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Sustainable Growth Rate Has Outgrown Its Usefulness, GAO Says
You could be paying the price for CMS' errors


According to the Government Accountability Office, the process the Centers for Medicare & Medicaid Services uses to update the fee schedule needs an overhaul itself --or else the agency could jeopardize one all-important component: your faith in the system.

In "CMS Needs a Plan for Updating Practice Expense Component" (GAO-05-60), the GAO warns that CMS' lack of a systematic or timely review suggests the agency is not relying on the best data.

How it works: When estimating Medicare's payments for physicians' operating costs, CMS looks at expense estimates from American Medical Association physician surveys, as well as resource estimates for individual services developed by expert panels from a cross section of physician specialties.

According to the GAO, the process is breaking down in three key areas:

* Falling behind. CMS lacks a specific plan to ensure that it can update the fee schedule on time. The AMA physician survey that provides total practice expense data was last modified in 2000. Some specialties continue to submit updates voluntarily, but this is "not an appropriate substitute for a systematic data collection effort," the report reads.

* Questionable numbers. The GAO found evidence that CMS is using data that does not properly represent physician practices within a specialty, while arbitrarily rejecting more representative data.

* Closed doors. CMS modifies estimates made by expert panels without always relying on adequate data or explaining the rationale for its actions.

To read the report, go to www.gao.gov/new.items/d0560.pdf.