The Practice Expense Advisory Committee (PEAC) is responsible for refinement of direct practice expense for existing CPT® codes.
Background
Practice expense for all existing CPT codes is being reviewed and evaluated through the American Medical Association's Practice Expense Advisory Committee (PEAC). Reimbursement for medical procedures, as defined by CPT codes, is divided into three components – physician work, practice expense and malpractice expense. The physician work component became resource-based (reimburse for the actual cost associated with providing a service) under a "Relative Value System (RVS)" in 1992. Congress also mandated that the practice expense component become resource-based, with a four-year gradual transition, beginning in 1999. With this transition, Centers for Medicare and Medicaid Services (CMS, formerly known as HCFA) attempted to collect data regarding practice expense by contracting with a consulting firm called Abt Associates. CMS designed a two-pronged process for data collection.
The first effort by CMS was a very complex survey that failed due to inadequate response from the survey participants. The second effort by CMS was to use the Clinical Practice Expert Panels (CPEPs). These panels included representatives from all major medical specialties who identified "direct inputs" (non-physician clinical labor, medical supplies, procedure specific equipment, and overhead equipment) incurred in performing medical procedures represented by CPT codes. Congress mandated that this direct cost data be validated. In response to this mandate, CMS reassembled the CPEPs to review and evaluate data they previously developed. This validation approach was unsuccessful, however, this step in the process still needed to take place. To this need, the AMA Relative Value Update Committee (RUC) developed a subcommittee call the Practice Expense Advisory Committee (PEAC) to finish this validation process.
The PEAC is primarily responsible for the analysis and refinement of the original CPEP data. The PEAC meets three times a year. The PEAC has developed a schedule with lists of CPT codes to be presented at each meeting. The specialty societies survey their members to obtain accurate "direct input" data for these codes and society representatives present the data to the PEAC. The PEAC members critique this data, often times making modifications. Following approval by the PEAC, data are forwarded to the CMS to be used to calculate the practice expense relative values. To date, they have reviewed and accepted practice expense recommendations on over two thousand CPT codes presented by specialty societies and have approximately two thousand additional codes to review and evaluate by March 2004 when this refinement process is scheduled to be complete.
Each major specialty has a seat on the PEAC. The ACR represents radiology and Peter McCreight, M.D. is our PEAC member. Any society with a seat in the House of Delegates of the AMA is entitled to a PEAC advisor. Geraldine McGinty, M.D. is the ACR's PEAC Advisor. The role of the advisor is to present "compelling evidence" (detailed explanation of data submitted) in support of the specialty's recommendation for direct practice expense inputs to the PEAC.
The ACR has been involved with the refinement process for the last four years to ensure that direct practice expense for all radiology codes is updated.
And thus, practice expense surveys are used to collect data that accurately reflect the cost of resources used to provide radiology services. The data collected and presented to the PEAC represent the "typical" case scenario for practice expense for the codes surveyed. The survey contains three sections: 1) Clinical staff time; 2) Medical supplies; and 3) Equipment. While some elements may seem minor, each of the three sections listed above are essential in building up a complete picture of what it costs to perform radiology services. The data collected are reviewed and finalized by the ACR's Practice Expense Committee before they are submitted to the PEAC.
The ACR's Practice Expense Committee was formed in 2000 in response to a mandate by the AMA PEAC that specialty societies formalize a specialty panel who reviews all data and makes final recommendations regarding the "direct inputs" of practice expense for both the office and out-of-office clinical settings. The ACR's Practice Expense Committee consists of 12 members and was assembled using representatives from each of the ACR sub-specialty Economics Committees, thus assuring a broad representation of all the multiple radiology sub-specialties, general radiology and radiation oncology. Attention was paid to the geographic distribution, practice type and practice size of the representatives. In addition to his role as a member of the PEAC representing all of radiology, Dr. McCreight also is chairman of the ACR Practice Expense Committee.