total practice expenses and the resources required for individual
services. In commenting on a draft of this report, CMS agreed with the
need for a plan but said that it had substantial concerns with our
report. CMS stated that the agency already conducted or planned to
conduct most actions we recommended. We do not agree that CMS has taken
actions that obviate the need for our recommendations; however, we have
revised our report to reflect CMS's recent actions. AMA did not comment
on our recommendations. It agreed that the PEAC process had improved
resource estimates for individual services but objected to our
conclusions that CMS had not always provided adequate justification for
making changes and that this reduced physician confidence in the
process.
Background:
Practice expense payments under Medicare's physician fee schedule are
based on estimates of total practice expenses for each specialty and
estimates of the resources required for individual services. The
adequacy and appropriateness of fees are important to ensure Medicare
beneficiary access to physician services. If fees for a particular
service are too low, physicians may choose not to provide this service,
which may limit Medicare beneficiary access. If fees are too high, the
Medicare program will be wasting scarce resources. Determining the
appropriateness of physician fees is particularly difficult with regard
to practice expenses. The total expenses of operating a practice vary
significantly, depending on the specialty, organization of the
practice, and services provided. Further, these total expenses must be
allocated to over 7,000 individual services, and the expenses
associated with individual services cannot be easily identified because
a large share of practice expenses, such as rent and office equipment,
are not associated with the delivery of any given service but are
incurred across all services provided by the practice. In addition, the
resources involved in delivering certain services may be expected to
shift over time with technological innovations or as wages change for
clinical staff. Every year, approximately 200 to 300 service codes are
added to the fee schedule, which could change resource allocations for
other services. The uncertainty of these considerations underscores the
importance of the method CMS employs to refine and update the estimates
underlying practice expense payments.
SMS Survey Used to Estimate Specialties' Total Practice Expenses:
HCFA derived its original estimates of total practice expenses for each
specialty using data from AMA's annual SMS surveys from 1995 through
1997. The SMS survey, which was not specifically designed for this
purpose, gathered a broad range of information about economic and other
characteristics of physician practices and included questions on the
number of patient visits, medical practice revenues, and professional
expenses. The survey sample was randomly drawn from the AMA Physician
Masterfile, the most comprehensive available listing of physicians
practicing in the United States. Other health care professionals (such
as physical therapists or optometrists) paid under the physician fee
schedule were not included in the survey sample.
We have previously noted several potential problems with using SMS data
to estimate total practice expenses across all specialties.[Footnote
12] First, the reported practice expenses may not have been
representative of all physicians in some specialties because of a
limited number of respondents. Even though AMA adjusted the survey
results to minimize the effects of responding physicians who may not
have been representative of all physicians in a specialty, the number
of respondents may have been too small to ensure representative
estimates.[Footnote 13] For instance, the 1995 through 1997 SMS data
HCFA used for oncologists were based on 27 respondents, and the data
for allergists/immunologists were based on 31 respondents. Second, the
SMS survey only distinguished among 26 major physician specialties,
while Medicare recognizes over 65 physician and other health care
professional specialties. Thus, HCFA had to use the practice expenses
of the major physician specialties as proxies to represent the expenses
of smaller specialties or other health care professionals, even though
their practice expenses might not have been similar.[Footnote 14]
Third, the reported expenses in the SMS survey included items that were
not in Medicare's definition of practice expenses. For example, some
oncology practice respondents included chemotherapy drugs in their
supply expenses. Such expenses need to be excluded from estimates of
practice expenses in setting Medicare fees because Medicare pays for
them outside of the physician fee schedule; however, there was no way
for CMS to do this accurately with available data.
Physician Specialty Societies May Submit Supplemental Data on Total
Practice Expense Estimates:
As the physician fee schedule was implemented, Congress required CMS to
establish a process to accept specialty-supplied total practice expense
data that could supplement the SMS survey data. Any specialty society
may submit data for CMS to consider in refining the physician fee
schedule. CMS evaluates the supplemental data collection method and the
survey respondents to ensure that they meet the criteria used in its
review process for acceptance. If CMS accepts a specialty society's
submission, the data are blended with the existing SMS data used to
estimate that specialty's practice expense payments, although for some
nonphysician specialties that were not represented in the original AMA
survey, the supplemental data replace the existing SMS data.[Footnote
15] To be considered for changes to the following year's fee schedule,
supplemental data must be submitted by March 1 of the preceding year.
The last year that CMS will accept such submissions is 2005.
CMS's criteria for acceptance of supplemental data govern the data
collection method and the survey respondents (see table 1). To collect
the data, a contractor experienced with the SMS survey (or other
national survey of physicians) must use an instrument based on the SMS
survey instrument and protocols.[Footnote 16] The surveyed physicians
must be randomly selected from the AMA Masterfile or, for nonphysician
specialties, from a nationally representative listing of
practitioners.[Footnote 17] The names of the physicians contacted for
the survey must be kept confidential so no interested parties can
contact them about the survey.
Table 1: CMS Criteria for Evaluating Specialty Society Supplemental
Data Submissions:
Data collection: Survey instrument;
CMS criteria: Is based on SMS survey.
Data collection: Survey administration;
CMS criteria: Is conducted by experienced contractor;
Uses SMS protocols;
Keeps sample member identity confidential.
Data collection: Sample selection;
CMS criteria: Is randomly drawn from the AMA Masterfile of physicians
or from a nationally representative listing of practitioners for
nonphysician specialties;
May be a stratified sample with random selection within each stratum.
Survey respondents: Representativeness of responses;
CMS criteria: Must have a high response rate, or respondents must have
the same characteristics as all physicians in the specialty or
responses must be weighted to reflect the overall composition of the
specialty.
Survey respondents: Precision of responses;
CMS criteria: Estimates must have an error rate of no more than plus or
minus 15 percent of the mean.
Sources: 67 Fed. Reg. 43,555 - 43,557 (2002) (interim final rule with
comment period) and 67 Fed. Reg. 79,971 - 79,972 (2002) (final rule
with comment period).
[End of table]
The supplemental data survey respondents must be representative of the
entire specialty, as demonstrated by a high response rate or by the
respondents' having the same characteristics as all physicians in the
specialty.[Footnote 18] The number of respondents must be sufficient so
that the estimated expenses comply with a precision criterion.
Specifically, the estimates must have an error rate of no more than
plus or minus 15 percent.[Footnote 19] The supplemental data from a
typical specialty need about 140 usable responses for the estimates to
meet the precision criterion.[Footnote 20]
Six specialties have submitted supplemental data, and CMS accepted
three of these submissions (see table 2).[Footnote 21] The data from
vascular surgery met the criteria and were accepted for use in
establishing the practice expense payments. The data from physical
therapy were initially rejected because they did not meet the precision
criterion. That criterion was relaxed, however, in June 2002, and the
physical therapy submission was accepted because the data met the new
requirements. CMS deferred acceptance of data submitted by oncology in
2002. After the agency resolved its concerns about the accuracy of the
data, it accepted the submission.
Table 2: Supplemental Data Submissions by Specialty, CMS Decision, and
Reasons for Rejection, 2000 through 2002:
2000 submissions: Specialty: Physical therapy;
CMS decision: Rejected;
Reason for rejection: Precision criterion not met.
2000 submissions: Specialty: Vascular surgery;
CMS decision: Accepted.
2001 submissions: Specialty: Physical therapy;
CMS decision: Rejected;
Reason for rejection: Precision criterion not met.
2001 submissions: Specialty: Optometry;
CMS decision: Rejected;
Reason for rejection: Precision criterion not met.
2001 submissions: Specialty: Pediatrics;
CMS decision: Rejected;
Reason for rejection: SMS protocols and survey not used; sample was not
representative.
2002 submissions[A]: Specialty: Physical therapy[B];
CMS decision: Accepted.
2002 submissions[A]: Specialty: Oncology;
CMS decision: Accepted.
2002 submissions[A]: Specialty: Cardiology;
CMS decision: Rejected;
Reason for rejection: SMS protocols and survey not used.
2002 submissions[A]: Specialty: Pediatrics[C];
CMS decision: Rejected;
Reason for rejection: SMS protocols and survey not used; sample was not
representative.
Sources: GAO analysis of the annual reports prepared by CMS's
contractor: The Lewin Group, Recommendations Regarding Supplemental
Practice Expense Data Submitted for 2001 (Falls Church, Va.: 2000); The
Lewin Group, Recommendations Regarding Supplemental Practice Expense
Data Submitted for 2002 (Falls Church, Va.: 2001); and The Lewin Group,
Recommendations Regarding Supplemental Practice Expense Data Submitted
for 2003 (Falls Church, Va.: 2002).
[A] The precision criterion was relaxed in June 2002.
[B] The American Physical Therapy Association resubmitted the data it
had submitted in 2001. These data met the relaxed precision criterion.
[C] Pediatrics resubmitted the data it had submitted in 2001.
[End of table]
Expert Panels Establish and Refine Resource Estimates for Individual
Services:
To develop the original estimates of the resources required for
individual services, HCFA convened 15 specialty panels composed of
physicians, nurses, and practice administrators. These clinical
practice expert panels (CPEP) estimated the amount of direct expenses,
such as clinical labor, medical equipment, and medical supplies,
associated with providing each service to the typical patient.[Footnote
22] In general, the panel for a particular specialty included
clinicians from that specialty who reviewed the services that its
physicians typically provided. AMA, some specialty societies, and some
researchers who specialize in physician reimbursement issues supported
using the panels' estimates of service-specific resources to establish
the practice expense payments, but other specialty societies noted some
concerns.[Footnote 23] They stated that panel members did not represent
a cross section of physician practices (by size or urban and rural
location) or all types of physicians who provided a particular service.
They also stated that the panels used differing assumptions about and
definitions of the resources required for providing similar services,
resulting in inconsistent estimates across panels.
In 1999, AMA convened the PEAC as an expert panel to refine the
resource estimates for individual services. The PEAC had representation
from all major medical specialties and rotating membership for smaller
subspecialties. CMS representatives also participated, as observers, in
the PEAC meetings. The PEAC reviewed the resource estimates for
approximately 6,500 services from 1999 through March 2004, which
account for close to 90 percent of total Medicare physician payments.
It initially focused on high-volume services for each specialty,
"families" of similar services (for example, an endoscopy procedure
without biopsy, with biopsy, with removal of a single tumor, or with
removal of multiple tumors are considered a family of endoscopy
services), and services that specialty societies believed had
inaccurate estimates. After completing its review, the PEAC made
recommendations to CMS, through AMA's ongoing physician payment review
committee, about modifications to service resource estimates.[Footnote
24]
The PEAC review relied on data from specialties on the resources
required to provide the specialties' services. Once a service or family
of related services was identified for refinement by the PEAC,
specialties that normally provide these services gathered data on the
resources needed to furnish each service to a typical patient, such as
the time a nurse spends with a patient and the supplies and equipment
used.[Footnote 25] AMA provided the specialty societies with background
materials, such as the current resource estimates for the service and
any estimates the PEAC had previously approved for individual tasks or
supplies involved in performing the service.[Footnote 26] The specialty
society then presented the PEAC with its proposed resource estimate for
a service, a description of how the estimate was developed, and a list
of the tasks included in the estimate.[Footnote 27]
The PEAC reviewed the resource estimate in a two-step process. First, a
subgroup of the PEAC examined the data gathered by the specialty,
assessed whether the resource estimate for a service was reasonable and
comparable to those for similar services, and voted on whether to
endorse the resource estimate. The subgroup recommended that the full
PEAC approve the estimate, consider modifying it, or request additional
data. Second, the full PEAC made its decision, either approving the
specialty's estimate or a modified version of it or delaying its
decision until it received additional data. Official recommendations to
CMS required the approval of two-thirds of the PEAC members.
CMS made all final decisions about changes to the resource estimates
that were used in calculating physician fees, including its own changes
to original or existing resource estimates and those recommended by the
PEAC. Its approach to reviewing PEAC recommendations varied: CMS staff
made site visits to observe services being performed or consulted the
medical directors of insurance companies to learn how other payers
established payments for a service. CMS modified estimates for
different reasons, including to make them consistent with estimates for
other services and to remove expenses that were accounted for in other
Medicare payments. For example, CMS changed the PEAC-recommended time
spent by a nurse providing patient education and counseling for one
service to be consistent with the time for this task already assigned
to a comparable service. In the earlier years of the process, HCFA
rejected or modified certain recommendations. In 2003, CMS accepted all
of the PEAC's recommendations. AMA stated that the PEAC process was
concluded in March 2004 because the PEAC had completed its work of
reviewing most services. In May 2004, a representative from AMA told us
that although the PEAC had been officially discontinued, a committee
would be appointed to refine the resource estimates for the
approximately 200 services that had not been reviewed by the PEAC.
Certain Aspects of CMS's Review Are Problematic:
Although a review of specialty-provided supplemental data from surveys
on total practice expenses is necessary to protect against the risk of
bias inherent in a voluntary submission process, because of certain
aspects of its review, CMS may not be accepting the best available
supplemental practice expense data. In assessing whether the
respondents to the survey for supplemental data are representative of
all physician practices within a specialty, CMS may not be examining
practice characteristics that adequately reflect the range of practice
expenses within a specialty, such as whether a practice is single-or
multispecialty or hospital-based. In addition, CMS's precision
requirement for estimates based on the submitted data has led the
agency to reject some supplemental submissions that could improve upon
the information it currently uses to establish estimates. CMS also
elected to assess the accuracy, or reasonableness, of a recent
submission by comparing it with data from other sources but has not
indicated whether it will consistently assess the accuracy of all
supplemental data submissions. Moreover, CMS ultimately accepted
practice expense data in this submission that were much higher than
comparable benchmark data, which is problematic. The data were deemed
representative, yet were influenced by high-cost practices, raising
concerns about CMS's test for representativeness.
Review of Supplemental Data Is Necessary:
A review of supplemental data submissions is necessary because medical
specialty societies voluntarily gather and submit these data, and the
data are not audited or verified before being used to establish fees.
In addition, because the specialty societies have an incentive to
engage in this endeavor only if they believe the practice expense
estimates used to establish their Medicare fees are too low, the
supplemental submission could be biased if a disproportionate share of
those who complete the survey represent high-cost practices. CMS has
established review criteria regarding the data collection method and
the respondents to help guard against any perceived or actual bias in
the estimates based on these data.
CMS's review of the data collection method--the survey instrument,
survey administration, and sample selection--helps ensure that
supplemental data can be used to update practice expense estimates. For
example, by requiring that the survey instrument be based on the SMS
survey instrument, CMS ensures that the definitions of the various
categories of expenses between supplemental and previously used data
are consistent.[Footnote 28] CMS's requirement that the supplemental
data submissions be based on the same survey administration protocols
as the SMS survey increases the comparability of the supplemental data
to the SMS data.
CMS's review of respondent characteristics is necessary to ensure that
the data are representative of the average practice expenses within a
specialty and are not distorted by a disproportionate share of
respondents of one type or another. If the response rate is high, and
the sample is randomly drawn from a nationwide listing of the physician
specialty, the submissions are assumed to be representative of the
entire specialty. If the response rate is low, CMS evaluates whether
the respondents are representative of the specialty by comparing
respondent characteristics with characteristics of the entire
specialty.[Footnote 29] In 2002, CMS also reviewed a data submission to
determine whether the reported values were reasonable, as a test for
accuracy. Assessing the accuracy of the data, by comparing them with
other benchmarks or norms, is important because establishing the
representativeness of the respondents and the precision of the data do
not guarantee that the responses themselves are accurate.
Certain Aspects of Review Process Are Problematic:
In evaluating whether supplemental data submissions are representative
of the entire specialty, CMS examines practice characteristics of the
respondents that do not necessarily reflect the variation in the
specialty's practice expenses. CMS compares its survey respondents with
all physician practices within a specialty using characteristics that
AMA used, such as physician gender, years in practice, and membership
in a medical specialty organization, to adjust responses to produce
published reports on the nation's physicians. CMS uses these
characteristics to ensure that supplemental data submissions are
consistent with SMS data already collected, but other characteristics
may better reflect the potential range and distribution of practice
expenses for the specialty. For example, hospital-based practices may
have lower practice expenses than independent practices because
hospitals may pay for clinical staff, supplies, and equipment needed to
provide a service, while in an independent practice the physician bears
these expenses.[Footnote 30] For some specialties, expenses for
practices that are independent can be as much as 50 percent higher than
those for practices that are hospital-based. If a supplemental data
submission includes a disproportionate share of hospital-based
practices compared to the specialty as a whole, then the total practice
expense estimates for the specialty may be too low; if the submission
includes a disproportionate share of independent practices, the total
practice expense estimates for the specialty may be too high. Thus,
practice expense payments, which are based in part on these total
practice expense estimates, may also be correspondingly either too low
or too high.[Footnote 31]
In addition, CMS may be rejecting data that could improve estimates. In
rejecting data that do not meet the agency's precision criterion, even
though they are deemed representative, CMS ignores data that could
provide a better estimate of the specialty's practice expense data than
the data it currently uses, particularly the proxy data used for
nonphysician specialties. For example, in 2001, the American Optometric
Association (AOA) collected supplemental practice expense information
from optometrists. CMS rejected the data because they did not meet the
precision criterion, although its contractor recommended that the data
be accepted because they were valid and the best available information
on practice expenses of optometry practices.[Footnote 32] Optometrists'
practice expenses were originally established with the practice
expenses of the average physician because optometrists were not
included in the SMS survey. Supplemental data submitted by the
specialty would be likely to improve the estimates because they are
specific to the specialty, whereas the practice expenses of the average
physician would be less likely to closely match optometrists' practice
expenses. Supplemental data also could improve the estimates for those
specialties with few respondents in the SMS survey, as long as the data
were from a representative sample of practices.
In addition to assessing representativeness and precision, CMS assessed
the accuracy of a 2002 submission, although it has not indicated
whether it will consistently assess the accuracy of all
submissions.[Footnote 33] CMS delayed accepting the 2002 submission
from the American Society of Clinical Oncology (ASCO) because ASCO's
estimates appeared to be too high. CMS assessed the accuracy of this
submission by comparing the supplemental data with data for similar
specialties and from other sources to see whether the submitted data
appeared reasonable. The comparison with benchmark data enabled CMS to
evaluate aberrant data that had passed the representativeness and
precision tests. Salaries in the supplemental data were more than four
times higher for clerical staff than salaries reported in Bureau of
Labor Statistics data; and salaries for clerical staff in the oncology
submission were even higher than some of the salaries for clinical
staff that ASCO reported. These comparisons indicated that the
supplemental data might not accurately represent oncologists' practice
expenses. CMS later accepted the submission for use in setting 2004
payments without revisions after ASCO explained that the differences
were due to certain high-cost practices among the respondents in the
sample.
CMS's acceptance of the ASCO data raises concerns about the review
process. First, the respondents in the ASCO survey were deemed
representative, yet the reported costs were much higher than benchmark
data, underscoring the concern that CMS's assessment of
representativeness is problematic. Second, the basis on which CMS
accepted the ASCO data after assessing its accuracy is problematic
because the explanation that the estimates were influenced by high-cost
practices should have increased, not alleviated, CMS's concerns about
the representativeness of the data. Our replication of the hourly
practice expense calculations and discussions with CMS's contractor led
us to conclude that the average hourly practice expense estimates were
higher when the few practices with high costs were included.
Updating Process Improved Resource Estimates for Individual Services,
Although Certain CMS Changes Were Made without Adequate Justification:
Stakeholders agree that the PEAC improved resource estimates for
individual services, and although CMS used almost all of the PEAC-
recommended estimates, it at times used estimates that differed from
PEAC recommendations and made other changes to estimates without
adequate justification. CMS relied on the PEAC's recommendations to
update the estimates. The PEAC's process for developing estimates
became increasingly systematic from its inception in 1999, and its
recommendations were widely accepted by specialty societies and AMA as
leading to improved resource estimates for individual services. This
acceptance stemmed in part from the broad representation on the PEAC of
multiple specialties and a cross section of physicians and from the
PEAC's standardization of estimates for tasks that are common to many
services. CMS implemented almost all of the PEAC-recommended estimates,
but it has modified certain original estimates and PEAC-recommended
estimates. However, CMS did not always use adequate supporting data or
explain the rationale for its changes, which has reduced some physician
specialties' confidence in the PEAC process and the resulting
estimates.
Stakeholders Agree that PEAC Improved Estimates:
AMA and CMS officials, as well as representatives from specialties told
us that they believe the PEAC improved the estimates of the resources
required to furnish individual services. These stakeholders said the
PEAC process for developing estimates became more systematic from its
inception in 1999. The PEAC established standard estimates for the
clinical staff time, equipment, and supplies needed to perform certain
activities or tasks common to many services, such as taking vital
signs, whereas previously estimates for the same task may have varied
by type of service or specialty. The PEAC's multispecialty
representation further standardized estimates because many of the
tasks, such as administration of an injection, are performed by
multiple specialties. A specialty could receive PEAC approval to
deviate from an estimate for a service only if the specialty satisfied
the PEAC that the existing estimate was not appropriate for that
service because the service the specialty provided was different from
other services that appeared comparable. In addition, the PEAC adopted
rules about how estimates were to be established. For example, the PEAC
provided guidance to specialty societies on how to gather data, such as
through expert panels or a survey, and on the information that had to
accompany any recommendation to change a resource estimate, such as a
detailed listing of tasks performed by nurses in providing a service.
As a result of these changes in the PEAC process, CMS accepted most of
the PEAC's recommended estimates without modification in recent years.
CMS Changed Certain Estimates without Adequate Justification:
Although CMS implemented almost all of the PEAC's recommended resource
estimates for individual services, it at times made changes to PEAC-
recommended estimates and to the original physician panel estimates.
Some of these changes were to estimates that conflicted with Medicare
coverage rules or to make estimates consistent across services. For
other changes, however, CMS did not always use adequate supporting
evidence. For example, CMS removed from the original resource estimates
the cost of clinical staff time associated with certain procedures
performed by specific surgical specialties, basing its decision to do
so on inadequate data. Certain surgical specialties, primarily thoracic
surgeons, provided CMS data showing that they routinely bring their own
clinical staff to the hospital to help in the operating room and
provide other assistance on patient floors and stated that these
expenses should be reflected in their resource estimates for individual
services.[Footnote 34] CMS rejected these claims and removed the
expense of clinical staff time from these surgical specialties'
resource estimates for all services provided in the hospital. CMS
officials claimed that Medicare paid for these expenses through other
payment mechanisms. CMS also stated that it removed this expense on the
basis of evidence that most physicians across all specialties combined
did not bring staff with them to the hospital. Although CMS later asked
the HHS OIG to assess whether specific specialties typically brought
clinical staff to the hospital, it did not reverse its decision in the
meantime. The OIG subsequently issued a report indicating that it was a
typical practice for certain surgical specialties to bring clinical
staff to the hospital.[Footnote 35] However, the OIG did not analyze
whether other Medicare payments account for the expenses associated
with clinical staff accompanying physicians in the hospital setting.
In addition, CMS did not always make public its reasons for making
changes to PEAC recommendations. In our meetings with specialty
representatives, some noted that CMS did not provide adequate
explanations for some of its changes to PEAC recommendations. For
example, in reducing the time established by the PEAC for radiation
therapists to deliver a specific radiation therapy, CMS stated that the
service commonly takes less than the recommended time and requires
fewer therapists to perform. CMS officials told us that they based
their conclusion on interviews with practicing physicians and a site
visit to witness the procedure being performed, neither of which was
mentioned in the public notice.[Footnote 36] Physicians told us that
they did not understand why CMS did not explain these decisions, since
CMS representatives participated in all of the PEAC meetings and had
the opportunity to raise concerns there. Moreover, they said that CMS's
inadequate explanation for certain decisions lessened their confidence
in the process used to develop the estimates.
CMS Has Not Specified a Plan for Developing Appropriate Data to Update
the Fee Schedule:
CMS has not outlined a plan for obtaining and using the necessary data
to update practice expense resource estimates for all specialties. Such
a plan would include data collection, evaluation, and incorporation.
CMS officials told us they are in the process of obtaining a contract
to collect total practice expense data from the major physician and
nonphysician specialties, although it has not provided specifics. CMS
has indicated that the ongoing AMA committee--the RUC--will develop
resource estimates for new and revised services. Although CMS officials
told us that they believe they can complete data collection and review
by 2007 as required, they did not identify nor outline a plan to
implement the actions needed to ensure that CMS will be able to comply
with the mandate to update the fee schedule at least every 5 years.
CMS cannot rely on its previous approaches to complete this review.
Data sources CMS used to refine the fee schedule no longer exist or are
insufficient. The SMS survey, which was the source of total practice
expense data for all major specialties, was last conducted in 1999, and
a modified version of that survey fielded in 2001, called the Patient
Care Physician Survey, did not collect data detailed enough for this
purpose. Data submissions from specialty societies are voluntary and
therefore unlikely to be comprehensive. In March 2004, AMA discontinued
its sponsorship of PEAC after it had concluded its review of over 6,500
physician services. AMA told us that the RUC would review resource
estimates for new and revised services and that there would be no need
for a detailed review of the services that had been reviewed by the
PEAC.
Updating estimates of total practice expenses and resource estimates
for individual services is increasingly important given the ongoing
introduction of new medical services and technologies, and changes in
wages. The attendant resource requirements for individual services can
change significantly when, for example, a new procedure augments or
replaces a traditional procedure, resulting in changes to the staff or
equipment needed to provide the service. Similarly, a new
pharmaceutical can change the treatment for a condition, resulting in
different resource requirements for caring for the typical patient.
Conclusions:
CMS's collaboration with physician specialty societies to update total
practice expense estimates and resource estimates for individual
services has helped ensure the appropriateness of fees and physician
acceptance of Medicare's payment approach. However, CMS's updates to
estimates of total practice expenses using supplemental survey data
that do not always represent the range of practices within a specialty
may result in Medicare payments that either overcompensate practices
for their costs or undercompensate practices, which could discourage
physician participation. In addition, CMS's deviation from its own
process in evaluating resource estimates for individual services has
caused some physician and specialty societies to question the soundness
of the process and CMS's decision making.
Congress recognized the importance of continually updating the fee
schedule by mandating that CMS review the fee schedule at least every 5
years. The processes CMS had in place to update total practice expense
estimates and estimates of the resources required for individual
services were not suitable for the comprehensive update required for
this review. While CMS has taken a first step at collecting data for
this review, without a detailed plan, CMS may not be able to gather and
refine representative data necessary to update the fee schedule in a
timely manner and ensure its integrity over time.
Recommendations for Executive Action:
To improve and update the physician fee schedule, we recommend that the
CMS Administrator take the following three actions:
* Consistently assess the accuracy of all supplemental data submissions
on total practice expenses, modify the assessment of representativeness
such that the data submitted by specialties better reflect the
variation in practice expenses within a specialty, and adjust the
precision requirement so that supplemental data submissions that would
improve the information currently used to set fees are accepted.
* Base any revisions to the resource estimates for individual services
on sufficient data analysis and a documented and transparent rationale.
* Develop and implement a plan to update the fee schedule in a timely
manner with representative data on total practice expenses and the
resources for individual services so that the fees appropriately
reflect changes in medical services and the costs of their delivery.
Agency and Industry Comments and Our Evaluation:
We received comments on a draft of our report from CMS and AMA. CMS
indicated that it routinely conducted, or was in the process of
conducting, most of the actions we recommended. However, it stated that
it had substantial concerns with our report. AMA agreed in general with
our findings but took issue with some of our conclusions. AMA also
conveyed comments from ASCO, which disagreed with our conclusion
regarding CMS's acceptance of ASCO's supplemental survey data. CMS and
AMA also provided technical comments, which we incorporated as
appropriate. (We have reprinted CMS's comments in app. III but have not
included the attachment pages reprinting statements from specialty
societies and detailing technical comments, nor have we reprinted the
technical comments submitted by AMA.)
To address our first recommendation, that CMS make revisions to its
assessment of supplemental data submissions, CMS responded that its
contractor consistently assessed the representativeness of
supplemental data submissions. CMS noted that its contractor's
assessments of surveys submitted in 2004 from three specialties
included as "a fundamental feature" a review of whether a physician
practice was hospital-or office-based. The contractor's report was made
available on CMS's Web site after our report went to CMS for comment.
While we applaud CMS's use of the practice location characteristic in
its assessment of recent surveys, we believe that CMS should conduct an
analysis to determine whether there are other characteristics that
could be used to better describe the potential variation in practice
expenses within a specialty.
CMS said it rejected AOA's data on the basis of the precision
requirement, noting that (1) the data's representativeness was
questionable because the data did not include responses from non-AOA
members and (2) the inclusion of the data would have made little
difference to the final practice expenses because the AOA per hour data
were very similar to the data currently used. We note that CMS's
contractor had recommended that CMS accept the AOA data because they
were "valid and the best available information on practice expenses for
optometry practices," and we have added this information to the report.
We believe that including the data from the specialty, rather than
relying on the use of proxy data, would improve the estimates. Our
concern with the precision requirement is that in applying it CMS may
reject data that are more representative than data it currently uses.
If data were deemed representative on the basis of characteristics that
describe the variation in practice expenses across practices, a
precision requirement might not be needed.
In assessing ASCO's 2002 submission for accuracy, CMS stated that its
acceptance of the data complied with requirements in the Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 that CMS
use supplemental survey data meeting certain requirements, which CMS
says these data met. CMS added that it was satisfied with ASCO's
explanation that the anomalous results were caused by a few extreme
survey responses and that elimination of these extreme responses had
little effect on the hourly practice expense estimates. We were able to
obtain the ASCO survey data only after our draft report went to CMS and
AMA for comment. Our own analysis of the ASCO data and discussions with
CMS's contractor led us to conclude that elimination of the extreme
values would have had a significant effect on the hourly practice
expense calculations, and we have revised the report to reflect this.
Although CMS considered the data "anomalous," CMS accepted them because
they met the representativeness criterion as required by law. CMS's
acceptance of these data raises issues about the review process. We are
concerned that the practice characteristics CMS uses to assess
representativeness may not describe the range and distribution of
practice expenses. CMS was silent regarding our recommendation that it
consistently assess supplemental data submissions for accuracy.
In response to our second recommendation, that CMS base revisions to
resource estimates for individual services on sufficient data analysis
and a documented and transparent rationale, CMS stated that the vast
majority of these revisions had been based on PEAC recommendations and
that on the rare occasions when it disagreed with the PEAC, CMS
documented its rationale in the proposed or final rules. As we noted in
the draft report, CMS implemented almost all of the PEAC-recommended
estimates without change and it generally documented its rationale in
instances in which it did make changes to PEAC-recommended or original
estimates. Also as noted in the draft report, however, CMS did not
always use adequate justification when it made changes. For example,
CMS based its decision to remove from the original estimates the cost
of clinical staff for all services provided in the hospital on data
from the American Hospital Association survey pertaining to all
specialties, rather than on evidence pertaining to certain surgical
specialties that claim that they routinely bring their own staff to the
hospital. CMS took issue with our statement that its lack of supporting
data or rationale in these cases has reduced physician confidence in
the PEAC process and in the resulting estimates, and provided comments
from six specialty organizations as evidence of support for CMS's
decision making regarding PEAC data revisions. As we noted in the draft
report, specialty societies and AMA told us they supported the PEAC
process. Nevertheless, other specialties conveyed their concerns to us
regarding the PEAC process.
CMS agreed with our recommendation that it needs to develop and
implement a plan to acquire representative data on an ongoing basis to
update the fee schedule. CMS indicated that it was in the process of
obtaining a contract to collect data for future updates to the practice
expense portion of the physician fee schedule and that the RUC would
continue to be involved in developing practice expense resource
estimates for new or revised individual services. We are encouraged by
this new information from CMS and have revised our finding and
recommendation accordingly. However, contracting for data collection,
collecting and reviewing the data, using the data in developing the
fees, and addressing public comments take time, making it imperative
that CMS expedite these actions. CMS needs to develop a plan to ensure
that it can comply with the congressional mandate to update the
physician fee schedule at least every 5 years.
In its other comments, CMS took issue with our draft report's reference
to updating estimates of total practice expenses with data that are not
representative of the range of practices within a specialty, which, as
we stated in the draft report, either "overcompensate practices for
their costs and waste taxpayer dollars or undercompensate practices and
discourage physician participation." CMS stated that because the system
is budget neutral, any alternative would reduce payments to the
overcompensated specialty and raise payments to all other specialties.
Even within a budget neutral system it is wasteful to overcompensate
for some services. However, it was not our intention to imply that the
system was not budget neutral, and we have revised the report to avoid
misinterpretation.
AMA's comments covered the method for establishing total practice
expense estimates and resource estimates for individual services and
included specific comments it had received from ASCO. AMA commented
that it had advised CMS in the past that CMS's criteria for
supplemental practice expense data appeared to be appropriate. AMA also
stated that it would be inappropriate to use supplemental data that
were significantly less reliable and valid than the original SMS data.
We concur with this statement. AMA agreed with our conclusion that the
PEAC process has improved resource estimates for individual services.
It objected to the draft report's statement that AMA had discontinued
sponsoring the PEAC as a result of resource constraints and stated
rather that the PEAC process had concluded in March 2004 because it had
successfully completed its work. It also reported that it would
continue to review, through the RUC, the resource estimates for new or
revised codes. Although AMA representatives of the PEAC had told us
that resource constraints had contributed to their decision to
discontinue the PEAC, we have modified the report to indicate that the
PEAC concluded its initial review of the codes as of March 2004 and
that the RUC will continue this review for new or revised codes. AMA
also objected to our conclusion that certain CMS revisions to the PEAC
recommendations were made without adequate information, stating that
this was unfair criticism of the process. As we noted in the draft
report, CMS accepted the majority of PEAC recommendations, although
there were instances in which it modified earlier resource
recommendations without using adequate information or providing
adequate explanation. Finally, AMA noted that CMS's collaboration with
physician specialty societies to update the practice expense estimates
does not help ensure the appropriateness of the fees because the level
of Medicare payments largely depends on other components of the payment
methodology. While it is true that other parts of the payment method
affect the final payment amounts, the practice expense estimates remain
an important determinant.
ASCO disagreed with our concerns about its supplemental survey data. It
reiterated that it had discussions with CMS regarding the few practices
with high costs for certain items that had no significant effect on the
average hourly practice expense estimates used in CMS's methodology. As
noted earlier, our replication of the hourly practice expense
calculations and discussions with CMS's contractor led us to conclude
that including the few practices with high costs did in fact raise the
average hourly practice expense estimates. We have revised the report
to include this information.
We are sending copies of this report to the Administrator of CMS and
other interested parties. We will make copies available to others upon
request. This report also is available at no charge on GAO's Web site
at http://www.gao.gov.
Please call me at (202) 512-7119 if you or your staffs have any
questions. Major contributors to this report are listed in appendix IV.
Signed by:
Laura A. Dummit:
Director, Health Care--Medicare Payment Issues:
List of Committees:
The Honorable Charles E. Grassley:
Chairman:
The Honorable Max Baucus:
Ranking Minority Member:
Committee on Finance:
United States Senate:
The Honorable Joe Barton:
Chairman:
The Honorable John D. Dingell:
Ranking Minority Member:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Bill Thomas:
Chairman:
The Honorable Charles B. Rangel:
Ranking Minority Member:
Committee on Ways and Means:
House of Representatives:
[End of section]
Appendix I: Medical Specialty Societies Interviewed for This Report:
We interviewed representatives from the following 32 medical specialty
societies:
American Academy of Dermatology:
American Academy of Family Physicians:
American Academy of Neurology:
American Academy of Ophthalmology:
American Academy of Otolaryngology - Head and Neck Surgery:
American Association of Neurological Surgeons & The Congress of
Neurological Surgeons:
American Association of Vascular Surgery:
American College of Cardiology:
American College of Emergency Physicians:
American College of Obstetricians and Gynecologists:
American College of Physicians-American Society of Internal Medicine:
American College of Radiation Oncology:
American College of Radiology:
American College of Rheumatology:
American College of Surgeons:
American Optometric Association:
American Osteopathic Association:
American Physical Therapy Association:
American Podiatric Medical Association:
American Psychiatric Association:
American Society for Gastroenterology:
American Society for General Surgery:
American Society of Anesthesiologists:
American Society of Clinical Oncology:
American Society of Plastic Surgeons:
American Thyroid Association:
American Urology Association:
College of American Pathologists:
Joint College of Asthma, Allergy and Immunology:
Renal Physicians Association:
Society of Thoracic Surgeons:
The Endocrine Society:
[End of section]
Appendix II: Scope and Methodology:
To evaluate the process that CMS uses to review specialty-submitted
supplemental practice expense data, we interviewed representatives from
medical specialty societies. We identified 50 medical specialty
societies by searching the Internet using AMA's categories of major
specialties. We contacted each group and met with representatives from
the 32 specialty societies that responded (listed in app. I). Using
structured interviews, we asked the specialty society representatives
whether they were satisfied that AMA Socioeconomic Monitoring System
(SMS) survey data used to estimate their specialty's total practice
expenses were representative. We obtained their views about whether the
supplemental data submissions improved the practice expense estimates
and about CMS's process for evaluating the data. We reviewed written
materials provided by specialty societies and followed up by telephone
when necessary. We reviewed relevant Federal Register documents to
determine how CMS evaluated the supplemental data submissions and
reviewed CMS's decisions about whether to accept the data. We
interviewed CMS staff about the supplemental data submission process
and interviewed the contractor that CMS hired to provide technical
assistance to the specialty societies. We also reviewed the
contractor's report on the oncology data submitted by the American
Society of Clinical Oncology.[Footnote 37]
To evaluate the process that CMS uses to update resource estimates for
individual services, we asked the specialty society representatives
about the resource estimates developed by the clinical practice expert
panels (CPEP) and the refinement process used by the Practice Expense
Advisory Committee (PEAC). We asked for their views about the role CMS
played in the PEAC and any changes CMS made to the estimates. We also
met with representatives of AMA to determine AMA's views on the PEAC
process. We attended PEAC meetings and reviewed supporting materials
provided by specialties. To better understand the issue of physicians'
use of clinical staff in the inpatient hospital setting, we reviewed
survey data and other materials provided by the Society of Thoracic
Surgeons. To determine whether clinical staff time was included in the
physician work component, we analyzed detailed estimates from AMA's RVS
Update Committee (RUC). We reviewed the Department of Health and Human
Services Office of Inspector General (OIG) report, Medicare Payment for
Nonphysician Clinical Staff in Cardiothoracic Surgery, including
analyzing the raw survey data upon which the report was based, and
discussed it with OIG staff. OIG indicated that its data reliability
checks were performed in accordance with generally accepted government
auditing standards. We interviewed CMS staff about the bases for their
decisions relating to changes to PEAC resource estimates. We attended
CMS's "Open Door Forum Meetings," during which physicians and other
clinicians discussed their concerns about fees and other issues related
to services provided to Medicare beneficiaries. We conducted a review
of relevant Federal Register documents to identify any decisions CMS
had made with regard to resource estimates.
To determine whether CMS will have the data needed for the mandated
review of the physician fee schedule at least every 5 years, we held
discussions with CMS staff.
We performed our work from November 2001 through December 2004 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix III: Comments from the Centers for Medicare & Medicaid
Services:
DEPARTMENT OF HEALTH & HUMAN SERVICES:
Centers for Medicare & Medicaid Services:
Administrator:
Washington. DC 20201:
DATE: SEP 15 2004:
TO: Laura A. Dummit:
Director, Health Care-Medicare Payment Issues:
General Accountability Office:
[Initialed by]
FROM: Mark B. McClellan, M.D., Ph.D.:
Administrator:
SUBJECT: General Accountability Office's Draft Report: MEDICARE
PHYSICIAN FEE SCHEDULE: CMS Needs to Plan to Refine and Update Practice
Expense Component (GAO-04-289):
Thank you for the opportunity to review the General Accountability
Office's (GAO) draft report entitled, MEDICARE PHYSICIAN FEE SCHEDULE.
CMS Needs to Refine and Update Practice Expense Component, (GAO-04-
289).
Section 121 of the Social Security Act Amendments of 1994 (Pub. L. 103-
432) enacted on October 31, 1994, required us to develop a methodology
for a resource-based system for determining practice expense relative
value units (RVUs) for each physician's service beginning in 1998. In
developing the methodology, we were to consider the staff, equipment,
and supplies used in providing medical and surgical services in various
settings.
In response to a mandate in the Medicare, Medicaid, and SCRIP Benefits
Improvement:
and Protection Act of 2000, GAO evaluated the Centers for Medicare &
Medicaid Services' (CMS) processes for updating total practice expense
and resource estimates and whether CMS will have the data necessary to
update the fee schedule at least every 5 years, as mandated by law.
We have substantial concerns with the GAO report. Our specific comments
to the report are attached. We ask that our comments be included in
their entirety in the GAO report.
Attachment:
Centers for Medicare & Medicaid Services' Comments to the GAO Draft
Report: MEDICARE PHYSICIAN FEE SCHEDULE: CMS Needs to Refine and Update
Practice Expense Component (GAO-04-289):
GAO Recommendation:
CMS needs to consistently assess the accuracy of all supplemental data
submissions on total practice expense data, modify the assessment of
representativeness such that the data submitted by specialties better
reflect the variations in practice expense within a specialty, and
adjust the precision requirement so that supplemental data submissions
that would improve the information currently used to set, fees are
accepted:
CMS Response:
Our contractor, the Lewin Group, has consistently assessed the survey
methodology and representativeness of the supplemental data
submissions. They have provided us with detailed reports that we have
made public on the CMS Web site. For example, the GAO report discusses
the hospital or office-based nature of the survey respondents as a
potential issue. We note that this was a fundamental feature of Lewin's
review of three surveys that were submitted to us in 2004 by radiology,
radiation oncology, and cardiology. With respect to the precision
requirement, we request that the GAO indicate any flaws it perceives in
the current methodology. This would assist us in evaluating the
recommendation.
GAO Recommendation:
CMS should base any revisions to the resource estimates for individual
services on sufficient data analysis and a documented and transparent
rationale.
CMS Response:
The vast majority of revisions to the resource estimates have been
based on the recommendations of the multi-specialty Practice Expense
Advisory Committee (PEAC) process. As described in greater detail
below, the rare occasions where we have differed with the PEAC have
been well-documented each year in the physician fee schedule proposed
and final rules. We have included as an attachment comments from some
of the major specialty organizations supporting CMS' work as it relates
to PEAC data revisions.
GAO Recommendation:
CMS needs to develop and implement a plan to acquire representative
data on total practice expenses and the resources for individual
services on an ongoing basis to update the fee schedule so that it
appropriately reflects changes in the nature of medical services and
the costs of their delivery.
CMS Response:
We agree with this recommendation and are taking the appropriate steps
to acquire practice expense data for potential future revisions.
Additional Comments:
Page 6:
The report states that although we implemented the vast majority of
PEAC recommendations, we also "modified certain original estimates and
PEAC-recommended estimates at times without using adequate supporting
data or explaining its rationale." The report also states that
'physicians told us that CMS' changes to estimates without adequate
data or explanation lowered their confidence in the process and the
resulting estimates." However, the majority of feedback CMS has
received through the regulatory process has been overwhelmingly
supportive of both our participation in the PEAC and our decision-
making capability with regard to the PEAC recommended values (See p. 7
of attachment).
Below we review the Physician Fee Schedule rules in which we discussed
our acceptance or modification of the PEAC recommendations.
* In the November 2, 1999, Physician Fee Schedule final rule, we
discussed our review of the recommendations on 65 codes from the first
PEAC meeting (we note that CMS is not a voting member of the PEAC).
This meeting was a learning experience for all involved, standards had
not yet been developed, and there was confusion among the presenters
regarding the technical and policy requirements of our methodology.
Therefore, although we accepted most of the recommendations, it was
necessary to make several, mostly minor, revisions. For example: we
deleted supplies that were difficult to allocate to a single procedure,
as well as separately billable drugs and casting supplies; we matched
the quantities of patient gowns, table paper, and pillow cases to the
number of visits; we deleted items that were office supplies or
equipment because these were considered indirect costs and deleted
equipment costing less than $500; and we eliminated duplicated
supplies. We explained this in the rule.
* In the November 1, 2000, Physician Fee Schedule final rule, we stated,
"We have reviewed the submitted.. recommendations and have accepted
all of them with only two minor revisions.. we have deleted the
marking pen when it appears in a recommended supply list because it is
not practical to allocate its use to individual procedures. In
addition, for the ophthalmology codes that were refined before the
supply packages were adopted, we have substituted the ophthalmology
visit supply package as appropriate." In addition, in this same rule we
positively responded to the majority of comments we received on our
previous actions on the 1999 PEAC recommendations.
* In the November 1, 2001, final rule, we again stated that we have
accepted most of the PEAC recommendations with only minor technical
revisions. The only significant changes from the PEAC recommendations
were for the therapy codes where we deleted assistant time for
obtaining vital signs and measurements, patient education, and phone
calls because, we explained, we believed that these tasks are done by
the therapist and are captured in the work RVIJs. We did, however, add
in extra time for the therapy aide to ensure that the total times
appeared accurate. In this rule, we also responded to comments from
specialty societies representing osteopaths, rheumatologists,
neurologists, ophthalmologists, obstetricians, and gynecologists
commending us for implementing the refinements submitted by the PEAC
and relative value update committee (RUC) as part of the on-going
refinement process. Other commenters had also praised CMS staff for
being helpful in responding to the PEAC members' questions .. as well
as for our willingness to work with physician specialty societies
toward establishing fair and appropriate reimbursement values.
* In the December 31, 2002, final rule, we stated that we had received
recommendations from the PEAC on the refinement to the clinical
practice expense panel (CPEP) direct practice expense inputs for over
1,200 codes and that we were able to accept all of the recommendations
without any revision. We also responded to the argument presented in a
comment from the specialty societies representing therapists by
reinstating the time we had previously deleted. In addition, we
responded to comments from societies representing radiology, orthopedic
surgery, general surgery, family practice, and dermatology thanking us
for our implementation of PEAC recommendations.
* In the August 15, 2003, proposed rule, we discussed the PEAC
recommendations we had received on over 4,000 codes. We reviewed these
recommendations and proposed acceptance of all of them without change.
In the November 7, 2003, final rule, we responded positively to the
majority of specialty comments we received on the CPEP changes. Once
again, we received comments from many diverse specialty societies
expressing appreciation for our acceptance of the PEAC recommendations
and our commitment to the PEAC process.
With respect to the time that had been assigned by the CPEP panels for
physicians' clinical staff brought into the hospital and our removal of
that time, we note the following points.
* In our Notice of Intent to Regulate published on October 31, 1997, we
solicited detailed information regarding the issue of clinical staff
used in the facility setting, along with the name of any facility where
the practice occurs. We received only 16 responses, most of them
anecdotal. Two specialties submitted the results of the surveys. The
society representing ophthalmologists submitted results that indicated
that while the practice does occur, it is not typical. The society
representing cardiothoracic surgery submitted a survey done by a
physician assistants (PAs) association that indicated that PAs
frequently assist in the operating room. However, because PAs are
physician extenders and we pay for assistants at surgery, we believe
that the costs for these services are not practice expense, but would
be captured in the work RVUs.
* After the issue of clinical staff time in the hospital setting was
raised by the primary care specialties at the first PEAC meeting, no
code that included such time was passed by the PEAC.
* In the July 22, 1999, proposed rule, where we proposed eliminating
the clinical staff intra time in the facility setting, we laid out a
lengthy and detailed statutory, regulatory, and policy rationale for
this proposal and also requested data "regarding situations where the
recognition of costs associated with the use of a physician's clinical
staff in a facility would be appropriate." In that year's final rule,
we discussed the data that we had received. Although many specialties
asserted that it was a common practice to bring staff to the hospital,
the American Hospital Association submitted data from a national survey
of 1,459 hospitals that refuted these assertions. We also examined the
1996 Socioeconomic Monitoring System (SMS) survey and did not find
support for the specialties' assertions. Only two specialties provided
any extensive information on the issue. The society representing
anesthesia submitted a survey that actually indicated that it was not a
typical practice for the specialty, and the society representing
thoracic surgeons resubmitted the PA survey discussed above.
Page 17:
* GAO raises concerns about CMS' decision on the American Optometric
Association (AOA) survey. The AOA survey was not used because of its
failure to meet the precision requirements and the questionable
representativeness of the data. We note that the data did not include
responses from non-AOA members. We also note that the use of the AOA
data would make little difference to the final practice expense RVUs
since the survey practice expense per hour is very similar to the
crosswalk we are using.
Page IS:
GAO expresses concern that CMS accepted oncology data that was much
higher than benchmark data from other sources. The CMS and the Lewin
Group met with the American Society of Clinical Oncology (ASCO) and its
contractor to discuss what appeared to be anomalous results in the
data. ASCO explained to both CMS' and Lewin's satisfaction, that the
anomalous results were explained by a few extreme survey responses and
that CMS' policy was not to eliminate any data from either the SMS or
supplemental surveys. Further, while elimination of these extreme
responses made the salary per employee data comparable to what GAO
refers to as "benchmark" data, it actually had little effect on the
practice expense per hour.
Page 5 - Attachment:
* The Medicare Prescription Drug, Improvement, and Modernization Act of
2003 requires the use of supplemental survey data meeting certain
requirements. The ASCO survey data meet these requirements.
Pages 20-21:
The GAO Report states that, "The OIG subsequently issued a report
indicating that it was a typical practice for certain surgical
specialties to bring clinical staff to the hospital." The conclusion of
the OIG report was, "Medicare pays for nonphysician clinical staff even
though surgeons do not receive additional payments for some of the
staff they bring to the hospital. Instead, services of these staff are
paid either to physicians through the work relative value units, to the
mid-level practitioners directly, or to the hospital through Part A or
the Ambulatory Payment Classification system for outpatient
services.."
Page 21:
The report indicates that CMS has no plan in place for future updates
to the practice expense portion of a fee schedule payment. However, CMS
is currently in the process of obtaining a contract that would collect
practice expense data from the major specialties, both physician and
nonphysician. This survey instrument would include additional questions
that would improve the current precision associated with the practice
expense inputs. Also, we are proposing updated costs for all the
equipment in our CPEP database in the upcoming proposed rule.
Although the PEAL will no longer exist for future updates, the RUC will
continue to be involved with the development of practice expense RVU
recommendations. The RUC is more than capable of providing CMS with
recommendations on practice expense inputs as the majority of the RUC
members have already been involved in recommending the practice expense
inputs for new and revised codes. The RUC has also indicated
willingness to take part in the 5-year review of practice expense.
Page 23 & last paragraph of page 6:
* The report makes reference to overcompensating practices and wasting
taxpayer dollars. However, the system is budget neutral and any
alternative would reduce payments to the overcompensated specialty and
raise payments to all other specialties.
* The GAO makes a general recommendation that adjustments be made to the
precision requirements. In order to assist us in evaluating this
recommendation, we request that the GAO indicate what the flaws are in
the current precision requirement.
* The GAO recommends that CMS consistently assess the accuracy of all
supplemental data and modify the assessment of representativeness to
better reflect the variation in practice expenses within a specialty.
Our contractor, the Lewin Group, has consistently assessed whether a
survey's respondents are representative of the population and has
provided us with detailed reports that we have made public on the CMS
Web site. With respect to modifying the assessment of
representativeness to consider whether a specialty is hospital or
office-based, we note that this was a fundamental feature of their
review of three surveys that were submitted to us in 2004 by radiology,
radiation oncology, and cardiology.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Laura A. Dummit, (202) 512-7119:
Acknowledgments:
Major contributors were Iola D'Souza, Elizabeth T. Morrison, and
Gerardine Brennan.
FOOTNOTES
[1] This report refers to the practice expense component of payments as
"practice expense payments."
[2] See 42 U.S.C. 1395w-4(c)(2)(B)(i), (ii).
[3] GAO, Medicare Physician Payments: Need to Refine Practice Expense
Values During Transition and Long Term, GAO/HEHS-99-30 (Washington,
D.C.: Feb. 24, 1999) and GAO, Medicare Physician Fee Schedule: Practice
Expense Payments to Oncologists Indicate Need for Overall Refinement,
GAO/HEHS-02-53 (Washington, D.C.: Oct. 31, 2001).
[4] See Section 212 of the Medicare, Medicaid and SCHIP Balanced Budget
Refinement Act of 1999, Pub. L. No. 106-113, App. F, 113 Stat. 1501A-
321, 1501A-350.
[5] Since we sent our report to CMS for comment on June 15, 2004, CMS
posted information on its Web site about four additional supplemental
data submissions.
[6] On July 1, 2001, the agency that administers the Medicare program
was renamed from HCFA to the Centers for Medicare & Medicaid Services
(CMS). In this report, we will refer to HCFA where our findings apply
to operations that took place before July 1, 2001.
[7] Medicare, Medicaid, and SCHIP Benefits Improvement and Protection
Act of 2000, Pub. L. 106-554, Appendix F, Section 411, 114, Stat.
2763A-463, 2763A-508.
[8] See 64 Fed. Reg. 59,380, 59,399 - 59,403, (1999); 65 Fed. Reg.
65,376, 65,390 - 65,399 (2000); 66 Fed. Reg. 55,246, 55,255 - 55,262
(2001); 67 Fed. Reg. 79,966, 79,973 - 79,976 (2002).
[9] HHS, OIG, Medicare Payment for Nonphysician Clinical Staff in
Cardiothoracic Surgery, OEI-09-01-00130 (Washington, D.C.: HHS, April
2002).
[10] Precision measures how far the estimate may be from the true
value; for example, there is a 95 percent chance an estimate is +/-2
percent from the true value.
[11] CMS assessed the accuracy of three of the four recently posted
data submissions.
[12] GAO/HEHS-99-30 and GAO/HEHS-02-53.
[13] In making these adjustments, AMA considers characteristics such as
AMA membership, physician gender, years since the physician graduated
from medical school, physician membership in a medical specialty
organization, and board certification status.
[14] Total practice expense estimates for smaller specialties or
subspecialties were based on practice expense data from the major
specialty that was the "closest fit." For example, data from internal
medicine practices were used to estimate the expenses for practices
from the subspecialties of internal medicine, such as nephrology (the
medical specialty concerned with kidney function and disease) or
infectious diseases.
[15] The supplemental data have also replaced the original SMS data for
two physician specialties--oncology and cardiothoracic surgery.
[16] For example, the instrument must request expense data for the
categories that CMS uses in establishing Medicare's practice expense
payments and must use SMS definitions of expenses and hours worked.
[17] CMS allows specialties to use a stratified sample (that is, a
specialty's practices may be divided into subgroups from which random
samples are drawn) to help ensure that the responding practices are
representative. Stratification allows more follow-up to encourage
participation among subgroups with low response rates.
[18] A specialty may show that the physicians who did not respond were
not different from those who responded with regard to factors affecting
practice expenses. Alternatively, the estimates could be adjusted to
reflect the differences between the respondents and all practitioners
in that specialty. For example, if solo practitioners represent 20
percent of all physicians within a specialty but represent 40 percent
of the physicians responding to the survey, responses from the solo
practitioners would be weighted according to their representation in
the specialty.
[19] The estimated average practice expenses from the supplemental
surveys must have a margin of error not greater than 15 percent of the
estimated average, at a 90 percent confidence level. A 90 percent
confidence level means that there is a 90 percent probability that the
actual average falls within plus or minus 15 percent of the estimated
average. The precision criterion had originally required a margin of
error of no more than plus or minus 10 percent of the estimated
average, but this was relaxed in June 2002. As a result, the number of
responses needed to meet this criterion was reduced by about half.
[20] This estimate is based on the amount of total practice expense
variation exhibited across all the practices included in the SMS
survey. Small, homogeneous specialties with less variation across their
practices will require fewer survey responses, whereas specialties with
wide variation in their practice expenses will require more.
[21] Since we sent this report to CMS for comment on June 15, 2004, CMS
has posted information on its Web site about four additional
supplemental data submissions. Three specialties' data met the
criteria: CMS indicated that it would accept the data from pathology
for use in the 2005 practice expense methodology and stated that it
would wait to accept the data from cardiology and radiology, at the
specialties' request, until technical issues about the practice expense
methodology have been resolved. CMS rejected data from the fourth
specialty, radiation oncology, because they did not meet the precision
criterion.
[22] Indirect expenses, or overhead--administrative labor, office
expenses, and other expenses--are allocated to specific services in
proportion to the direct expenses and physician work involved in
providing that service.
[23] GAO, Medicare: HCFA Can Improve Methods for Revising Physician
Practice Expense Payments, GAO/HEHS-98-79 (Washington, D.C.: Feb. 27,
1998).
[24] This committee is known as the RVS Update Committee (RUC).
[25] A specialty society can gather these data using a panel of experts
or a survey of the specialty's practitioners. If data are collected
through a survey, the survey sample size, response rate, and
distribution of respondents by geographic setting and type of practice
(single-specialty, multispecialty, independent, or hospital-based)
have to be submitted with the proposed resource estimates.
[26] For example, the PEAC established 3 minutes as the standard time
for clinical staff to obtain between one and three patient vital signs
before the physician sees the patient for an office visit.
[27] The tasks included might be completing paperwork, explaining the
procedure to the patient, obtaining the patient's consent, calling in
prescriptions to a pharmacy, and arranging follow-up visits.
[28] Supplemental data surveys may include questions not included in
the SMS that are designed to provide previously unavailable information
needed for the practice expense estimates. For example, the
supplemental data survey might ask for information on the cost of
separately reimbursed supplies, such as drugs for oncology and optical
materials and supplies for optometry, which should be excluded from the
practice expense estimates. CMS must approve these additions.
[29] Most of the specialty societies' supplemental data submissions
have been based on surveys with response rates below 20 percent.
[30] In a 2000 report, CMS's contractor acknowledged that the
characteristics used to make the data representative of all physicians
in a specialty did not necessarily relate to practice expenses because
the SMS survey was not designed to calculate practice expense payments.
The contractor suggested that characteristics such as the size of a
practice and whether it is a single-or multispecialty practice would be
more relevant to consider. The Lewin Group, An Evaluation of the Health
Care Financing Administration's Resource Based Practice Expense
Methodology (Falls Church, Va.: 2000).
[31] CMS examined whether practices were independent or hospital-based
to determine representativeness in one of the four recent submissions,
and used other characteristics, such as the type of services provided,
for another two of the four submissions.
[32] The Lewin Group, Recommendations Regarding Supplemental Practice
Expense Data Submitted for 2002 (Falls Church, Va.: 2002).
[33] CMS also assessed the accuracy of three of the four recent
submissions.
[34] PEAC representatives told us that the thoracic surgeons did not
formally present to the PEAC their resource estimates for services that
include the costs of clinical staff they bring to the hospital because
CMS officials said the agency would not accept resource estimates that
included these expenses.
[35] Medicare Payment for Nonphysician Clinical Staff in Cardiothoracic
Surgery, April 2002.
[36] See 66 Fed. Reg. 55,310 (2001).
[37] The Lewin Group, Recommendations Regarding Supplemental Practice
Expense Data Submitted for 2002 (Falls Church, Va.: 2001), and The
Lewin Group, Recommendations Regarding Supplemental Practice Expense
Data Submitted for 2003 (Falls Church, Va.: 2002).
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