PFS Final Rule Cy2025: RVU New Thinking

 CMS issued a call for information and new thinking about problems with RVU valuation.  November 1, 2024, final PFS rule for CY2025.

##

The CMS document details multiple initiatives regarding Relative Value Unit (RVU) methodologies, particularly in the context of incorporating contemporary medical technologies and ensuring accurate cost reflection for medical practices. CMS acknowledges limitations in its current Practice Expense (PE) methodology and the need for adjustments to reflect evolving healthcare needs, especially with emerging technologies like Software as a Medical Device (SaMD) and Artificial Intelligence (AI).

Key Points:

1. Challenges with Current PE Methodology: CMS’s PE methodology, primarily based on the American Medical Association’s Physician Practice Information Survey (AMA PPIS) data from 2007-2008, has become outdated, particularly in its reflection of indirect costs associated with modern medical practices and technological advancements. CMS recognizes that indirect PE allocations do not adequately cover the expenses for software and SaMD, indicating a misalignment with current practice needs and costs. Stakeholders highlighted this as a limitation, urging CMS to adopt frequent updates and direct cost incorporation for software.

2. Future Strategies and Stakeholder Collaboration: CMS seeks to improve its methodology by engaging with stakeholders and exploring third-party independent data. The agency is considering a four-year update cycle for PE inputs to enhance stability and predictability in RVU adjustments, which would address inflation and deflation trends in supply and equipment costs. CMS is also investigating mechanisms for accounting for economies of scale, but opinions among stakeholders diverge on its application.

3. Software as a Medical Device (SaMD) Specificity: SaMD presents a unique cost consideration, as traditional PE metrics do not effectively capture the cost structures associated with these non-physical medical tools. Commenters emphasized the importance of updating PE data collection methods to include direct costs for SaMD and AI-driven applications, aligning PE calculations with the financial realities of integrating advanced software into healthcare services. These comments reflect a growing consensus that CMS’s methodologies must be updated to support practices that increasingly rely on digital tools for patient care.

4. Research and Continuous Feedback: To address these challenges, CMS has engaged the RAND Corporation to explore alternative methods for measuring PE inputs. This initiative aims to create a roadmap for methodical updates to RVU calculations, ensuring that PE methodology remains relevant as healthcare technologies evolve.

In summary, CMS is moving towards a more comprehensive RVU update strategy that includes SaMD and AI as integral components of PE calculations. This shift, prompted by stakeholder input, reflects a commitment to maintaining accuracy and relevance in physician payments amid technological advancements. The CMS’s response to SaMD costs represents a significant pivot toward acknowledging the financial implications of software-driven healthcare innovations.