I recently confirmed a disturbing truth that I had long suspected. Our best and worst payers were systematically paying less – a lot less – per relative value unit (RVU) for evaluation and management (E/M) services than for procedures. The fact that family physicians are underpaid was hardly news to me, but I hadn't realized the full extent of the disparity, which is essentially this: A payer's fee for any given code is based on the RVUs assigned to the code multiplied by a conversion factor that translates the RVUs into a dollar amount, and some payers use a lower conversion factor for E/M services, the mainstay of our specialty, than for procedural services.

If RVUs and conversion factors are foreign concepts to you, a brief history of health care payment methodology might help you understand why this latest phenomenon adds insult to injury. In the late 1980s, for the first time in health care economics, an attempt was made to compare the relative work associated with a large number of medical services: an office visit vs. an appendectomy, a hysterectomy vs. a cardiac bypass, etc. The “Harvard Study,” as it is known, ultimately influenced the development of the Resource-Based Relative Value Scale (RBRVS) on which the Medicare physician fee schedule is based. The Health Care Financing Administration (now the Centers for Medicare & Medicaid Services, or CMS), under the direction of Congress, put the RBRVS into place in 1992.

At about the same time, the AMA created the Relative Value Scale Update Committee (RUC), a group made up of physicians from multiple specialties who are tasked with updating the relative values of more than 7,000 CPT codes as well as recommending values for new CPT codes. The RUC is composed of individuals selected by their specialty societies; not all specialties are represented, and surgical specialties occupy a greater proportion of the seats than primary care specialties. Recommendations presented to the RUC need the approval of two-thirds of the group before they can be submitted to CMS. Whether this is the right approach is a matter of debate that is outside the scope of this editorial.

CMS considers all of the RUC deliberations and has the authority to accept, revise or reject the RUC's RVU recommendations. Over time, CMS has accepted more than 90 percent of them. What Medicare will eventually pay for any given code is based on the total RVUs of the code and a conversion factor. In 1997, at the urging of the AAFP and other primary care specialty societies, Medicare decided to eliminate the higher conversion factor it had used for procedural services and adopt a single conversion factor for all codes. The current Medicare conversion factor is $37.89 per RVU. In other words, Medicare would pay $37.89 for a code worth 1 RVU, $75.78 for a code worth 2 RVUs, $378.90 for a code worth 10 RVUs and so on, regardless of the type of service.

What's the difference?

As the AAFP's representative to the RUC, I have relatively easy access to RVU data. A few years ago, as I was processing the fees that our residency program negotiated with our insurers, I decided to analyze them on an RVU basis. I found that the dollars per RVU were 36 percent higher for procedural codes than for E/M codes, suggesting that insurers were using higher conversion factors for procedural codes than for E/M codes. For our better paying insurer, I discovered that the average dollars per RVU were $72 for procedural codes and $55 for E/M codes.

Last year my findings prompted a survey by the Indiana Academy of Family Physicians (IAFP), which asked the IAFP Commission on Health Care Services members what five major insurers in our state pay for 10 E/M codes and 14 procedural codes. This survey, while limited in scope, does include data from large urban, medium urban and rural family medicine practices. (Findings for one payer are shown in the table.) The IAFP survey findings supported what I had found in my review of residency program fee data. The average dollars per RVU were 31 percent to 86 percent more for procedure codes than for E/M codes. The bottom line: Every fee schedule we examined paid physicians using the RBRVS system but used different conversion factors for procedural codes and E/M codes, and therefore paid more dollars per RVU for procedural specialists than for cognitive specialists.

To compound the problem, surgeons are paid for a number of postoperative office visits for every procedure they perform that has a global time period attached to it. For example, laparoscopic cholecystectomy has one 99212 and two 99213 post-op visits included in the global payment. Not only is it questionable whether all these visits are actually performed, but the surgeon is paid much more per RVU for his or her post-op E/M visits than we cognitive physicians are paid for our daily E/M visits.

Obviously, none of the insurers we reviewed are using the RBRVS system as it was intended. As a result, the worth of the RBRVS system in fairly valuing health care services is significantly reduced. By using multiple conversion factors, insurers essentially make the relative value of services meaningless.

Over the years, I've heard a number of theories for why multiple conversion factors are used, the most common of which is that surgeons will not sign insurance company contracts without these higher fees. Whatever the reason, the use of multiple conversion factors compounds the long-standing income disparity between cognitive and procedural specialties that has plagued primary care physicians, and our student interest, for many years. It seems like a dirty little secret that insurance companies don't want family medicine and other primary care specialties to hear.

What can be done?

I hope that making family physicians aware of this problem will move us toward a solution. I also have these suggestions:

• Examine your payers' fee schedules to confirm the problem (use the spreadsheet that can be downloaded from the box).

• Discuss the problem with your insurers' provider relations representatives.

• When negotiating your next contract, insist that the insurer use one conversion factor for all payments.

• Help to raise awareness of the problem among your colleagues and encourage them to be proactive.

• Notify your state chapter of the problem and consider ways you can apply public pressure to convince your insurers to equalize the conversion factors.

Following the 2006 AAFP Annual Scientific Assembly, AAFP President Rick Kellerman, MD, added this issue to the list of topics he and other AAFP leaders discuss during meetings with leaders of national insurance companies. All have admitted to using multiple conversion factors for their fee schedules to obtain contracts with certain specialties. Perhaps with continued top-level and grassroots pressure, we will persuade insurers to adopt a single conversion factor.

With a relatively fixed pot of health care dollars and a tremendous number of procedures and E/M services involved, the elimination of multiple conversion factors would go a long way toward moderating the vast income gap between cognitive and procedural physicians.

Editor's note: This editorial is adapted from an article published in the Fall 2006 Frontline Physician, which is published by the Indiana Academy of Family Physicians and available online at http://www.in-afp.org/i4a/pages/index.cfm?pageid=3343.