June 2004 Bulletin

By Daniel H. Sung, JD

Medicare five-year review begins soon

AAOS needs your help to ensure adequate reimbursements

The Medicare five-year review of relative value units (RVU) is an important process that examines the adequacy and relativity of payment rates under the Medicare physician fee schedule. The AAOS is an advocate for all of orthopaedics in this process, but in order to be effective, it will need your help over the next year.


In 1992, the Centers for Medicare and Medicaid Services (CMS) established a fee schedule for Medicare that standardized payments to physicians using a resource-based relative value scale (RBRVS). Under RBRVS, every medical service is assigned an RVU that reflects the relative costs of resources required to provide that service. CMS updates the Medicare physician fee schedule on an annual basis.

To ensure that organized medicine would have input into the annual update process of the Medicare physician fee schedule, the American Medical Association and the national medical specialty societies formed the RVS

Update Committee (RUC). The RUC’s primary mission is to provide RVU recommendations to CMS for new or revised services in the Medicare physician fee schedule.

Over the past decade, the RUC has submitted more than 3,000 RVU recommendations to CMS through the annual update, and CMS has accepted more than 90 percent of these recommendations.

In addition to annual updates to the Medicare fee schedule, CMS and the RUC conduct a comprehensive review of RVUs every five years and make any needed adjustments to the fee schedule. The five-year review process presents an opportunity to improve the accuracy and relativity of the RVUs listed in the fee schedule because it gives medical specialty societies the opportunity to identify undervalued services within the Medicare fee schedule.

At the same time, the five-year review also provides Medicare with the opportunity to identify and adjust overvalued services within the Medicare fee schedule. It is important to note that the five-year review process is the only time that specialty societies can make recommendations to CMS to increase RVUs for existing services listed in the Medicare fee schedule.

Since the inception of RBRVS, there have been two five-year review cycles. In 1997, CMS and the RUC evaluated more than 1,000 services and procedures in the fee schedule. In 2002, more than 800 medical services were evaluated. In both cycles, the AAOS was able to increase the RVUs for a number of musculoskeletal procedures.

A new cycle starts

The AAOS has already begun preparing for the next five-year review, which is scheduled to begin in November 2004 and end in January 2007. The AAOS Health Care Financing and CPT and ICD Coding Committees are currently identifying undervalued musculoskeletal services within the fee schedule. They are also examining musculoskeletal services that may be targeted for review by CMS as overvalued services.

Over the course of the next year, AAOS members will be asked to help in collecting data on musculoskeletal procedures commonly performed by orthopaedic surgeons through a series of RUC five-year review surveys. These surveys look for information on how long it takes to perform a procedure and how many postoperative visits (both hospital and office) are associated with a procedure. Some surveys may ask you to compare the intensity and difficulty of two procedures in relation to one another.

Your data makes a difference

The data collected from these surveys will be used to develop recommendations that defend Medicare reimbursement rates for musculoskeletal procedures. If you receive a survey, it is vitally important for you to complete it because Medicare reimbursement rates for the surveyed procedures might decrease if the AAOS cannot collect sufficient data.

Daniel H. Sung, JD, is a policy analyst in the AAOS department of socioeconomic and state society affairs.

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