A. Amount reflects total overpayment or underpayment between 2011 and 2015. B. Percentage reflects total overpayment or underpayment amount relative to total Medicare reimbursement between 2011 and 2015. Analysis was restricted to procedures performed by otolaryngologists. Positive amounts signify overpayment and negative amounts signify underpayment.
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Rathi VK, Miller AL, Bergmark RW, Abt NB, Varvares MA. Valuation of Commonly Performed Head and Neck Surgical Procedures in the Medicare Physician Fee Schedule. JAMA Otolaryngol Head Neck Surg. 2019;145(9):866–868. doi:10.1001/jamaoto.2019.1943
The Medicare Physician Fee Schedule (PFS) is widely used by public and private payers to determine clinician reimbursement. The Centers for Medicare & Medicaid Services (CMS) specifies payment rates under the PFS based on relative value units, which account for the resources necessary to provide services, including clinician work, practice overhead, and malpractice expense.1 The number of relative value units allocated for clinician work primarily depends on the amount of time required to provide each service.2 To understand time requirements, CMS relies on the Relative Value Scale Update Committee (RUC) of the American Medical Association.
The RUC has faced criticism for estimating time requirements based on small physician surveys.2 Recent empirical work has demonstrated that biased data from these surveys may lead CMS to overcompensate certain surgical specialties (eg, orthopedics) and undercompensate others (eg, neurosurgery).2 Little is known about the potential impact on otolaryngology. We therefore sought to examine the accuracy of PFS valuations of commonly performed head and neck surgical procedures.
We performed a secondary subgroup analysis of published data on the accuracy of valuations of surgical procedures in the Medicare PFS.2 These data included a list of 98 procedures that were both among the most commonly performed in the National Surgical Quality Improvement Program (NSQIP) database and subject to RUC review between 2005 and 2015.2 We identified all head and neck surgical procedures in this list, and extracted the intraservice (ie, incision-to-closure) times recommended by RUC and contemporaneous2 mean intraservice times derived from analysis of the NSQIP database; CMS adopted intraservice times recommended by RUC for all identified procedures.3,4 Review by the Partners Human Research Committee was not necessary because this study analyzed publicly available data.
Using previously described methods,2 we calculated actual otolaryngologist work revenue for each of these procedures between 2011 and 2015 using Medicare Physician/Supplier Procedure summary data.5 We then estimated the counterfactual2 amount of otolaryngologist work revenue that would have been generated for each of these procedures if CMS had adopted more accurate (ie, contemporaneous mean NSQIP) intraservice times. This estimation methodology2 assumes that work intensity and same-day preservice and postservice times3 remain constant as intraservice times change. We compared actual and counterfactual work revenue at both the specialty and procedural level.
We identified 5 head and neck surgical procedures that were both among the most commonly performed in the NSQIP database and subject to RUC review between 2005 and 2015 (Table): modified radical neck dissection (MRND), superficial parotidectomy with nerve dissection, hemithyroidectomy, total thyroidectomy, and parathyroid exploration with or without parathyroidectomy (PE). The proportion of NSQIP mean intraservice time to RUC-recommended/CMS-adopted intraservice time ranged between 76.2% (PE) and 120.7% (MRND). Between 2011 and 2015, the net difference between actual and estimated counterfactual otolaryngologist work revenue for all 5 procedures was −$1.0 million (of $80 million in total revenue; −1.2%). There were substantial differences between actual and estimated counterfactual otolaryngologist work revenue at the procedure level (Figure), suggesting underpayment for MRND (−$3.5 million; −12.7% relative difference) and overpayment for total thyroidectomy ($1.3 million; 10.6% relative difference) and PE ($1.7 million; 12.3% relative difference).
Our findings suggest that the Medicare PFS overall neither overcompensated or undercompensated otolaryngologists for commonly performed head and neck surgical procedures on the basis of time. However, analysis at the procedure level suggests that CMS should revise the PFS to ensure sufficient time-based compensation for surgeons performing MRND. Surgeons treating patients with head and neck cancer may already be disadvantaged under alternative payment models such as the Merit-Based Incentive Payment System, which often lack adequate methods of risk adjustment.6 A data-driven increase in compensation for this procedure may help mitigate such financial uncertainty for surgeons serving this complex and vulnerable patient population.
To offset higher Medicare expenditures on MRND, the RUC and CMS could additionally explore whether PFS amendments are indicated to correct overpayment for total thyroidectomy and PE procedures. However, CMS should account for the ongoing adoption of intraoperative nerve monitoring (which may increase surgical time requirements) before reducing reimbursement for these procedures.
Our study has limitations. Given that preservice and postservice time determinations for MRND were not publicly available, we may have misestimated the effect of intraservice time inaccuracy on otolaryngologist work revenue for this procedure; nonetheless, the potential error introduced by assuming similar preservice (eg, positioning and scrubbing) and postservice time to other common head and neck procedures is likely modest.
Corresponding Author: Vinay K. Rathi, MD, Mass Eye & Ear Infirmary, 243 Charles St, Boston, MA, 02114 (firstname.lastname@example.org).
Accepted for Publication: June 4, 2019.
Published Online: July 25, 2019. doi:10.1001/jamaoto.2019.1943
Author Contributions: Dr Rathi had full access to all the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis.
Study concept and design: Rathi, Bergmark, Abt, Varvares.
Acquisition, analysis, or interpretation of data: Rathi, Miller, Bergmark, Abt.
Drafting of the manuscript: Rathi.
Critical revision of the manuscript for important intellectual content: All authors.
Statistical analysis: Rathi, Miller, Abt.
Administrative, technical, or material support: Abt.
Study supervision: Bergmark, Varvares.
Conflict of Interest Disclosures: Dr Bergmark reported grants from the American Board of Medical Specialties and funding from Department of Surgery at Brigham and Women's Hospital outside the submitted work. No other disclosures were reported.
Additional Contributions: We thank Dr David C. Chan, MD, PhD, Center for Health Policy–Center for Primary Care and Outcomes Research, Stanford University School of Medicine, for permitting secondary analysis of the previously published data and providing feedback on an earlier version of the manuscript. He was not compensated.