Practice Expense Methodology and Data Collection Research and Analysis
Aug 4, 2020
In this report, the authors address how the Centers for Medicare & Medicaid Services (CMS) might improve the methodology used in practice expense (PE) rate-setting, update data that inform PE rates, or both. The system of data and methods that CMS uses to support PE rate-setting is complex; thus, CMS must take into account a number of competing priorities when considering changes to the system.
Phase II Final Report
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Each year, Medicare allocates tens of billions of dollars for indirect practice expense (PE) across services on the basis of data from the Physician Practice Information (PPI) Survey, which reflects 2006 expenses. Because these data are not regularly updated, and because there have been significant changes in the U.S. economy and health care system since 2006, there are concerns that continued reliance on PPI Survey data might result in PE payments that do not accurately capture the resources that are typically required to provide services.
In this final report of the second phase of a study on PE methodology, the authors address how the Centers for Medicare & Medicaid Services (CMS) might improve the methodology used in PE rate-setting, update data that inform PE rates, or both. The authors conclude that this information is best provided by a survey; therefore, they focus on the advantages and disadvantages of survey-based approaches. They also describe the use of a lean model survey instrument, as well as partnering with another agency to collect data. Finally, the authors describe a virtual town hall meeting held in June 2021 to give stakeholders an opportunity to provide feedback on PE data collection and rate-setting.
The system of data and methods that CMS uses to support PE rate-setting is complex; thus, CMS must take into account a number of competing priorities when considering changes to the system. With this in mind, the authors offer a number of near- and longer-term recommendations.
Recurring Data Collection to Support the Allocation of Practice Expense
Practical Considerations for a Hybrid Survey Panel of Practices
Lean Model Instrument
Potential Synergistic Data Collection Strategies
Using the Outpatient Prospective Payment System to Inform Practice Expenses
Using Outpatient Prospective Payment System–Based Relative Value Units to Identify Potentially Misvalued Services and Address Site-of-Service Differentials
Potential Refinements in the Indirect Allocation
Approaches for Efficient Data Collection
Town Hall Summary
Recurring Surveys Relevant to New Data Collection to Update Practice Expense Data in the Medicare Physician Fee Schedule
Supplementary Analyses for Chapter 2
Lean Model Survey Instrument
Other Surveys Considered
Supplemental Information for the Outpatient Prospective Payment System Analyses
Supplemental Information for Analyses Using Outpatient Prospective Payment System–Based Relative Value Units to Identify Potentially Misvalued Services and Address Site-of-Service Differentials
Sample Allocations to Reduce Large-Impact Standard Deviations
This research was sponsored by the Centers for Medicare and Medicaid Services and conducted by RAND Health Care.
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