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To calculate physicians' fees under Medicare--which in turn influence the physician fee schedules of other public and private payers--one of the essential decisions the Centers for Medicare and Medicaid Services (CMS) must make is how much physician time and effort, or work, is associated with various physician services. To make this determination, CMS relies on the recommendations of an advisory committee representing national physician organizations. Some experts on primary care who are concerned about the income gap between primary and specialty care providers have blamed the committee for increasing that gap. Our analysis of CMS's decisions on updating work values between 1994 and 2010 found that CMS agreed with 87.4 percent of the committee's recommendations, although CMS reduced recommended work values for a limited number of radiology and medical specialty services. If policy makers or physicians want to change the update process but keep the Medicare fee schedule in its current form, CMS's capacity to review changes in relative value units could be strengthened through long-term investment in the agency's ability to undertake research and analysis of issues such as how the effort and time associated with different physician services is determined, and which specialties--if any--receive higher payments than others as a result.

In Setting Doctors’ Medicare Fees, CMS Almost Always Accepts The Relative Value Update Panel’s Advice On Work Values