Overview of the RUC’s Process for Developing Relative Value Recommendations and How CMS Uses These Recommendations when Establishing Relative Values for Medicare Physicians’ Services

The process to develop and establish relative values involves three main  steps: (1) CMS, the RUC, and AMA’s Current Procedural Terminology  (CPT) Editorial Panel identify services for RUC review, (2) the RUC  works with specialty societies to use surveys and other methods to  develop work relative value and DPEI recommendations for CMS for  identified services, and (3) CMS reviews each RUC recommendation it  receives to determine whether to use it when establishing relative values  for physicians’ services. For example, of the 231 active Medicare physicians’ services that  specialty societies surveyed for payment year 2015, the median response  rate was 2.2 percent and while the median number of respondents was  52, for 23 of these services, the number of respondents failed the  minimum survey response thresholds that the RUC implemented in  2014. The median number of times respondents reported performing the service in the past  year was 10. undermined by data weaknesses and weaknesses in its process due to  potential conflicts of interest. As a result of these efforts, the public  can have a better understanding of the RUC’s process and knowledge of  the recommendations submitted to CMS. CMS’s Process for Establishing Relative Values May Not Ensure Accurate Medicare Payment Rates and Lacks Transparency

CMS’s process for establishing relative values embodies several  elements that cast doubt on whether it provides assurance of accurate  Medicare payment rates. While CMS stated that it complies with a  statutory requirement governing how often physicians’ services are to be  reviewed, CMS does not track when a service was last valued or have a  documented standardized process for prioritizing its review of services. The agency also has limited documentation about its process, and does  not have any documentation with specific information about the selected  method used to review a specific RUC recommendation. Lack of  transparency in its process and lack of data sources to validate RUC  recommendations, combined with evidence that CMS relies heavily on  the RUC for relative value recommendations despite weaknesses with the  RUC’s data, may undermine payment rate accuracy. This indicates that CMS has a process in  place to ensure that relative values are reviewed regularly and revalued if  necessary. CMS Process for Establishing Relative Values Lacks Transparency, and Heavy Reliance on RUC Recommendations May Undermine Payment Rate Accuracy

CMS makes some information about its process for establishing relative  values available to the public, but some information on the services under  review is not included, which limits stakeholders’ knowledge about  whether payment rates are likely to change for these services. Moreover, while CMS provides general information on how it reviews  RUC recommendations, it does not document a process for reviewing  recommendations that would identify the resources considered during its  review of specific RUC recommendations. As a result, in the majority of cases, CMS has accepted the  RUC’s work relative value recommendation. 5.) CMS Is Developing an Approach for Validating Relative Values, but Does Not Yet Have a Specific Plan for Doing So or for Addressing Other Data Challenges

CMS does not yet have a formal process for validating RUC  recommendations, but is developing an approach as required by  PPACA.as part of its process for establishing relative values and agrees with or  refines them based on, for example, the agency’s assessment of the  RUC’s data or completion of a clinical review. First, physicians who serve Medicare beneficiaries—including  members of the RUC and specialty societies—may have potential  conflicts of interest with respect to the outcomes of CMS’s process for  setting payment rates for Medicare physicians’ services. Second, we  found some of the RUC’s survey data to have low response rates, low  total number of responses, and large ranges in responses. Furthermore, because CMS relies on the RUC’s recommendations when  establishing relative values, these challenges may also result in CMS  setting inaccurate Medicare payment rates for physicians’ services. In addition, CMS’s process lacks transparency. HHS did not concur with our recommendation to include the services  identified as potentially misvalued by the RUC in its rulemaking to allow  for public comment, prior to finalizing its list of potentially misvalued  services for the RUC to review. However,  under the new process CMS does not plan to inform the public of services  identified by the RUC as potentially misvalued. Appendix I: Establishing Relative Values for a Medicare Physician Service through the RUC and CMS Processes

The process to develop and establish relative values involves three main  steps: (1) the Centers for Medicare & Medicaid Services (CMS), the  American Medical Association’s (AMA) Relative Value Scale Update  Committee (RUC), and the AMA’s Current Procedural Terminology (CPT)  Editorial Panel identify services for the RUC to review; (2) the RUC  works with specialty societies to use surveys and other methods to  develop work relative value and direct practice expense input (DPEI)  recommendations for CMS for identified services; and (3) CMS considers  each RUC recommendation it receives to determine whether to use it  when establishing relative values for physicians’ services.
Why GAO Did This Study

Payments for Medicare physicians' services totaled about $70 billion in 2013. CMS sets payment rates for about 7,000 physicians' services primarily on the basis of the relative values assigned to each service. Relative values largely reflect estimates of the physician work and practice expenses needed to provide one service relative to other services.
The Protecting Access to Medicare Act of 2014 included a provision for GAO to study the RUC's process for developing relative value recommendations for CMS. GAO evaluated (1) the RUC's process for recommending relative values for CMS to consider when setting Medicare payment rates; and (2) CMS's process for establishing relative values, including how it uses RUC recommendations. GAO reviewed RUC and CMS documents and applicable statutes and internal control standards, analyzed RUC and CMS data for payment years 2011 through 2015, and interviewed RUC staff and CMS officials.

What GAO Found

The American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) has a process in place to regularly review Medicare physicians' services' work relative values (which reflect the time and intensity needed to perform a service). Its recommendations to the Centers for Medicare & Medicaid Services (CMS), the agency within the Department of Health and Human Services (HHS) that administers Medicare, though, may not be accurate due to process and data-related weaknesses. First, the RUC's process for developing relative value recommendations relies on the input of physicians who may have potential conflicts of interest with respect to the outcomes of CMS's process. While the RUC has taken steps to mitigate the impact of physicians' potential conflicts of interest, a member of the RUC told GAO that specialty societies' work relative value recommendations may still be inflated. RUC staff indicated that the RUC may recommend a work relative value to CMS that is less than the specialty societies' median survey result if the value seems accurate based on the RUC members' clinical expertise or by comparing the value to those of related services. Second, GAO found weaknesses with the RUC's survey data, including that some of the RUC's survey data had low response rates, low total number of responses, and large ranges in responses, all of which may undermine the accuracy of the RUC's recommendations. For example, while GAO found that the median number of responses to surveys for payment year 2015 was 52, the median response rate was only 2.2 percent, and 23 of the 231 surveys had under 30 respondents.
CMS's process for establishing relative values embodies several elements that cast doubt on whether it can ensure accurate Medicare payment rates and a transparent process. First, although CMS officials stated that CMS complies with the statutory requirement to review all Medicare services every 5 years, the agency does not maintain a database to track when a service was last valued or have a documented standardized process for prioritizing its reviews. Second, CMS's process is not fully transparent because the agency does not publish the potentially misvalued services identified by the RUC in its rulemaking or otherwise, and thus stakeholders are unaware that these services will be reviewed and payment rates for these services may change. Third, CMS provides some information about its process in its rulemaking, but does not document the methods used to review specific RUC recommendations. For example, CMS does not document what resources were considered during its review of the RUC's recommendations for specific services. Finally, the evidence suggests—and CMS officials acknowledge—that the agency relies heavily on RUC recommendations when establishing relative values. For example, GAO found that, in the majority of cases, CMS accepts the RUC's recommendations and participation by other stakeholders is limited. Given the process and data-related weaknesses associated with the RUC's recommendations, such heavy reliance on the RUC could result in inaccurate Medicare payment rates. CMS has begun to research ways to develop an approach for validating RUC recommendations, but does not yet have a specific plan for doing so. In addition, CMS does not yet have a plan for how it will use funds Congress appropriated for the collection and use of data on physicians' services or address the other data challenges GAO identified.

What GAO Recommends

CMS should better document its process for establishing relative values and develop a process to inform the public of potentially misvalued services identified by the RUC. CMS should also develop a plan for using funds appropriated for the collection and use of information on physicians' services in the determination of relative values. HHS agreed with two of GAO's recommendations, but disagreed with using rulemaking to inform the public of RUC-identified services. GAO clarified that the recommendation is not limited to rulemaking.