Physicians overestimate time that translates to their Medicare payments, study finds

Physicians overestimate the time it takes to perform procedures that are then used to calculate how they get paid under the Medicare physician fee schedule, a new study found.

At least, that’s the case when it comes to four common orthopedic surgical procedures, according to a Health Affairs study, that recommended the government no longer use self-reported time estimates—rather than empirical data on actual procedural times—to determine pay for physicians.

Researchers used electronic health record (EHR) time-stamp data from the University of Pennsylvania Health System to examine physicians’ time spent conducting knee and hip replacement surgeries. They found that the time estimates used by Medicare to set the physician relative value fee schedule, based on physician surveys, are greatly overestimated—including by more than 50% or more for revision hip replacements.

That can make a difference in healthcare costs as over 70% of U.S. physicians are reimbursed on a fee-for-service basis, with the Medicare physician fee schedule setting most of those payments. The physician fee schedule assigns relative value units for each procedure and bases the procedure’s value on a limited number of self-reported time estimates from physicians who perform that procedure.

Most commercial insurers base their payments on a multiple of Medicare’s fee-for-service rate and even alternative payment models build upon the fee schedule’s structure, the study authors said.

To determine the accuracy of physicians’ estimates, lead author John W. Urwin, M.D., of Beth Israel Deaconess Medical Center/Harvard Medical School and the University of Pennsylvania and coauthors reviewed just over 2,700 procedures performed at two academic hospitals from 2013 to 2016.

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The authors found that operating time estimates for original hip replacements and original knee replacements were overstated by 18% and 23%, respectively, while revision hip and knee replacements were overestimated by 61% and 48%, respectively. They also found that shorter-duration surgeries were not associated with higher complication rates.

With the availability of real-time surgical tracking using operating room time-stamp logs in EHRs, “it is no longer justifiable to use self-reported time estimates rather than empirical data on actual procedure times to pay physicians,” the authors concluded.

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In addition, the authors recommend that physician reimbursement should account for the work done outside the operating room to improve quality and patient safety by rewarding better patient selection and risk modification, better post-acute care management, and resulting quality metrics.

Under the current system, the government reviews only 2% of current procedural terminology (CPT) codes each year and continues to pay physicians based on decades-old surveys. That is “unacceptable and serves only to exacerbate disparities between specialties,” the authors wrote.

“And it likely increases payment to physicians by billions each year—a small fraction of which would pay for more frequent updates,” the study authors said.

Instead of relying on physicians’ time estimates, the Centers for Medicare & Medicaid Services (CMS) should require hospitals to provide empirical data on which to base reimbursement. It could modify payments based on complication, infection and readmission rates, the authors said, so the data could financially reward higher-quality care.

The study also suggested CMS add a payment modifier to the fee schedule to reward facilities and surgeons achieving high quality.