October 1996 Bulletin

HCFA may boost work values for 40 codes

Academy urges changes for misvalued orthopaedic procedures

Later this fall, the Health Care Financing Administration (HCFA) will publish the Final Rule on the five-year review of the resource-based relative value scale (RBRVS) which is expected to include work value increases for 40 orthopaedic codes.

This will mark the end of the first five-year review of the RBRVS, mandated by Congress when the RBRVS was introduced in 1992 as the Medicare physician payment system.

In the December 1994 Federal Register, HCFA solicited comments on all RBRVS work values. More than 1,100 comments were received from medical specialty societies, carrier medical directors and others. HCFA forwarded 1,118 comments to the American Medical Association/Specialty Society RVS Update Committee (RUC) for review and recommendations. The RUC then directed the specialty societies to conduct mail surveys, using a format approved by the RUC, to gather "compelling evidence" that a particular code was misvalued in the current Medicare RBRVS and should be changed.

The Academy selected 83 of the most egregiously misvalued orthopaedic procedures in the RBRVS to review in the survey process. In order to bring a recommendation before the RUC, at least 30 physicians had to respond to each surveyed code, and the recommended work value had to be at least 10 percent greater or less than the current work value. Nine of the codes surveyed by the Academy did not meet these criteria, and they were subsequently withdrawn from consideration.

After extensive review by a small RUC workgroup, the full RUC recommended work value increases for 40 of the 74 codes presented by the Academy. This 54 percent acceptance rate compared very favorably with that for other specialties. In general, the RUC did not accept recommendations for increased work values when the Academy's survey time data were similar to data in the original Harvard study of work values.

In the May 3, 1996 Federal Register, HCFA published a Notice of Proposed Rulemaking on the five-year review of physician work. HCFA accepted 93 percent of the RUC's work value recommendations, including all of those for orthopaedics.

A major issue brought up in the five-year review was the work values for evaluation and management (E/M) codes. Primary care physicians argued that the physician work involved in these services has increased since the time of the original Harvard study. In addition, the current CPT codes for E/M, published in 1992, were never directly studied by Harvard. The RUC reviewed selected E/M codes and found compelling evidence to recommend an increase in work value for office visits, subsequent hospital visits, and consultations (39 of the 98 E/M codes that Medicare covers).

HCFA, however, reviewed all 98 E/M services, and has proposed to increase the work value for 59 codes, decrease the work value for six codes, and maintain the current work value for 33 codes. On average, work values for E/M services increased 17 percent, which is equivalent to an 8.5 percent increase in total payments. Because E/M services account for such a large percentage of Medicare claims, an increase in their work values has a disproportionate impact compared to increases in the work values of other procedures.

HCFA must operate under a "budget neutrality" assumption-adjustments to physician work relative values may not cause total fee schedule payments to increase more than $20 million in any one year. Based on the five-year review increases, HCFA has calculated a budget neutrality adjustment-a reduction of 7.63 percent across all relative values for work. Because the adjustment applies only to work values, the decrease does not directly correspond to the impact on Medicare payments. Those specialties that account for more E/M services and fewer procedures, such as family practice or internal medicine, will receive larger increases in Medicare payments than most surgical specialties.

HCFA has calculated an overall decrease in Medicare payments for orthopaedic surgery of 1.5 percent from 1996 to 1997. The impact on orthopaedics is less than that for many other surgical specialties, because of the high number of E/M services that orthopaedic surgeons provide.

Despite the slight negative impact, orthopaedics did relatively well in the five-year review. Medicare payments for several of the most important orthopaedic codes will increase in 1997. The impact of the budget neutrality adjustment will likely be lessened somewhat by anticipated updates to the conversion factors for 1997.

Note: The changes in the work values shown will not be official until the Final Rule is published in the Federal Register. As of Sept. 30, 1996, the Final Rule had not been published.

(A list of 40 codes slated for work increases 10 for decreases follows.)

- Reported by Laura Nuechterlein,
policy analyst, Academy's department of health policy

Orthopaedic codes slated for work value increases

CPT DESCRIPTOR 1996
RVW
Interim
RVW
Proposed*
1997 RVW
21610 Costotransversectomy (separate procedure) 8.54 13.66 12.62
23222 Radical resection for tumor, proximal humerus; with prosthetic implant 16.64 22.78 21.04
23395 Muscle transfer, any type, shoulder or upper arm; single 12.42 16.00 14.78
23802 Arthrodesis, shoulder joint; with primary autogenous graft (includes obtaining graft) 14.67 15.62 14.43
25115 Radical excision of bursa, synovia of wrist, or forearm tendon sheaths (e.g. tenosynovitis, fungus, Tbc, or other granulomas, rheumatoid arthritis); flexors 6.26 8.00 7.39
26442 Tenolysis, simple, flexor tendon; palm AND finger, each tendon 6.10 7.45 6.88
27076 Radical resection of tumor or infection; ilium, including acetabulum, both pubic rami, or ischium and acetabulum 17.93 20.23 18.69
27134 Revision of total hip arthroplasty; both components, with or without autograft or allograft 24.54 27.00 24.94
27137 Revision of total hip arthroplasty; acetabular component only, with or without autograft or allograft 18.67 20.00 18.47
27138 Revision of total hip arthroplasty; femoral component only, with or without allograft 18.93 21.00 19.40
27146 Osteotomy, iliac, acetabular or innominate bone; 13.72 16.55 15.29
27147 Osteotomy, iliac, acetabular or innominate bone; with open reduction of hip 17.58 19.70 18.20
27151 Osteotomy, iliac, acetabular or innominate bone; with femoral osteotomy 18.58 21.50 19.86
27156 Osteotomy, iliac, acetabular or innominate bone; with femoral osteotomy and with open reduction of hip 20.16 23.62 21.82
27227 Open treatment of acetabular fracture(s) involving anterior or posterior (one) column, or a fracture running transversely across the acetabulum, with internal fixation 15.39 22.00 20.32
27228 Open treatment of acetabular fracture(s) involving anterior and posterior (two) columns, includes T-fracture and both column fracture with complete articular detachment, or single column or transverse fracture with associated acetabular wall fracture, with internal fixation 17.90 25.59 23.64
27329 Radical resection of tumor (e.g. malignant neoplasm), soft tissue of thigh or knee area 11.74 13.00 12.01
27365 Radical resection of tumor, bone, femur or knee 13.84 15.00 13.86
27397 Transplant, hamstring tendon to patella; multiple 9.33 10.53 9.73
27428 Ligamentous reconstruction (augmentation), knee, intra-articular (open) 10.68 13.28 12.27
27429 Ligamentous reconstruction (augmentation), knee; intra-articular (open) and extra-articular 11.86 14.67 13.55
27454 Osteotomy, multiple, femoral shaft, with realignment on intramedullary rod (Sofield type procedure) 12.26 16.55 15.29
27486 Revision of total knee arthroplasty, with or without allograft; one component 16.63 18.00 16.63
27487 Revision of total knee arthroplasty, with or without allograft; all components 21.69 24.00 22.17
27580 Fusion of knee, any technique 12.26 18.20 16.81
27712 Osteotomy; multiple, with realignment on intramedullary rod (Sofield type procedure) 11.81 13.20 12.19
27724 Repair of nonunion or malunion, tibia; with iliac or other autograft (includes obtaining graft) 12.11 13.88 12.82
27827 Open treatment of fracture of weight bearing articular surface/portion of distal tibia (eg, pilon or tibial plafond), with internal or external fixation; of tibia only 9.90 12.95 11.96
27828 Open treatment of fracture of weight bearing articular surface/portion of distal tibia (eg, pilon or tibial plafond), with internal or external fixation; of both tibia and fibula 12.33 15.12 13.97
27870 Arthrodesis, ankle, any method 10.42 13.00 12.01
27894 Decompression fasciotomy, leg; anterior and/or lateral, and posterior compartment(s), with debridement of nonviable muscle and/or nerve 7.64 9.13 8.43
28116 Osteotomy, excision of tarsal coalition 6.17 7.00 6.47
28261 Capsulotomy, midfoot; with tendon lengthening 8.92 10.95 10.11
28262 Capsulotomy, midfoot; extensive, including posterior talotibial capsulotomy and tendon(s) lengthening as for resistant clubfoot deformity 12.19 15.00 13.86
28309 Osteotomy, metatarsals, multiple, for cavus foot (Swanson type procedure) 8.83 12.00 11.08
28415 Open treatment of calcaneal fracture, with or without internal or external fixation 13.28 15.00 13.86
28615 Open treatment of tarsometatarsal joint dislocation, with or without internal or external fixation 5.12 6.99 6.46
28740 Arthrodesis, midtarsal or tarsometatarsal, single joint 6.20 7.40 6.84
28750 Arthrodesis, great toe; metatarsophalangeal joint 4.77 6.90 6.37
29889 Arthroscopically aided posterior cruciate ligament repair/augmentation or reconstruction 10.76 14.41 13.31

Table contains 40 orthopaedic codes receiving a work value increase during the Medicare five-year review.

* The proposed 1997 Relative Values for Work have been reduced by 7.63 percent to account for budget neutrality.

Note: The changes in the work values shown in the table will not be official until the Final Rule on the resource-based relative value scale is published in the Federal Register. As of Sept. 30, 1996, the Final Rule had not been published.

10 orthopaedic codes slated for work value decreases

The following orthopaedic codes, identified as overvalued, are expected to be included in the Final Rule published in the Federal Register later this fall by the Health Care Financing Administration (HCFA).

The codes are listed, in order, by the CPT code, descriptor, 1994 relative value work (RVW), and recommended RVW: 25065, Biopsy, soft tissue of forearm and/or wrist; superficial, 2.39, 1.94; 26992, Incision, deep, with opening of bone cortex (e.g, for osteomyelitis or bone abscess), pelvis and/or hip joint, 13.97, 12.30; 27040, Biopsy, soft tissue of pelvis and hip area; superficial, 3.26, 2.71;
27090, Removal of hip prosthesis (separate procedure), 12.00, 10.34; 27265, Closed treatment of post hip arthroplasty dislocation; without anesthesia, 5.58, 4.74; 27266, Closed treatment of post hip arthroplasty dislocation; requiring regional or general anesthesia, 7.73, 6.96; 27323, Biopsy, soft tissue of thigh or knee area; superficial, 2.67, 2.23; 27001, Tenotomy, adductor of hip, subcutaneous, open, 7.70, 6.50; 64763, Transection or avulsion of obturator nerve, extrapelvic, with or without adductor tenotomy, 6.72, 6.62; 27006, Tenotomy, abductors of hip, open (separate procedure), 9.50, 9.00.

These procedures were identified as overvalued through a different process than the American Medical Association/Specialty Society RVS Update Committee (RUC) surveys that are described in the article on page 25. A statistical analysis run by HCFA or the AMA RUC found that these procedures were valued too highly, compared to the Harvard study that formed the basis of the original Medicare Fee Schedule, or were statistical outliers in other ways. Eleven orthopaedic procedures were targeted in this way. The Academy agreed that 10 of the procedures were overvalued and recommended decreases in work value. The other code, 27550, was recommended (and accepted by the RUC and HCFA) for no change
in work value.


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