PRACTICE RESOURCES > Regulation/AUA Positions, Letters, and Talking Points > AUA Comments to CMS on 2004 Physician Fee Schedule

AUA Comments to CMS on 2004 Physician Fee Schedule

October 7, 2003

Thomas A. Scully
Centers for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-1476-P
P.O. Box 8013
Baltimore, MD 21244-8013

Dear Mr. Scully:

On behalf of its 10,000 U.S. members, the American Urological Association (AUA) is pleased to submit comments on proposed changes to the 2004 Medicare physician fee schedule. Unfortunately, because the proposed rule was published over two months late, we are unsure whether the Centers for Medicare and Medicaid Services (CMS) will be able to address our comments in time for inclusion in the November 1, 2003 final rule. Therefore, we would suggest that there be a separate process for dealing with issues that CMS is not able to incorporate into the final rule due to the delayed publication of the rule.

Also, in light of the anticipated negative update to the 2004 conversion factor, we urge CMS to consider solutions that can be applied administratively-such as removing the cost of drugs from the sustainable growth rate-to mitigate a negative update to 2004 physician payments. This is important, as continued reductions in physician payments will jeopardize access to care for Medicare beneficiaries. For urologists, the situation is also exacerbated by potential changes to Medicare's drug payment system and skyrocketing liability insurance premiums.

Our comments on specific provisions of the proposed rule are as follows:

  1. Resource-based Practice Expense Relative Value Units
    1. Supplemental practice expense survey data. We support CMS's decision to extend for an additional two years the period for accepting supplemental practice expense survey data that meets the previously-established criteria. Also, we agree with the acceptance of the American Society of Clinical Oncology's (ASCO) supplemental practice expense survey, which is discussed more in depth in CMS's August 20, 2003 proposed rule on Payment Reform for Part B Drugs (CMS-1229-P). We appreciate the extra work that CMS put into meeting with Lewin and ASCO to more thoroughly review the survey data and resolve concerns before making their decision to accept ASCO's supplemental survey. While the increase in oncology's practice expense per hour that results from acceptance of the survey might appear unbalanced, it may in fact point to long-standing undervaluing of practice expenses throughout the system.

    2. Repricing of practice expense inputs. We also applaud CMS's work to reprice the supply and equipment direct cost inputs, as we know this was a huge undertaking. We have reviewed the urology-relevant items on which comments were solicited in the proposed rule, and have and will continue to work with your contractor to clarify these items. We agree that the efforts of your contractor to assign categories to supplies and also to consolidate and standardize item descriptions and unit descriptions will greatly simplify the PEAC inputs. Because of the short notice in the proposed rule, we hope that these items will be kept open for comment as we continue to gather information.

  2. Geographic Practice Cost Index Changes

    Although the next review and revision of the physician fee schedule's Geographic Practice Cost Indices (GPCIs) is scheduled for 2004, we support CMS's decision to wait until 2005 to review and revise the work and practice expense GPCIs so that the most recent U.S. Census data can be incorporated into this review. We also appreciate CMS's decision to review and revise the physician liability insurance (PLI) GPCIs in 2004 as scheduled, recognizing that every effort must be made at this point to find ways to incorporate the rapidly escalating costs of PLI premiums into the fee schedule.

    We appreciate CMS's efforts to use more current data in the development of the 2004 through 2007 PLI GPCIs by using 1999 through 2003 malpractice premium data. We understand that CMS will use actual 1999 through 2002 premium data and then project the malpractice premium rates for 2003 by calculating the mean rate of growth between 1999-2002 and applying that rate to the 2002 premium, and will also obtain a national aggregate malpractice premium series with which to benchmark the 2003 forecast. We realize that CMS cannot provide final data on this until the final rule because it is still collecting 2002 premium data to be used in the 2003 projections.

    As a member of the American Medical Association's (AMA) Relative Value Update Committee (RUC), the AUA supports the RUC's efforts to work with CMS to review these issues more in depth through its newly-established PLI Workgroup. We look forward to commenting on the revised PLI GPCIs when they are published in the final physician fee schedule rule.

  3. Rebasing and Revising the Medicare Economic Index (MEI)

    We applaud CMS's rebasing and revision of the MEI to ensure that the data reflects the changing distribution of physicians' earnings and practice expenses over time. This is especially important for the MEI category that measures changes in the cost of liability insurance, as demonstrated by the size of the change between 1996 and 2000 expense weights for PLI from 3.152 to 3.865.

    However, CMS notes that the new proposed MEI weights now do not match the proportion of total RVUs attributable to physician work, practice expense and malpractice across all physicians' services. The MEI weights for physician work and practice expenses are lower than the proportion of aggregate RVUs attributable to these categories, and the malpractice weight within the MEI is now higher than its share of total aggregate 2002 RVUs. Thus, CMS believes it is desirable to adjust the RVUs to match the revised MEI weights, because by giving more weight to malpractice and less weight to physician work and practice expenses, Medicare's payments will better reflect each component of physician practice expenses.

    An adjustment of RVUs will trigger budget neutrality adjustments, which CMS could apply to the RVUs or to the conversion factor. Therefore, CMS has proposed one of two options: to adjust work, practice expense and malpractice RVUs or to adjust only practice expense and malpractice RVUs, while reducing the conversion factor to account for the work RVU adjustment. The AUA urges CMS to retain the stability of the work and practice expense RVUs by applying any necessary work and practice expense budget neutrality adjustments to the conversion factor. However, we also urge CMS to explore whether it has the statutory authority to keep the proposed PLI RVUs in place without reducing the work and practice expense RVUs through budget neutrality. This would help address the rising cost of PLI instead of simply shifting RVUs around between work, practice expense and PLI.

Thank you for considering our comments. If you have any questions or need additional information, contact Robin Hudson, Manager of Regulatory Affairs, at 410-689-3762 or


Martin I. Resnick, MD
American Urological Association


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