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Research Questions

  1. How can newly collected data (particularly data on the number of post-operative visits) be used to formulate an approach to revalue global surgery procedures?
  2. What share of work for procedures with 10- and 90-day global periods is associated with post-operative visits that do not typically occur?
  3. What share of direct practice costs are associated with post-operative visits that do not typically occur?
  4. What are the impacts on procedures with global periods in terms of total work and on specialties in terms of their total payments under Medicare's Physician Fee Schedule from updating valuations using the reverse building block approach?

Medicare payment for many health care procedures covers not just the procedure itself but also most post-operative care over a fixed period of time (the "global period"). The Centers for Medicare & Medicaid Services (CMS) sets payment rates assuming that a certain number and type of post-operative visits specific to each procedure typically occur.

This report describes how CMS might use new claims-based data on the number of post-operative visits to adjust valuation for procedures with 10- and 90-day global periods. There are links between the number of bundled post-operative visits and the components of valuation addressed in this report: work, practice expense (PE), and malpractice relative value units (RVUs). There is some ambiguity regarding how a reduction in post-operative visits translates into changes in work RVUs. In contrast, a reduction in post-operative visits has clear implications on physician time and direct PE. Changes in physician work, physician time, and direct PE will in turn affect the allocation of pools of PE and malpractice RVUs to individual services.

The idiosyncrasies of the resource-based relative value scale system used to determine payment for Medicare services result in some ambiguity about how procedures should be revalued to reflect reductions in post-operative visits. These results may inform further policy development around revaluation for global procedures.

Key Findings

  • Depending on which statistic describing the number of observed visits we used (e.g., mean, median), the resulting updated work RVUs were between 18 percent and 30 percent lower for procedures with 90-day global periods, and between 38 percent and 40 percent lower for procedures with 10-day global periods compared with current work RVU levels.
  • The net reduction in work RVUs was 2.7 percent across all Physician Fee Schedule services or $2.6 billion at the 2019 conversion factor.
  • Adjusting direct practice expense inputs alone resulted in relatively modest reductions in PE and total RVUs for most proceduralist specialties and increases for other specialties such as cardiology.
  • Revaluation reduced total RVUs by from 5.1 percent (vascular surgery) to 20.6 percent (cardiac surgery) among proceduralist specialties and resulted in small increases for some other specialties (e.g., cardiology, neurology, and the specialties contributing to our primary care category).
  • These changes in valuation resulted in slightly moderated reductions in payments for surgical specialties due to a higher conversion factor.
  • Payments to primary care practitioners and some other specialties that perform procedures rarely increased — by roughly 3 percent.

Recommendations

  • Procedures can be revalued to reflect the actual number of post-operative visits provided using the "reverse building block" approach.
  • Different approaches to measuring the "typical" number of visits, including the median, mean, and mode of observed visits, should be considered.
  • The implications of revaluation should be examined separately for work RVUs, PE RVUs after reducing practice expense inputs only, and in terms of total RVUs.
  • It is important to summarize the implications of revaluation of surgical procedures for surgical specialties as well as primary care and other nonsurgical specialties due to the budget neutrality of Medicare payments for physician services.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Summary of Recent Work on Number and Level of Visits and Revaluation Approach

  • Chapter Three

    Revaluation Approach Overview

  • Chapter Four

    Variation in Reported Post-Operative Visits

  • Chapter Five

    Revaluation Results

  • Chapter Six

    Discussion

  • Appendix A

    Data and Methods

  • Appendix B

    Detailed Results Tables

  • Appendix C

    Adjusting Work RVUs Using Information on the Number and Level of Post-Operative Visits

Research conducted by

The research described in this report was funded by the Centers for Medicare & Medicaid Services (CMS) and conducted by the Payment, Cost, and Coverage Program within RAND Health Care.

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