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Using Claims-Based Estimates of Post-Operative Visits to Revalue Procedures with 10- and 90-Day Global Periods

Updated Results Using Calendar Year 2019 Data

by Andrew W. Mulcahy, Teague Ruder, Susan L. Lovejoy, Daniel J. Crespin, Petra Rasmussen, Katie Merrell, Ateev Mehrotra

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Research Questions

  1. How can newly collected data (particularly 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 occur?
  3. What share of direct practice expense is associated with post-operative visits that typically do not 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 only 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 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 (e.g., mean, median) was used to describe the number of observed visits, the resulting updated work RVUs were between 18 percent and 32 percent lower for procedures with 90-day global periods and between 39 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 2.6 percent across all Physician Fee Schedule services, or $2.5 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 between 5.1 percent (vascular surgery) and 20.3 percent (plastic and reconstructive surgery) among proceduralist specialties and resulted in small increases for some other specialties (e.g., cardiology, neurology, and primary care specialties).
  • 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 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, for PE RVUs after reducing PE 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 because of the budget neutrality requirement for Medicare payments for physician services.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Revaluation Approach Overview

  • Chapter Three

    Revaluation Results

  • Chapter Four

    Discussion

  • Appendix A

    Data and Methods

  • Appendix B

    Variation in Reported Post-Operative Visits

  • Appendix C

    Detailed Results Tables

Research conducted by

This research was funded by the Centers for Medicare & Medicaid Services (CMS) and carried out within the Payment, Cost, and Coverage Program in RAND Health Care.

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