Ep 12. The most powerful committee in US healthcare that you've never heard of

Even seasoned healthcare leaders—those with decades of clinical, financial, or operational experience—often miss the two most powerful levers behind how care gets paid for: the CPT process and the RUC committee. These aren't just billing codes and obscure meetings. They're the gatekeepers of what and how much is paid for care in the U.S. healthcare system.

To truly understand healthcare in the U.S., an understanding of CPT and RUC is fundamental.

Introduction to CPT and the RUC

We're back with Value Health Voices. This is episode 12. Amar, it's great to be back. We have so many episodes planned with great guests coming up. But tonight you are the guest because we're going to talk about the CPT code development process and the RUC. And I couldn't think of who better to interview on that than you.

I'm happy to give our listeners a brief intro and overview of what goes on behind the scenes and how the sausage is made.

All right, let's get right into it. This is a real treat for me because you and I talk about this all the time. I know you know the CPT process and the role of the RUC in valuing CPT codes inside and out. You live it. We're going to talk about a bunch of things tonight as an introduction. Hopefully not get too deep into the extremely wonky end. Hopefully we can manage to succeed.

I'll try not to nerd out too much.

Agenda and Scope of Discussion

There you go. So in doing this, I think the obvious place to start is more general and then we'll gradually rise the ladder of sophistication and specificity as we go through this. So if we could think about maybe a menu of our conversation tonight, we'll start by defining what CPT codes are. We have to talk about the difference between the aspect of developing the codes and then how they're valued, which is what the RUC does. I think we'll talk about things like the lifecycle of these codes, how they go from idea of something new all the way to a Category I code just to describe a few things. Are there other things on your mind as topics to talk about?

Yeah, we can talk about which stakeholders are involved in getting new CPT codes and who are the interested parties who want to get them valued. We can discuss the composition of these panels and just some of the behind the scenes workings of practice expense and physician work.

I think it would be also really nice if we can take some time as we work through this to talk how people who aren't necessarily actively involved in the process—like you as a RUC advisor—can participate. We should discuss stakeholders like physicians, hospitals, and industry. What role does industry have? And what comes before these important policy suggesting bodies, because ultimately CMS either accepts the recommendations or does not. Finally, maybe we'll talk about how this process that currently exists today might change in the near future. There are always discussions about what the future may look like within the next year and maybe some of the critical aspects or criticisms of the RUC. I'm happy to talk about some of that as well because obviously nothing's perfect.

Defining CPT Codes

That's right. Can definitely get into that as well. All right, so if we're going to follow our plan and start general and get specific, let's start at 30,000ft. What exactly is a CPT code and why do they matter?

I think that's probably a good place to start. CPT codes are codes that are owned by the AMA, first of all. They describe all the medical procedures that doctors do. And when I mean procedures, I mean anything. So let's say a doctor sees somebody for a consultation, there are codes associated with that depending on how complex that consult is or how much time was spent. If you're a surgeon and you're doing an appendectomy, there are codes with that. If you're a radiologist and you're reading a chest X-ray, there are codes with that. For a cancer, there are codes with our radiation therapy treatment delivery. Anything any doctor does has a code that they can bill, which is owned by the AMA. But those codes then also have value. If they're considered a Category I code, then they have a value associated with it, and that value can then be converted to a dollar amount, which is how physicians get reimbursed.

Okay, so we mentioned a couple very basic abbreviations there. We mentioned AMA, that's the American Medical Association, and they play a fundamental role in all this, as you already intimated. What does CPT stand for?

CPT stands for Current Procedural Terminology. And I do not know why that is what it stands for.

I do not know either. Facts. We got that out there.

The Code Change Process

CPT codes change all the time. This creates some frustration on the part of clinicians. It's why people who are coding and billing experts have to stay up on these things. Why are they added, deleted, revised? What's going on there?

Sometimes new codes will come from stakeholders who want a new code. So let's say there's a new technology, then industry could potentially ask for a new code, or the professional society of those physicians practicing that new procedure can ask for a new code. A code change application is initiated for a new code. But also if you want to modify or edit an existing code because you no longer think the work that's done for it accurately describes the work that's being done now, then you can maybe modify or edit a code. That also can go into a code change application. Or if something's no longer being done and is outdated, you can request a code be deleted. Those are all mechanisms for new, modified, or deleted CPT codes.

And that is the responsibility of the so-called CPT editorial panel, is that right?

Correct. The CPT editorial panel is a panel of 17 people. The majority are physicians of different specialties, but then there's also some other representatives on it like from Payers, CMS, and Blue Cross Blue Shield. Ultimately, it acts as an arbitrator of what the specialty societies or industry submits with their code change application. They'll deliberate whether something should be a new code or not.

You know, I was recently talking to some junior physicians, some trainees, and I think one of the folks was just out of training. They had by that time come across the term CPT code, but they had no idea really that there was a distinct body responsible for all this. I tried to explain that both with this panel and then the RUC itself, which we'll get into, there is an enormous amount of influence over the entirety of the US healthcare system. Did I oversell it or get it right?

No, it's a hundred percent true. This is where some of the criticisms are because a lot of this happens behind closed doors. The reason for it is there's a lot of confidentiality that has to be part of the process, obviously, because otherwise people wouldn't be honest and transparent if they felt that their information could be public.

Evidence and Submission Requirements

I think with this as a good intro, we can start to get into that interplay between the CPT development process and then handing it over to the RUC, which is the Relative Value Scale Update Committee. But before we hit that point of handing the code over, could you tell us a little bit about the contents of the submission, let's say the package of evidence that a sponsor must put forward when requesting a new code?

Sure, there's a lot of stuff that can go into that application. It's a long application we fill out. I mean, it could be 20-something pages long and they'll ask everything under the sun. Some examples would be: Is it FDA approved? Are there other codes that are currently being used to bill for this procedure? Other codes do you think could and would still be billed with this procedure? What's the clinical evidence? What's the prevalence of the disease being treated? How widely is it performed specifically in the United States? What's a sample clinical vignette, or a scenario of a typical patient who would be getting this procedure? How often do you think it will be performed? How often has it been performed? That's just the tip of the iceberg that I can think of off the top of my head.

That's right. This is not something that happens on a whim or quickly that there are code changes or new codes that arise. Thinking about that conversation I had with my junior colleagues the other day, I remembered another thing that one of them asked me. She asked me, can just any doctor or any person sign up and attend the CPT meetings or how does that work? Is that not open to the public?

I believe with the CPT it is open to the public and you can request to sign up in advance and attend. You just would have to sign a confidentiality form.

So you can't just turn up, but you don't have to be anybody special. You have to sign up and then you're good.

Yeah, I think you'd have to sign up and register and then you could attend. You're not allowed to speak at the table, but you could attend as an observer.

From CPT Approval to RUC Valuation

Good. So in that sequence of questions, my next thing I really wanted to ask you is: Okay, so you've submitted all that packet. A CPT code is now born. It exists. What triggers it to be handed off to the RUC now for valuation?

Well, maybe I'll step back one more thing. What triggers it to be approved by the CPT? The thing they're really looking at is the level of evidence. What they really want to see is what we call Level 2A evidence at a minimum or Level 1 evidence, meaning randomized control studies or at least a systematic review of cohort studies. They don't want to just see some smaller studies that are Level 3 or Level 4 studies; that does not rise to the level. They want to see a few of these, usually about three or more studies. The other thing is they want to see that a lot of these studies were done in the United States and it wasn't just all European data that's being collected. Once all that's presented, they look at the application and they'll discuss it at the panel and then they'll vote whether to approve it or postpone it or deny it. If they vote to approve it, then is when it goes to this whole thing you were saying with the RUC. One of the things they'll do is they'll send out this Level of Interest, an LOI, and they'll see what medical specialty societies are interested in this new code and would be interested in being a part of the valuation process.

Yes, I've seen those. And at this stage also in addition to the LOI, if I have it correct, this is where a lot of the industry folks, the specific companies that are moving a code application forward, seek guidance from the specialty societies. They reach out and have a kind of conversation about evidence development. Do we have enough? Should we take it forward? Do I have that right?

So they'll do it before the panel meets—before the application is submitted. Once the application is submitted, you're not allowed to have any of these discussions with industry. But prior to that, because they want to get the opinions of who we call the CPT advisors, which are the people from each professional society who are the experts and the representatives of their specialty with these code change applications. The vendors will ask: Does this... do you think we have enough evidence for a Category I code? A Category I code are the ones that end up going to the RUC to get valued. Or do we think if there's not enough evidence then we may sometimes recommend as a professional society that it only meets the level of a Category III code? That means it can be used and documented, but it's not going to be valued by Medicare and CMS. That doesn't mean that with private payers you can't negotiate some rates with them, but it's not going to be valued by CMS.

Role of Specialty Societies

I'm glad you brought up the specialty societies at this stage, because that actually is a third thing that I remember was brought up in this conversation I've referred to a few times now. If I'm coming out of training and I'm interested in health policy—and I believe this particular physician is a pediatrician—what is my avenue to get involved? And I did say to her, well, the specialty societies have a key role to play in all this. So they likely have a committee or a subcommittee that you can essentially apply to be on to take you forward through this health policy track. Is that right?

No, you're 100% right, Anthony. The AMA pretty much mandates as part of this process—because they want to have stakeholder involvement from members who are practicing in this specialty—that a specialty society has some form of advisory committee for both the CPT and the RUC, with CPT advisors and RUC advisors. They may name these committees differently. Some will call it a health policy committee, some will call it an economics committee, some will call it a code development evaluation committee. But whatever it is, it will always sit in a professional society and be an avenue for people who are interested in health policy to join that committee and be a part of this process.

Right. And it is in that capacity that you participate in this process. And me too, but obviously not in the hot seat like you were, but instead sort of learning the process. All right, so we brought up the RUC a few times. Let's talk about that now. Where do you want to start talking about the RUC?

Composition of the RUC

Let's talk about what the RUC is. The RUC, like you said, is the Relative Value Scale Update Committee. It's also part of the AMA. It's 31 people who sit on this committee, and they're nominated and then elected to be on this committee. They are supposed to be independent of whatever specialty they came from. So let's say you have a pulmonologist on there, you have a vascular surgeon and everything like that. When pulmonology or vascular surgery procedure codes come to the RUC, they are not supposed to advocate or even, frankly, be a part of the discussion, because they're supposed to be impartial and not represent their specialty. That being said, then there's this advisory committee, like I said, on the professional societies. And those advisory committees would nominate a person who serves as the advisor. So I'm the RUC advisor for our professional society, the American Society for Radiation Oncology. And so it's my job to represent radiation oncology interests. So when I go to this panel, I sit in the hot seat and they grill me and ask me all these questions about a new procedure or whatever's coming from the CPT panel to the RUC.

Calculating RVUs and Practice Expense

And of course, being the Relative Value Scale Update Committee, they have to calculate how many relative value units, how many RVUs is associated or assigned to each CPT code. They have to make a suggestion actually to CMS. It almost seems silly to me to ask you this question, Amar, but is it possible, in a succinct way to describe how the RUC calculates the RVUs for a given code?

Yeah, exactly. It's totally doable. Let's try this. So there's this LOI that goes to the professional societies. Let's say they're interested in the code that's coming out of CPT. They'll mark their level of interest as a Level 1 on the LOI, which means they are going to survey for that code. So what does that mean? They will send out surveys to all the members of that professional society and say that this is a sample clinical vignette. And so how do you believe this code is in terms of a relative value? Is it similar to other codes or should it be valued higher or valued less? And they look at that based on time and intensity of the work. The other thing that goes out in the surveys is practice expense, which is the cost associated of delivering that care. And that practice expense can consist of equipment, it can consist of supplies, but it can also consist of clinical labor staff and the time for the clinical labor staff for those procedures. So all this data is compiled together from the surveys and comes back to that advisory committee that you're a part of, Anthony, at the professional societies. We compile it all together and create recommendations from that on what we believe is a physician work RVU based on that time and the intensity of that work, as well as a practice expense RVU based on the practice expense associated with that. And we submit those recommendations in a summary of recommendation to the RUC and to the Practice Expense Committee that's a part of the RUC. And then we go there and be in the hot seat and answer questions they have about that spreadsheet we submit.

How was that for summary?

Oh, that was outstanding. So, yes, the time and complexity weighs heavily as you described. I was just thinking through some examples in my head, just like you. I'm a radiation oncologist by training. You're the chief of a radiation oncology department. One of the hats I wear is also chief of radiation oncology department, but also the medical director of a larger cancer program—meaning all the specialties: MedOnc, SurgOnc, RadOnc, et cetera. And thinking about the different RVU levels for some of the codes I see that come across my desk. So complex oncoplastic reconstructions, enormous RVU numbers. Nasopharyngeal laryngoscopy, which you probably do?

I do because I take care of head and neck cancer patients. And it's a few RVUs, because it takes two minutes and it's really simple.

No, exactly. And if you think about the intensity of a procedure where you're operating against the spinal cord like a spine surgeon or a neurosurgeon, it's going to be much more intense than taking an X-ray of a foot. So that is, everything's relative. The key is nothing is thought of in terms of absolute when it comes to valuing physician work. It's all relative. And this is one of the criticisms around the survey data: How do we know the survey data is accurate? If people inflate their times or inflate the intensity, are we reimbursing more highly for these procedures than they should be? That's inherent in that process.

And if I remember correctly, you and I spoke at length about this in one of our episodes, specifically the origin of this relativity in valuations and why and how that flows to essentially this idea of a fixed pie, that if something gets more RVUs, something else gets less as a kind of a balance. And we talked about why that is.

Budget Neutrality and Valuation Challenges

Right. And actually that feeds right into the whole RUC process because you have a fixed pot, like you said, and as CMS calls it, budget neutrality. There's only a certain amount allotted to the Medicare physician fee schedule. And so when you come with a new code and you're trying to seek evaluation and you're sitting in this hot seat, any service that gets valued highly has to come at the expense of somebody else's service. Something else will end up going down with budget neutrality. So it was a very clever system that was created with the AMA and CMS. So you have a lot of people all fighting, all the doctors are fighting amongst themselves for this fixed pot of money to justify why something should be valued more than something else. And so it doesn't allow for innovation. With new technology, it stifles innovation. That's a big criticism.

There's a criticism that I believe has persisted ever since the origin of the RUC and that is about the composition of proceduralists versus non-proceduralists. Talk to us about that.

The RUC as we mentioned has 31 individuals on it. And there's a select number, I believe it might be 21 or 22 who are elected by professional societies that are designated to have a spot on the RUC. And then there's a few rotating seats, I believe four rotating seats. But by and large those specialties that have a permanent seat on the RUC are a lot of them procedural specialties. And so that does shift the balance about when we look at valuation toward valuing things that may be procedural higher. I mean that's one of the criticisms. CMS actually recognizes this. And so one of the things they've done in recent years is to allow for primary care to be valued higher. They purposely took back all the non-procedural CPT codes like the consultations and follow-ups that primary care does and revalued them through the RUC process, kind of forcing the RUC to revalue them. They looked at increasing clinical labor pricing for nurses involved and changing the time and complexity. So this way it allows for primary care to bill for those more complex services. But by doing that actually in the last couple years, it's procedural specialties that all of a sudden now took the hit because of budget neutrality.

CMS Oversight and Industry Codes

So I was thinking about the relationship between the RUC and CMS. We sort of glossed over this. But just to be really specific, at a certain point in time the AMA essentially convinced CMS that AMA should have essentially the sole contract, the sole responsibility for the functions of the CPT—code origination and then code valuation. But what they didn't get as part of that relationship with CMS is any kind of promise by CMS that CMS would accept always the RUC's recommendations. So how often does CMS just say hey thanks RUC, but really we think you're off base here with this recommendation, we're going to go our own way?

It actually doesn't happen that frequently, but as you are a radiation oncologist like I am, we know it's happened in our field almost 10 years ago when we were revaluing treatment delivery. The treatment delivery codes for radiation therapy went through the CPT process, got approved, got surveyed, went through the RUC process, valuations were created and approved by the RUC, and then it went to CMS and CMS said no. And because these previous codes, once they go through this process, the old codes get deleted, they couldn't just go back and say, "Well we'll just use the old codes." So CMS created new codes called G codes which they own and just said we'll just make them. We call it "crosswalked." In other words, the valuations could be tied to what the old codes were. The reason for that is they also hear feedback from a lot of stakeholders. So patient advocacy groups sometimes have a stake in the game. Let's say a breast cancer society group may say, well, we think codes to treat breast cancer should be valued higher. Or if the ranking of the valuation for let's say a Level 1, a Level 2, and a Level 3 procedure... if they think the ranking is wrong, then they may just reject all the codes outright and say no, we think there's a rank order abnormality. So that would also allow for codes to be rejected. It's not that common, but it definitely happens.

You mentioned earlier the obstacles to innovation that come from the requirements of budget neutrality. Are there other things? I remember at the RUC there were vendor applications or let's say vendor-driven codes that were up for valuation at that particular RUC meeting. Have you heard what folks on the vendor side say about the process? Is it too complex, too long, too much bureaucracy?

Back in the day it used to be that most of the code applications all came from the professional societies. But the process has been so slow with allowing for this new innovation so many times now industry will hire their own consultants who are experts in the CPT RUC process and try to push an application through themselves. The problem is the way that the CPT RUC process sees it is even though you can do that and sometimes it is successful, typically they want the specialist society to at least support it. Because the specialty society, the RUC advisors are the ones who have to advocate for it at the table. Industry is not allowed to have a representative there. In fact, as a physician, I'm not allowed to have any conflict of interest at all. It has to be very clean. Because they don't want somebody to have a stake in the game financially and then advocating for something clinically. So that's why industry is not allowed to be there or any physicians involved in industry. But one of the things with industry recently is also the level of evidence. The bar of evidence has been kind of raised than what it used to be. It used to be they would allow for more data from Europe or maybe not so much randomized control data. So by having that requirement, it also is tough for industry. They're trying to sell the equipment, they're trying to sell the product. If there's no reimbursement for it, it's very tough for them. So many times now, instead of going through the CPT RUC process, they'll try to bypass it completely and just negotiate with CMS to get codes outside of the CPT RUC process.

Okay. To get G codes, essentially.

Yeah, HCPCS codes, they're called. But yes, G code is a type of the HCPCS code. But yeah, they're pretty much codes that CMS owns that allow for new technology.

Amar, you pulled out another code category altogether. And just for listeners, the HCPCS code is actually HCPCS and that stands for Healthcare Common Procedural Coding System. And yes, you brought up the difference between a code that is the AMA's own CPT code versus a code that comes from CMS directly.

The RUC Meeting Dynamic

No, I was thinking one other thing I think would be interesting for our listeners to know is what is the dynamic that actually happens at the RUC. So it's very stressful because you're in this hot seat. I equate it to giving almost congressional testimony. Our listeners may see or...

I agree with you. That's what it was like.

Exactly. So you're there, and they'll grill you with question after question. You could potentially be at that table for three hours, four hours, no break, and you just have your glass of water, and they can just grill you with one thing after another. And when I mean grill, like, for example, along practice expense, they may say, "Well, why do you need two pairs of gloves? Can't you do this with one pair of gloves? Why do you need a motorized table? Can't you just do with a regular table? Why do you need two drapes? Can't you do with one drape?" So it's down to that level of minutiae where they will ask all these questions.

You bringing that up makes me laugh because that's where I started to ask myself some questions, like, can there really be any accuracy in this? I mean, we're asking that level of detail. How does that play in real life?

Right. But it's a system we have. And what they really want to know is: Is it typical? That's the question they'll ask. It's not, "Can this be done?" Is this typically done? And obviously they rely on the opinion of the experts. So you'll typically have an expert in that procedure at the table also who says that, no, this is typical and not an anomaly. But that is one of the criticisms, for sure.

Criticisms and Future Reforms

Throughout this conversation, but especially over the past minute or two, you were talking about criticisms. And I think those criticisms, some of them do have a good foundation. So we're starting to hear reform ideas circulating, ways to change the CPT and RUC process as it relates to transparency or broader stakeholder seats, even replacing the RUC altogether. So what are we talking about here? What are we hearing?

Yeah, I mean, like I said, there's pluses and minuses. On the one hand, there is a lot of criticism, and it's coming from all avenues, whether it's the administration or whether it's economists. Healthcare economists write a lot about this and have published extensively on this, and whether the RUC just needs to be scrapped altogether and a new system needs to be created. The thing I worry about, and the reason the RUC came to be to begin with, is because it allowed for physician input. It allowed physicians who practice this and do this to explain why it should be valued the way it is. And so I think no matter what the new process is, my fear is that if you take physicians out and it's just the bean counters doing it, that's the worry. Will things actually still be valued correctly? Now, obviously this is not 100% accurate, what we do. But I will say they do try to at least allow for accuracy. For example, when they look at time or intensity, they don't oftentimes go with the median value. They usually go with the 25th percentile. And that's because they're assuming that maybe these numbers that they get back from the surveys are inflated. So you would actually really have to explain strongly and heavily and have a good argument why something should be valued higher than the 25th percentile. They also have specific times that are associated with things like dressing a patient or gowning a patient or cleaning a room, which you would really have to explain why something should take longer than it does for everything else in the house of medicine. So they try to have these package times and look at 25th percentile. But that being said, no, there is definitely a movement to scrap the RUC altogether.

Advice for Leaders and Conclusion

So as we bring this to a close, I'm going to ask a question now that I'm also going to answer, but then I want to hear your answer too. Think about some advice for health system leaders who've never followed a RUC meeting. What advice would you give them? The advice that I found that I had to give some people is that they didn't even have an idea that the RUC existed. Maybe they heard the term at one time or another, but they really didn't know what it does. And I say my advice would be, you got to dig in and understand because this is one of the most powerful committees in the entire US Healthcare system. What do you think?

I agree completely. It is shocking how little many hospital executives know about this. It flies under the radar. Yeah. Even when I talk about it, I can tell that they think they know where physician reimbursement comes from and they think a lot of it is maybe through MedPAC and some other channels. But they don't realize the whole CPT RUC process and like you said, the critical role that this one committee plays to set these valuations for CMS.

I'll make just one other comment here and that is that the role of CPT codes and the role of the RUC is so deeply rooted in healthcare finance in this country, in the US healthcare system that I do not think there's going to be any easy or simple on-ramp or alternative in the next three to five years. Am I reading that right? Am I having too much confidence in the status quo?

No, I mean I think I agree with you. I think it would just have to be new payment systems entirely. So whether they're bundled payments or other kinds of alternative payment systems, they would have to be created that go outside of this kind of building block model. It's just kind of valuing a service in entirety for an episode of care. But yeah, for new technology and there's just too much vested interest from all the different stakeholders to just abandon it completely.

One thought about some of these alternative payment models, bundled approaches, is that there'd be some runway and I think pretty long at the outset of these models where the expectation from CMS would be that clinicians and hospital operators are still billing these codes, still doing the things like they did them pre-bundled model to allow for a kind of apples-to-apples comparison and a kind of non-backsliding away from the way things were done before. Because if you had a given pathway of care and set of services you provide and now all of a sudden there's a bundle, one thought could be, "Well I'm just not going to do stuff I used to do because now there's not an individual reimbursement widget for that." And so I think that the CPT system would persist for some time even under a bundled model just kind of running in the background.

Exactly. To value the new technology that's coming in that's not part of the bundle. For sure. And I think the only other thing I want to leave the listeners and viewers with is the amount of work that goes into this from the volunteer perspective, the physician volunteers. So you've been a part of this process now, Anthony, and you've seen some of it. It always is tough for me when I hear other physicians complain about, "Oh, there's so many cuts and this is going on and why is it happening?" And I'm like, well, there are people who are advocating and trying to make sure it doesn't happen. But a lot of it comes down to people filling out the surveys. So when people get surveys, people should be filling them out, not just letting them sit in their email box because it's the individuals who submit the feedback—that's where the valuations set from. So people have to fill those surveys and then appreciate the amount of hundreds of hours that the physician volunteers on that committee are putting in to help everybody in the greater good.

Maybe a thought I'd leave everyone with is just a harkens back to a comment I made earlier from talking to junior doctors, and that is: Get involved. If you have a passion for this and you care about health policy, you should get involved with your specialty society, learn about this process. It could be very rewarding. And like Amar, you may find yourself carrying on your shoulders the weight of an entire specialty in front of the RUC one day. And it's a great, an awesome responsibility. So thank you for doing that and thank you for answering all of my very basic questions. This was definitely a different flip of an episode where I was the guest. But we'll have you be the guest one day too, Anthony.

I'll have to come up with something that I am qualified to answer like you are for this. But this has been a lot of fun. Like I said, it was a real treat for me. You shared a lot of your knowledge and I hope that our listeners find it interesting. We're going to be back with a real guest next time for our next episode. Very good. Thanks, Amar.

All right. Thank you.