Medicare Overpaid Surgeons by $2.6B for Postoperative Care

Medicare overpaid surgeons by $2.6 billion for postoperative care even though only four percent of minor surgical procedures resulted in postoperative care, according to a recent study from RAND Corporation. 

The study published in the New England Journal of Medicine found that postoperative care accounts for nearly 25 percent of Medicare payments for procedures with bundled post-operative care, which totaled $9.9 billion in 2017. 

Medicare payments for surgical procedures are based physician work, practice expenses, and malpractice expenses related to the procedure and associated postoperative visits. Providers are asked to estimate the number and level of postoperative visits required to care for a typical patient who undergoes a specific procedure. 

But one vital concern regarding this system has been that there is no way of validating that the expected number of postoperative visits reported in physician surveys are actually provided.

The study confirmed the suspicions that most expected postoperative visits are not taking place. Researchers modeled what would happen if relative value units (RVU) associated with postoperative visits had been scaled back to match the number of such visits reported to CMS.  

According to the model, the changes would have cut Medicare payments for procedures with ten and 90-day global periods by 28 percent, or nearly $2.6 billion in 2018. And total Medicare payments for all services would have decreased 15 to 20 percent. 

In July 2017, Medicare required certain physicians in nine particular states to report their postoperative visits using a “no pay” code. 

The difference between the number of postoperative visits that are assumed during valuation and the number that is actually provided under the global payment suggested that CMS must respond by lowering valuations to reflect new data. 

But additional issues were raised by the new data. 

“In the longer term, we believe that CMS should move to a system that does not depend solely on physician surveys and that uses a range of inputs, including data from billing claims, quality-improvement databases, and electronic health records (EHR),” researchers stated in the report.

But cuts could have significant effects on surgeon revenue, the report highlighted. The current system results in inflated payments for surgical procedures relative to evaluation and management visits and other nonsurgical services that are the base for physician services.

Lower payments for surgical procedures would also result in payment increases across the board for all other physician services due to Medicare’s budget-neutrality policy. 

In 2015, CMS suggested removing postoperative visits from bundled payments for procedures, in response to reviews by auditors that suggested that fewer postoperative visits were provided than the agency had assumed when setting Medicare payment rates.

But Congress prohibited CMS from moving forward with this plan in the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), and required CMS to collect data based on the number and level of postoperative visits its provided and to further use that data to improve the accuracy of the valuation of procedures, according to the report.