CMS  may at times also make changes to fees for services independent of RUC  recommendations. CMS has a long-standing policy called a multiple procedure  payment reduction (MPPR) to avoid duplicate payments for portions of  practice expenses that are incurred only once when two or more surgical  services are furnished together by the same physician during the same  operating session. Under the MPPR policy, the full fee is paid for  the more expensive service, but a reduction is applied to the fees for each  subsequent service. For example, through the Deficit Reduction  Act of 2005 (DRA), Congress mandated that savings resulting from the  MPPR for certain imaging services that were furnished together be  exempted from budget neutrality. CMS Has Recognized Efficiencies in Some Services, but Has Not Focused on High- Spending Services

CMS has taken steps to recognize efficiencies for services commonly  furnished together through the use of the RUC process and the MPPR, but  has not targeted services with the greatest potential for savings, and the  RUC process depends on specialty societies. The MPPR is limited in scope  because it does not apply to a broad range of services, nor does it capture  efficiencies occurring in the physician work component. RUC Workgroup Examines Efficiencies in Services Commonly Furnished Together, but Does Not Target Services with Greatest Potential for Savings

CMS stated that it is reviewing the efforts of a workgroup recently created  by the RUC to identify efficiencies in services that are commonly  furnished together. However, these service pairs would likely result in limited savings. This element is  inherent in a process based on input and consensus from specialty  societies. 1). CMS  estimated that its use of the MPPR for certain imaging procedures  produced savings of about $96 million in 2006. In this instance,  Congress exempted these savings from the budget neutrality provision; as  a result, the $96 million was not redirected to other services but accrued  as savings to the Medicare program. For example, a physician’s review of a  patient’s medical history and prior imaging or other test results before the  service, and dictation of the final report for the medical record, occur only  once. CMS’s MPPR Policy Could Be Applied to Other Services Commonly Furnished Together and Expanded to Reflect Efficiencies in Physician Work

Our review of Medicare claims data indicated the potential for reducing  excessive physician payments by implementing an MPPR to reflect  efficiencies generally occurring in the practice expense component of  certain nonsurgical and nonimaging service pairs commonly furnished  together. Potential Exists for Reducing about $175 Million Annually through Expanding the Current MPPR for Imaging Services to Reflect Efficiencies in the Physician Work Component

Our analysis of 118 imaging service pairs suggests that efficiencies in  physician work occur when services are furnished together, and an   MPPR policy that reflected these efficiencies could save Medicare over  $175 million annually. However, based on  our review of the workgroup’s processes and progress to date, we  continue to believe that these processes are resource intensive and will  likely limit CMS’s ability to quickly identify opportunities for savings from  those service pairs that account for a high share of Medicare spending. Appendix I: Estimating Potential for Further Savings from Efficiencies in Multiple Services

In this appendix, we describe the processes we used to determine  opportunities for the Centers for Medicare & Medicaid Services (CMS) to  avoid excessive payments for services commonly furnished together. We generated a list of all  service pairs that were furnished by the same physician to the same  beneficiary on the same day and made the following exclusions:    service pairs with low utilization—those that were billed fewer than 5,000    service pairs containing only the professional portion of a service;    service pairs that were already subject to payment policies that reduced  payments for one of the services in the pair;   service pairs containing supplemental services, which are priced to  exclude duplication of physician work and practice expenses that are  already included in the primary service; and   service pairs containing duplicate services. The  AMA/Specialty Society Relative Value Scale Update Committee (RUC)  bases its estimates of physician work and practice expenses on these  vignettes. 3) describes the nonphysician clinical labor, supplies, and  equipment resources required for each service.
Why GAO Did This Study

Medicare's physician fees may not always reflect efficiencies that occur when a physician performs multiple services for the same patient on the same day, and some resources required for these services do not need to be duplicated. In response to a request from Congress, GAO examined (1) the Centers for Medicare & Medicaid Services' (CMS) efforts to set appropriate fees for services furnished together and (2) additional opportunities for CMS to avoid excessive payments when services are furnished together. GAO examined relevant policies, laws, and regulations; interviewed CMS officials and others; and analyzed claims data to identify opportunities for further savings.

What GAO Found

CMS has taken steps to ensure that physician fees recognize efficiencies that occur when certain services are commonly furnished together, that is, by the same physician to the same beneficiary on the same day, but has not targeted services with the greatest potential for savings. CMS is reviewing the efforts of a workgroup created by the American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) in 2007 to examine potential duplication in resource estimates for services furnished together. However, the RUC workgroup has not focused on services that account for the largest share of Medicare spending. For this and other reasons, its methodology to identify and review services furnished together likely will result in limited savings. The workgroup's process is also resource intensive because it depends on input and consensus from specialty societies. Independent of the RUC, CMS has implemented a multiple procedure payment reduction (MPPR) policy for certain imaging and surgical services when two or more related services are furnished together. Under an MPPR, the full fee is paid for the highest-priced service and a reduced fee is paid for each subsequent service to reflect efficiencies in overlapping portions of the practice expense component--clinical labor, supplies, and equipment. For example, a nurse's time preparing a patient for a medical procedure or technician's time setting up the required equipment is incurred only once. The MPPR produced savings of about $96 million in 2006 for imaging services. However, the scope of the policy is limited because the policy does not apply to nonsurgical and nonimaging services commonly furnished together, nor does it specifically reflect efficiencies occurring in the physician work component--the financial value of a physician's time, skill, and effort. For example, when two services are furnished together, a physician reviews a patient's medical records once, but the time for that activity is generally reflected in fees paid for both services. CMS has additional opportunities to reduce excess physician payments that can occur when services are furnished together and Medicare's fees do not reflect the efficiencies realized. GAO's review found that expanding the MPPR to reflect practice expense efficiencies that occur when nonsurgical, nonimaging services are provided together could reduce payments for these services by an estimated one-half billion dollars annually. GAO's review also indicated that expanding the existing MPPR policy to reflect efficiencies in the physician work component of certain imaging services could reduce these payments by an estimated additional $175 million annually. Under the budget neutrality requirement, by law, savings from reductions in fees are redistributed by increasing fees for all other services. Thus, these potential savings would accrue as savings to Medicare only if Congress exempted them from the budget neutrality requirement, as was done in the Deficit Reduction Act of 2005 for savings from the changes to certain imaging services fees.