Practice Expense Data Collection and Methodology: Phase II Final Report.

Each year, Medicare allocates tens of billions of dollars for indirect practice expense (PE) across services on the basis of data from the Physician Practice Information (PPI) Survey, which reflects 2006 expenses. Because these data are not regularly updated, and because there have been significant changes in the U.S. economy and health care system since 2006, there are concerns that continued reliance on PPI Survey data might result in PE payments that do not accurately capture the resources that are typically required to provide services. In this final phase of a study on PE methodology, the authors address how the Centers for Medicare & Medicaid Services (CMS) might improve the methodology used in PE rate-setting, update data that inform PE rates, or both. The authors conclude that this information is best provided by a survey; therefore, they focus on the advantages and disadvantages of survey-based approaches. They also describe the use of a lean model survey instrument, as well as partnering with another agency to collect data. Finally, the authors describe a virtual town hall meeting held in June 2021 to give stakeholders an opportunity to provide feedback on PE data collection and rate-setting. The system of data and methods that CMS uses to support PE rate-setting is complex; thus, CMS must take into account a number of competing priorities when considering changes to the system. With this in mind, the authors offer a number of near- and longer-term recommendations.

Estimating Surgical Procedure Times Using Anesthesia Billing Data and Operating Room Records.

OBJECTIVE: The median time required to perform a surgical procedure is important in determining payment under Medicare's physician fee schedule. Prior studies have demonstrated that the current methodology of using physician surveys to determine surgical times results in overstated times. To measure surgical times more accurately, we developed and validated a methodology using available data from anesthesia billing data and operating room (OR) records. DATA SOURCES: We estimated surgical times using Medicare 2011 anesthesia claims and New York Statewide Planning and Research Cooperative System 2011 OR times. Estimated times were validated using data from the National Surgical Quality Improvement Program. We compared our time estimates to those used by Medicare in the fee schedule. STUDY DESIGN: We estimate surgical times via piecewise linear median regression models. PRINCIPAL FINDINGS: Using 3.0 million observations of anesthesia and OR times, we estimated surgical time for 921 procedures. Correlation between these time estimates and directly measured surgical time from the validation database was 0.98. Our estimates of surgical time were shorter than the Medicare fee schedule estimates for 78 percent of procedures. CONCLUSIONS: Anesthesia and OR times can be used to measure surgical time and thereby improve the payment for surgical procedures in the Medicare fee schedule.

Ambulatory Surgical Services Provided Under California Workers' Compensation: An Assessment of the Feasibility and Advisability of Expanding Coverage.

The California Department of Industrial Relations asked RAND to examine the feasibility and appropriateness of including procedures that are typically performed only in an inpatient setting on the workers' compensation Official Medical Fee Schedule for ambulatory surgical center facility fees. The authors used interviews, literature review, and data analysis to assemble information on the requirements applicable to ASCs, assess how the criteria that Medicare uses to assess whether procedures can be safely performed in an outpatient setting apply to the workers' compensation patient population, and to examine alternative methods for establishing fee schedule amounts. The study focused on 23 high-volume workers' compensation inpatient procedures with relatively short average lengths of stay. The study finds that most ASCs that are currently eligible for facility fees are equipped to provide services that do not require a one-night stay. However, the data analyses and literature review did not provide strong support for adding any procedures to the fee schedule with the possible exception of procedures related to cervical spinal fusions. Other than instrumentation used in conjunction with spinal fusions, relatively few of the study procedures are being performed in an ambulatory setting on either WC or privately insured patients ages 18-64. The literature suggests that two-level anterior cervical fusions and the use of instrumentation for one- or two-level fusions can be performed safely on an outpatient basis but does not include evidenced-based selection criteria to suggest which patients are appropriate candidates for having the procedures in an outpatient setting.

Implementing a Resource-Based Relative Value Scale Fee Schedule for Physician Services: An Assessment of Policy Options for the California Workers' Compensation Program.

A RAND study used 2011 medical data to examine the impact of implementing a resource-based relative value scale to pay for physician services under the California workers' compensation system. Current allowances under the Official Medical Fee Schedule are approximately 116 percent of Medicare-allowed amounts and, by law, will transition to 120 percent of Medicare over four years. Using Medicare policies to establish the fee-schedule amounts, aggregate allowances are estimated to decrease for four types of service by the end of the transition in 2017: anesthesia (-16.5 percent), surgery (-19.9 percent), radiology (-16.5 percent), and pathology (-29.0 percent). Aggregate allowances for evaluation and management visits are estimated to increase by 39.5 percent. Allowances for services classified as "medicine" in the Current Procedural Terminology codebook will increase by 17.3 percent. In the aggregate, across all services, allowances are projected to increase 11.9 percent. Because most specialties furnish different types of services, the impacts by specialty are generally less than the impacts by type of service.

Does It Cost More to Train Residents or to Replace Them?: A Look at the Costs and Benefits of Operating Graduate Medical Education Programs.

The policy issue underlying this study is whether Medicare support for graduate medical education (GME) should be restructured to differentiate between programs that are less costly or are self-sustaining and those that are more costly to the sponsoring institution and its educational partners. The authors used available literature, interviews with individuals involved in operating GME programs, and analysis of administrative data to explore how the financial impact of operating residency training programs might differ by specialty. The study does not quantify the variation in financial impact, but it provides a framework for examining both the costs and benefits of operating GME programs to the sponsoring institution and its educational partners. It also identifies the major factors that are likely to affect financial performance and influence program offerings and size. Marginal financial impacts are more likely to influence sponsor decisions on changes in GME program size and offerings and help explain why GME program expansions are occurring without additional Medicare funding. If the hospital has service needs, there is a marginal benefit to adding a resident, particularly in the more-lucrative specialty and subspecialty programs, before considering the additional benefits of any Medicare GME-related revenues.

Selection of workers' compensation treatment guidelines: California experience.

OBJECTIVE: Workers' compensation systems increasingly use mandatory treatment guidelines to guide clinicians and for utilization management. This article describes the steps for selecting such guidelines. METHODS: On the basis of experience with the RAND/University of California, Los Angeles project to help California select guidelines, we identified the necessary choices and processes for guideline selection and evaluation. RESULTS: Major steps in guideline selection include: 1) define purpose; 2) assign decision-making authority; 3) decide whether to use existing guidelines or develop new ones; 4) choose whether to use one or multiple existing guidelines; 5) specify clinical topics that guidelines should address; 6) identify and screen guidelines; 7) evaluate guidelines; 8) consider implications of results; 9) select guideline(s); 10) disseminate selection; and 11) assess long-term effectiveness. CONCLUSIONS: Given the many choices required, selecting mandatory workers' compensation guidelines should involve careful planning and a transparent, well-defined process.

Identifying and accommodating statistical outliers when setting prospective payment rates for inpatient rehabilitation facilities.

OBJECTIVE: To demonstrate how a Bayesian outlier accommodation model identifies and accommodates statistical outlier hospitals when developing facility payment adjustments for Medicare's prospective payment system for inpatient rehabilitation care. DATA SOURCES/STUDY SETTING: Administrative data on costs and facility characteristics of inpatient rehabilitation facilities (IRFs) for calendar years 1998 and 1999. STUDY DESIGN: Compare standard linear regression and the Bayesian outlier accommodation model for developing facility payment adjustors for a prospective payment system. DATA COLLECTION: Variables describing facility average cost per case and facility characteristics were derived from several administrative data sources. PRINCIPAL FINDINGS: Evidence was found of non-normality of regression errors in the data used to develop facility payment adjustments for the inpatient rehabilitation facilities prospective payment system (IRF PPS). The Bayesian outlier accommodation model is shown to be appropriate for these data, but the model is largely consistent with the standard linear regression used in the development of the IRF PPS payment adjustors. CONCLUSIONS: The Bayesian outlier accommodation model is more robust to statistical outlier IRFs than standard linear regression for developing facility payment adjustments. It also allows for easy interpretation of model parameters, making it a viable policy alternative to standard regression in setting payment rates.