Getting the price right: Medicare payment rates for cardiovascular services

Health Affairs

Volumn 26, Issue 1, 2007, Pages 124-136

  Hayes, Kevin J ^a   Pettengill, Julian ^a   Stensland, Jeffrey ^a  

^a Medicare Payment Advisory Commission   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CARDIOVASCULAR DISEASE; CORONARY CARE UNIT; DIAGNOSIS RELATED GROUP; ECONOMICS; FEE; GOVERNMENT; HEALTH ECONOMICS; HUMAN; MANAGEMENT; MEDICARE; ORGANIZATION AND MANAGEMENT; PROSPECTIVE PAYMENT; REVIEW; UNITED STATES;

CARDIAC CARE FACILITIES; CARDIOVASCULAR DISEASES; DIAGNOSIS-RELATED GROUPS; ECONOMICS, HOSPITAL; ECONOMICS, MEDICAL; FEE SCHEDULES; HUMANS; MEDICARE; OWNERSHIP; POLICY MAKING; PROSPECTIVE PAYMENT SYSTEM; UNITED STATES; UNITED STATES CENTERS FOR MEDICARE AND MEDICAID SERVICES;

EID: 33846665311     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.26.1.124     Document Type: Review

References (24)

1. J.S. Skinner, D.O. Staiger, and E.S. Fisher, "Is Technological Change in Medicine Always Worth It? The Case of Acute Myocardial Infarction," Health Affairs 25 (2006): w34-w47 (published online 7 February 2006; 10.1377/hlthaff.25.w34).
2. Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy (Washington: MedPAC, 2006), 133-150.
3. In a survey conducted in 1998, the American Medical Association found that 63 percent of respondents were using Medicare's resource-based relative value scale. See P.E. Gallagher, ed., Medicare RBRVS: The Physicians' Guide (Chicago: American Medical Association, 2000).
4. National Center for Health Statistics, Health, United States, 2004, with Chartbook on Trends in the Health of Americans (Washington: U.S. Government Printing Office, 2004), 159.
5. D.M. Cutler, Your Money or Your Life: Strong Medicine for America's Health Care System (New York: Oxford University Press, 2004), 47-60;
6. and J.K. Iglehart, "The New Era of Medical Imaging - Progress and Pitfalls," New England Journal of Medicine 354, no. 26 (2006): 2822-2828.
7. MedPAC, Report to the Congress: Medicare Payment Policy (Washington: MedPAC, 2003), 153-173;
8. and P. Cunningham, A. Staiti, and P.B. Ginsburg, "Physician Acceptance of New Medicare Patients Stabilizes in 2004-05," January 2006, http://hschange.org/CONTENT/811/811.pdf (accessed 5 July 2006).
9. MedPAC, Report to the Congress: Physician-Owned Specialty Hospitals (Washington: MedPAC, 2005).
10. Authors' analysis of 1996 and 2004 MEDPAR claims data from the Centers for Medicare and Medicaid Services.
11. G. Taylor et al., Fifth Annual Nonprofit Hospital Survey (New York: Banc of America Securities, 2006).
12. MedPAC, Physician-Owned Specialty Hospitals Revisited (Washington: MedPAC, 2006).
13. Ibid.
14. The APR-DRG payment-to-cost ratio computations are based on the assumption that department-level cost-to-charge ratios can be used to approximate the cost-to-charge ratios of individual services within the department. To the extent that a particular service within a department has a higher markup than the department average, our estimates of relative profitability for cases that use that service will be too low because costs will be overstated. If the markup is lower than average, our estimate of relative profitability will be too high. Formost cases, the errors for individual services will be small and largely offsetting. Given that the hospital-level analysis (Exhibit 3) is perfectly consistent with our APR-DRG cost-accounting analysis, we are confident that cardiac surgery cases on average have above-average profitability.
15. Centers for Medicare and Medicaid Services, "Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2007 Rates," Federal Register 71, no. 160 (2006): 47870-48351.
16. During the five-year review for 2007, about 700 services were reviewed.
17. For more information on the RUC, see AMA, AMA/Specialty Society RVS Update Process (Chicago: AMA, 2005).
18. We developed these estimates with methods used in MedPAC's 2006 Report to the Congress: Medicare Payment Policy. We defined cardiovascular services with the Berenson-Eggers Type of Service (BETOS) service classification scheme maintained by the CMS. For more information, see CMS, "Berenson-Eggers Type of Service," 30 January 2006, http://www.cms.hhs.gov/HCPCSReleaseCodeSets/20_BETOS.asp (accessed 13 October 2006). To select cardiovascular services, we selected all billing codes separately payable under the physician fee schedule in BETOS categories described as cardiovascular.
19. MedPAC, Report to the Congress: Medicare Payment Policy (2006), 139-140.
20. Through 2006, the CMS's method for pricing equipment applied only to medical equipment not used for imaging. For 2007, the proposal is to extend use of the method to include imaging equipment as part of overall changes to payments for practice expense. See CMS, "Medicare Program; Five-Year Review of Work Relative Value Units under the Physician Fee Schedule and Proposed Changes to the Practice Expense Methodology," Federal Register 71, no. 125 (2006): 37249.
21. CMS, "License for Use of Current Procedural Terminology, Fourth Edition," http://www.cms.hhs.gov/apps/ama/license.asp?file=/ physicianfeesched/downloads/cpepfiles022306.zip (accessed 11 October 2006).
22. The specifics of the CMS's assumption are as follows: Equipment is used 50 percent of the time that physician practices are open for business, and practices are open fifty hours per week and fifty weeks per year. Together, these assumptions equate to use of equipment for an average of twenty-four hours per week. See Health Care Financing Administration, "Medicare Program: Revisions to Payment Policies under the Physician Fee Schedule, Other Part B Payment Policies, and Establishment of the Clinical Psychologist Fee Schedule for Calendar Year 1998," Federal Register 62, no. 117 (1997): 33164.
23. MedPAC, Report to the Congress: Increasing the Value of Medicare (Washington: MedPAC, 2006), 94.
24. Glenn M. Hackbarth, Medicare Payment Advisory Commission, Comment letter on the CMS's proposed rule entitled "Medicare Program; Five-Year Review of Work Relative Value Units under the Physician Fee Schedule and Proposed Changes to the Practice Expense Methodology," 17 August 2006, http://www.medpac. gov/publications/other_reports/Aug06_MedPAC_PracticeExpense_RVU_Comment.pdf? CFID=1899168&CFTOKEN=77134860 (accessed 11 October 2006).