Do You Know How RUC Is Affecting Your Income?

Right now the RUC is in the midst of a critical five-year review of codes that could result in changes in how much psychiatrists and other physicians are paid by Medicare (and by extension by some private insurers). As part of this process, APA has been conducting a survey of “relative work values”—the component of the Medicare payment formula that places a value on procedures performed by clinicians, based on the intensity of work involved in those procedures compared with other medical procedures (see APA Urges Psychiatric Code Changes).

So what exactly does the RUC do? To answer that, a little history is in order.

Prior to 1989, the government paid physicians in the Medicare program according to their “usual and customary” fees. But to the federal government, working with fixed tax dollars, a usual and customary fee was bound to be an arbitrary one, subject to manipulation and unrelated to the “rational” variables that typically determine price in a market system.

So that year the government adopted the Resource-Based Relative Value Scale (RBRVS), developed by Harvard economist William Hsaio, Ph.D., the goal of which was to assign something approximating a rational value to the services physicians provide to their patients.

At the heart of the formula are two principles—it is resource based, meaning it aims to approximate the resources used by a physician to perform any procedure; and it aims for relative equality across procedures that involve similar skills, techniques, and resources.

As Burd explained, “While it may not be possible to derive an absolute value for what a doctor does, you can establish a relative value—that is to say, this procedure is more difficult than that one.”

And so the Relative Value Update Committee, as its name suggests, is largely concerned with assessing the relative value of services and procedures—this service is more time consuming, resource intensive, and difficult than that one.

Burd emphasizes that his role as a “representative” from APA is to act as an impartial arbiter of the relative value of services and procedures offered by specialists of all kinds; he serves on the RUC as a physician and does not advocate for psychiatry.

That obligation puts all of the RUC's representatives in an interesting position, since Medicare works with a fixed dollar amount. “As representatives, we try to make sure that appropriate values are assigned to reflect the relative difficulty of services and procedures,” he said. “But we are all aware that if the RUC recommends an increase in a value for a service provided by one specialty, it necessarily incurs a decrease somewhere else.”

However, Burd noted that APA's “advisors” to the RUC—Dewan and Schmidt—are able to act as advocates for the specialty offering testimony specific to recommendations put forward from psychiatry. The balance of specialty representatives and advisors has resulted in a RUC whose recommendations to the government carry considerable weight.

“CMS does not have to agree to our recommendations,” Burd said. “But the RUC has a 95 percent acceptance rate.”