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Published 6/1/2011
R. Dale Blasier, MD, MBA; Matthew Twetten, MA

Understanding the RUC

The AMA’s multispecialty Relative Value Update Committee is under scrutiny

For a 26-person advisory body variously described as “secretive,” “little known,” and “hardly ever heard of,” the American Medical Association’s (AMA) multispecialty Relative-Value Update Committee (RUC) has been receiving a great deal of attention in recent months.

Recently, the Wall Street Journal, The New York Times, Kaiser Health News, and the New England Journal of Medicine have featured the RUC and its history and have criticized its process. The RUC has also been criticized in Congress and has been singled out in a bill introduced in the U.S. House of Representatives by Rep. Jim McDermott, MD (D-Wash.), which seeks to add a new, second level of bureaucratic review on the relative value of physician services.

As one of 23 medical specialty societies with a permanent seat on the RUC, the AAOS has been a part of the RUC since its inception in 1991. The AAOS has actively participated in the valuation of thousands of musculoskeletal procedure codes. Although the process can be tedious, and the Centers for Medicare & Medicaid Services (CMS) does not always accept the RUC’s recommendations, the process does provide a fair review, consistent across all specialties and driven by physician input. These points are too often overlooked by critics of the RUC.

All medical specialty societies are treated equally before the RUC, and the RUC panel consists entirely of practicing physicians. The AAOS believes strongly that practicing physicians are better able to judge the resources required to perform particular physician services than economists or policy makers.

The fact that the RUC is only an advisory body to CMS is another essential point that is frequently overlooked. CMS is the ultimate arbiter of the relative values that are published annually in the Medicare Physician Fee Schedule and form the basis for reimbursement rates from Medicare and many other nonfederal government payers.

History of the RUC
The AMA established the RUC in response to a request from the Health Care Finance Administration (HCFA), the predecessor to CMS. HCFA wanted assistance in establishing a Resource-Based Relative Value Scale (RBRVS), which would be used to determine specific payment rates for specific physician procedures.

The RBRVS replaced the previous usual-and-customary system for pricing physician services and was designed to be based on the actual amount of resources necessary to provide a particular physician service. At the time, the two resources studied for each service were physician work and physician practice expense. CMS later added medical malpractice as a third component.

The RUC, working with researchers from Harvard University, established the first RBRVS for the 1992 Medicare Physician Fee Schedule. Since 1992, the RUC has had two purposes: to relatively value new procedures added to the Medicare Fee Schedule and to regularly review relative value units (RVUs) for established procedures. It is the RUC’s second function that has attracted the most attention and criticism.

Is it biased?
Criticism of the RUC centers on a perception that the RUC is biased in favor of specialists (procedural physicians) and against primary care physicians (cognitive physicians), leading to the undervaluation of services performed by primary care physicians. These Evaluation and Management (E/M) services describe patient visits and consultations in the office, outpatient, and hospital facilities.

Primary care advocates contend that societies representing specialists are overrepresented on the RUC and that primary care specialties have too few voting members relative to the proportion of Medicare-funded services they provide. However, this contention ignores the fact that all specialists are major users of E/M codes. Surgical specialists, including orthopaedists and general surgeons, derive 40 percent or more of their income from E/M visits. It also ignores the fact that the relative and actual values of E/M codes have been significantly increased by CMS, at the RUC’s recommendation, twice in the last 15 years.

Current RVUs for E/M services are at least 30 percent higher than in 1995. Only a handful of the thousands of musculoskeletal codes have seen similar increases. Ironically, increases in RVUs for musculoskeletal procedures are often the result of increases in the value of E/M services that are bundled into payments for surgical procedures. Specifically, the value of surgical procedure codes with 10- or 90-day global periods (which include E/M visits) increase each time the RVUs for E/M services increase.

Other criticism has focused on the RUC’s review of established values and a perception of conflict-of-interest on the part of all RUC participants (primary care included). In 2007, the Medicare Payment Advisory Commission (MedPAC), an independent advisory commission to the U.S. Congress, issued a report saying that, in the ongoing review of existing codes, the RUC rarely recommended new lower values and often recommended new increased values.

MedPAC and others believed that the resources required to perform an established procedure (particularly physician time) would likely decrease over time. But no evidence exists indicating that physicians take less time now to perform a given procedure than they did when it was first valued.

It is also true that time efficiencies enjoyed by experienced providers would not likely extend to newer, less experienced providers performing the same procedure. MedPAC’s assumption that the typical resources required to perform a procedure would decrease over time, therefore, does not make sense.

MedPAC also overlooks the concept of budget neutrality. According to CMS’s budget neutrality policy, if the value of a code (or several codes) increases, CMS is not required to pay out more money because the value of the increase is offset by decreasing the RVUs of other codes. Even if code values increase, there is no financial impact for CMS.

An inherent conflict?
According to some critics, RUC members and those who present before the RUC have inherent conflicts of interests that should preclude them from valuing procedures. The contention is that presenters and deliberators who themselves perform these procedures will be biased to maximize the value of a given procedure.

This assumes, however, that no mechanism to enforce rational valuation of services exists when in fact, the RUC and CMS do provide a powerful and incontrovertible enforcement mechanism. A two-thirds vote is required to pass any recommendation, and no single specialty has that much representation on the RUC panel. Therefore, no single specialty is able to unilaterally maximize RVUs for its own procedures.

Importantly, recommendations made to the RUC must be based on survey data. The survey data represent a range of possible recommendations, and the RUC has never presented a RVU recommendation that ignores provider surveys and substitutes the whim of a specialty society. Furthermore, no member of the RUC panel may comment on procedures performed by his or her own specialty. Finally, because the RBRVS is ultimately a relative value scale, any increases or decreases to one procedure produce the same effect on other procedures.

AAOS participation
The AAOS will continue to participate fully in the RUC process and to support the RUC in its efforts to bring fairness and balance to the Medicare physician fee schedule. The AAOS opposes efforts by Congress and others to substitute the judgment of nonphysicians in determining the appropriate relative value of physician services. Furthermore, the AAOS believes that the RUC will continue to play an important role in providing input to CMS on proper RVUs even in the event that the Medicare Fee-For-Service payment model is replaced or integrated into episode-based payments. Therefore, any speculation about the death of the RUC is, to paraphrase Mark Twain, greatly exaggerated.

R. Dale Blasier, MD, MBA, is the AAOS RUC panel member. Matthew Twetten, MA, is the AAOS senior manager of regulatory, quality, and medical affairs and the AAOS staff liaison to the RUC.