Medical savings accounts: lessons from Singapore.
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Cost Sharing↗
Biomedical subjects
W C Hsiao
Publications and source records attributed to W C Hsiao.
Economies of scope in physicians' work: the performance of multiple surgery.
While the fees for the large majority of physicians' services in the new Medicare Fee Schedule (MFS) are derived directly from studies of the resource costs involved, payments for one class of procedures, multiple surgery, are based instead on existing policies and conventions. Using surveys of physicians, we measured the work and time involved in performing 146 multiple surgeries. We found economies of scope exist in performing these services, particularly during the preoperative and postoperative periods. We also found some differences in economies across procedures. Based on our findings, we propose payment policies for multiple surgery.
Fee Schedules↗
Therapeutic lamellar keratectomy in the management of nontuberculous Mycobacterium keratitis refractory to medical treatments.
Nontuberculous Mycobacterium keratitis is characterized by its indolent course and poor response to antibiotic drugs. Between November 1989 and September 1993, 10 eyes diagnosed to have nontuberculous Mycobacterium keratitis underwent therapeutic lamellar keratectomy in conjunction with fortified topical medications. Nine operated eyes (90%) recovered with a shortened course and healed with an inactive scar. Six patients (60%) achieved a visual acuity of 20/40 or better postoperatively. For recalcitrant nontuberculous Mycobacterium keratitis, therapeutic lamellar keratectomy is highly recommendable for patients with intractable paracentral or peripheral ulcer, for uncompliant patients, for patients who cannot tolerate drug-induced ocular toxicity, or when penetrating keratoplasty is to be reserved for late rehabilitation of the eye.
Adult↗
An overview of the development and refinement of the Resource-Based Relative Value Scale. The foundation for reform of U.S. physician payment.
Responding to distortions in payment rates between services, policymakers in the United States have sought a systematic and rational foundation for determining physician fees. One such approach to paying physicians, the Resource-Based Relative Value Scale (RBRVS), determines fees by measuring the relative resource costs required to produce them. On January 1, 1992, the Medicare program implemented a new payment system for physician services based on the RBRVS. This article provides a brief history of the RBRVS and a summary of the methods and data used to derive it. This overview represents the culmination of 6 years of research by the Harvard RBRVS study team and provides a road map to the study's concepts and definitions. The overview also provides a context for the articles in this issue that describe five major studies undertaken since 1988. The study's overall results are presented in the last article of the series.
Data Collection↗
Results and impacts of the Resource-Based Relative Value Scale.
On January 1, 1992, the Health Care Financing Administration implemented the 1989 legislation reforming the Medicare payment system for physicians' services. The cornerstone of the new payment reform is the Medicare Fee Schedule (MFS), which is based on the Resource-Based Relative Value Scale (RBRVS). In this article, the major findings of the RBRVS study and its impacts on physician payment are summarized. The authors report the impacts of a RBRVS-based fee schedule on Medicare fees and physicians' income if it were fully implemented, assuming budget neutrality and absence of volume changes in services. Under this scenario, fees for evaluation and management services increase by 15% to 45%, while fees for invasive services and diagnostic tests decrease by 20% to 30%. These changes increase the Medicare income of family practitioners by more than 30% while decreasing the income of most surgical specialties by 10% to 20%.
Economics, Medical↗
Comparing health care systems: what nations can learn from one another.
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Canada↗
Refinement and expansion of the Harvard Resource-Based Relative Value Scale: the second phase.
The Harvard resource-based relative value scale (RBRVS) for physician services has assumed a critical role in physician payment reform. We have demonstrated that the relative resource costs of providing physician services can be defined and measured in a rational and systematic way and that the results are reliable and valid. Consequently, the RBRVS is a viable basis for national payment policy and could be used for establishing a national fee schedule for physician services or to identify "mispriced" physician procedures. Since the release of the final report of the first phase of the Harvard RBRVS study in September of 1988, there has been extensive review, discussion, and criticism of the RBRVS. Dr. Laurence F. McMahon, Jr., in the accompanying article, provides a further critique of our research. In this paper, we review the RBRVS study and results and respond to the major criticisms that have been raised by Dr. McMahon and others. We then describe the tasks we are currently undertaking to expand and validate our research and address the important criticisms and limitations.
Data Interpretation, Statistical↗
Will this man's formula revolutionize medicine?. Interview by Michele Robinson.
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Economics, Medical↗
Resource-based relative values. An overview.
Studies have been conducted over the past decade to develop a Resource-Based Relative Value Scale (RBRVS) for physicians' services. Policymakers view an RBRVS as a potential tool to pay physicians. The Physician Payment Review Commission, under a congressional mandate, has endorsed the general concept of a fee schedule based on resource costs for physician payment under Medicare. In this overview article, we present the policy context in which the RBRVS may play a role and describe the approach taken to develop this scale, specifically consultation with clinicians, researchers, and insurers and data gathering, including a national survey of physicians. We discuss underlying elements that are necessary to constructing an RBRVS, each of which is described more fully in subsequent articles: measuring the work (intraservice work) of performing medical services and procedures, estimating preservice and postservice work, comparing work across specialties, measuring practice costs, extrapolating from surveyed services, and establishing an RBRVS for evaluation/management services and for invasive procedures. Overall results are presented in a companion article.
Costs and Cost Analysis↗
Extrapolation of measures of work for surveyed services to other services.
A national survey of physicians produced detailed data on the work involved in performing 372 different services. This article describes methods developed to extrapolate the study data to a larger universe of services, defined by the Physicians' Current Procedural Terminology, edition 4. Because data measuring work inputs for nonsurveyed services presently are unavailable, we devised an extrapolation method that makes use of available charge data without building their inherent distortions into the extrapolated scale. To neutralize the effect of these distortions, we used small, homogeneous families of services as the basic units for the extrapolations and assumed that charges are reasonable indicators of relative work within such families. To produce extrapolated work values within each family, we multiplied an estimate of work based on survey data for a benchmark procedure by charge-based ratios that represent the relationships between surveyed and nonsurveyed services. These extrapolations can be used in constructing a Resource-Based Relative Value Scale.
Clinical Laboratory Techniques↗
Results, potential effects, and implementation issues of the Resource-Based Relative Value Scale.
This article presents the overall results of the Resource-Based Relative Value Scale (RBRVS) study. We present resource-based relative values for selected services in each of the 18 specialties we studied. We found that preservice and postservice work represents close to 50% of total work for invasive services and 33% of total work for evaluation/management services. We also found that the work per unit time (a measure of intensity) for invasive services is about three times that of evaluation/management. We developed a simple model and simulated an RBRVS-based fee schedule for the Medicare program under a "budget-neutral" assumption. Results for 30 commonly performed services show that office visit fees for evaluation/management services could rise by 70%, while some surgical fees could drop by 60%. We also simulated what the Medicare outlays would have been in 1986 for categories of medical services under an RBRVS-based fee schedule. We found that total Medicare payments for evaluation/management services would have increased by about 56%. Invasive, imaging, and laboratory services would have decreased by 42%, 30%, and 5%, respectively. We also discuss implementation issues related to an RBRVS-based fee schedule, such as the determination of a monetary conversion factor, practice costs, billing codes, and the need to evaluate the potential impacts of an RBRVS-based payment system on the cost and quality of health care.
Costs and Cost Analysis↗
Measurement and analysis of intraservice work.
The work that physicians perform represents a major resource input to medical services and procedures. In this article we describe the concepts of work and its dimensions, as well as the methods developed to measure them. We also describe the design and results of a national probability survey of physicians in 18 specialties. We present the results--estimated values of work and its dimensions--for selected services. Our findings indicate that physicians can give reliable and valid ratings of work and that we can model this work as a function of four dimensions: time, mental effort and judgment, technical skill and physical effort, and stress. Analyzing the complex functional relationship between work and these four dimensions shows that all four dimensions are important and statistically significant in predicting work. Time is a more important dimension in predicting work for medical specialties than for surgical specialties, with the estimated regression coefficients between .3 and .5 and .2 and .3, respectively. In contrast, technical skill is a more important dimension in predicting work in surgical specialties than for medical specialties, with the estimated regression coefficients between .3 and .5 and .2 and .3, respectively. Finally, we found that an exponential equation of the four dimensions precisely describes total work.
Clinical Competence↗
A method for estimating the preservice and postservice work of physicians' services.
The goal of the Resource-Based Relative Value Scale is to measure the resource costs of physicians' services, or, more centrally, the physicians' total work. This article describes the estimation of relative values for physicians' work before and after the performance of a service (preservice and postservice work). For methodological and practical reasons, we could not obtain direct ratings of preservice and postservice work except for a few services. We therefore developed a systematic process to estimate preservice and postservice time and rate of work per unit of time. Then time and work per unit of time were multiplied to estimate work. The major finding of our investigation is that preservice and postservice work make up a substantial portion of total work. The typical percentages of total work accounted for by preservice and postservice work range from 26% and 33% for imaging services and evaluation and management services, respectively, to 46% for invasive services performed in a hospital inpatient setting.
Ambulatory Surgical Procedures↗
Cross-specialty linkage of resource-based relative value scales. Linking specialties by services and procedures of equal work.
This article describes methods used to combine into a common scale resource-based relative values from separate specialties. The key to producing a common scale is identifying pairs ("links") of services from different specialties that require approximately equal amounts of intraservice work. We distinguished two kinds of pairs of link services, those judged to be the same and those judged to be equivalent, usually within a narrow category of medical activity. Working with a cross-specialty panel of physicians and with data on time factors from a national survey, we selected sufficient links to connect each specialty to others by at least four links. We then used the weighted least-squares method to locate all the links optimally on a single, common scale. Analyses of the accuracy of this scale showed that the typical disagreement between specialties about where to locate the intraservice work of a given service was only 7%. Other analyses showed that the accuracy of the common scale was not sensitive to different classes of links.
Data Collection↗
Relative cost differences among physicians' specialty practices.
Practice costs, defined as those costs of medical practice that exclude the physician's own time and effort, represent a substantial portion of the resources necessary to perform a service. In this article we describe the development of the practice cost index used in constructing the Resource-Based Relative Value Scale (RBRVS). We derived the practice cost index value for each specialty, using specialty-specific practice costs and gross revenue data. The index values for all other specialties are standardized to the value for general surgery, and these are used to adjust the resource-based relative values for services performed by each specialty; in this way, the RBRVS incorporates practice cost variations. The data used in the construction of the practice cost index are the 1983 Physician Practice Cost and Income Survey data, adjusted to reflect the relative levels of 1986 professional liability insurance. Our findings show that among most specialties, the range of relative difference in practice costs as a percentage of gross revenue is approximately 15%. Four specialties fall outside this range: pathology, psychiatry, rheumatology, and orthopedic surgery. We discuss problems with the available data on practice costs as these relate to their use in the RBRVS and conceptual issues in applying practice costs to the construction of the RBRVS.
Costs and Cost Analysis↗
Evaluation and management services in the Resource-Based Relative Value Scale.
Evaluation and management (E/M) services, which include making diagnoses, counseling and educating, developing strategies of care, and following up on treatment, are common to all medical specialties. Surveys of a variety of specialists using the magnitude-estimation method show that physicians agree closely in rating the work of particular E/M services. Regardless of the type of E/M service, the site at which it is performed, or the specialty performing it, work per unit of time varies only slightly. Comparison of work and time for services to which experts assigned billing codes in our consultative process indicates, however, that there may be large differences in the way different specialties use these billing codes. In some instances, work entailed by some of the E/M billing codes within specialties also appears to vary substantially. If empirical studies of physicians' coding and billing practices support our findings, possible responses might include (1) developing specialty-specific resource-based relative values for E/M services and (2) redefining the Physicians' Current Procedural Terminology, edition 4, codes for these services in terms that include time specifications.
Economics, Medical↗
Resource-based relative values for invasive procedures performed by eight surgical specialties.
We surveyed approximately 850 physicians in eight surgical specialties to investigate physicians' work in performing invasive services. Building on our analysis of physician work, we developed a relative value scale of physicians' services based on resource costs. First, we found that physician charges are not set in proportion to the resources required to perform a given procedure: there is a threefold variation, across hospital-based invasive procedures, in the ratio of charges to resource-based relative values. Second, for most procedures, the preoperative and postoperative periods represent 60% to 75% of a physician's total service time, but only 35% to 50% of the total service work. Lastly, intraoperative work per unit of time varies greatly. Work per minute for invasive procedures is two to three times that of medical office visits and is strikingly greater for some specialties. The Resource-Based Relative Value Scale, at a minimum, represents a useful tool for payers to identify procedures with potentially aberrant charges and also offers unique insights into the nature of physicians' work.
Ambulatory Surgical Procedures↗
Estimating physicians' work for a resource-based relative-value scale.
We have developed a resource-based relative-value scale as an alternative to the system of payment based on charges for physicians' services. Resource inputs by physicians include (1) total work input performed by the physician for each service; (2) practice costs, including malpractice premiums; and (3) the cost of specialty training. These factors were combined to produce a relative-value scale denominated in nonmonetary units. We describe here the process by which the physician's work was defined and estimated. The study asked two questions: What is the physician's work for each service performed? and Can work be estimated reliably and validly? We concluded that a physician's work has four major dimensions: time, mental effort and judgment, technical skill and physical effort, and psychological stress. We found that physicians can rate the relative amount of work of the services within their specialty directly, taking into account all the dimensions of work. Moreover, these ratings are highly reproducible, consistent, and therefore probably valid.
Economics, Medical↗