AMA's Role in Setting Medicare Fees Battered

Two prominent media reports critical of the American Medical Association's influence over payment rates for services on the Medicare physician fee schedule coincide with a renewed legislative push to diminish the group's power over pricing.

The Washington Post headline in Sunday's paper, How a Secretive Panel Uses Data that Distort Doctors' Pay, was deliberately provocative. And it got a strong rebuttal from the American Medical Association, in the form of a fact sheet. Among the facts listed: The Committee is not a secretive body.

But that panel, the AMA's Specialty Society Relative Value Scale Update Committee, is again the focus of a legislative effort to clip its wings.

In late June, Rep. Jim McDermott (D-WA) introduced HR 2545 (the Accuracy in Medicare Physician Payment Act of 2013). McDermott, a psychiatrist by training, wants to reduce Medicare's reliance on the committee, which is known in physician circles as the RUC.  

In a statement announcing the bill, McDermott noted that for more than 20 years the Centers for Medicare & Medicaid Services has relied on the RUC committee to "set payment rates for the 7,400 services on the Medicare physician fee schedule. No other area of the Medicare program asks providers to play such an active role in setting their own payments."

The RUC meets three times a year to decide how physician services should be valued, which is a polite euphemism for how services should be priced. Most of the 31 committee members are from medical specialties, although some are primary care practitioners. Over several days of closed proceedings, RUC members vote on service prices, oops, I mean "values."

Typically the RUC has been free to go about its business, but in recent years it has found itself under something of a microscope as the Medicare program struggles with increased healthcare costs, and McDermott and others question the CMS reliance on the RUC.

In separate reports this month, both the Washington Post and the Washington Monthly, took a good look at the internal workings of RUC. The committee is set up to advise CMS, but in reality, CMS "has accepted about 90%" of the RUC recommendations. The Washington Monthly article states that the RUC has "de facto control" over how about $85 million in Medicare funding is spent each year.

Its influence stretches beyond Medicare and extends to commercial payers. According to a 2009 document from the AMA practice management center, "more than 75% of private payers" incorporate Medicare's Relative-Value Scale fee schedule into at least one product line.

The Washington Post offered an example of a Florida physician who performs in a typical 9-10-hour-day at least 12 colonoscopies and four other procedures. According to the RUC a basic colonoscopy takes 75 minutes of physician time. Based on medical journals, interviews, and physician records, however, the typical colonoscopy takes closer to 30 minutes, according to the newspaper.

Barbara Levy, MD, the RUC chair, and the AMA are contesting some of the newspaper findings, too. She describes the colonoscopy findings as "based on outlier ambulatory surgical centers in Florida and some practices in Pennsylvania."

Rep. McDermott, the ranking member of the House Ways & Means Subcommittee on Health, wants CMS to more or less stop rubber-stamping RUC decisions. His bill calls for CMS to have more "muscle and resources to do the job."  

Based on a recommendation from the nonpartisan Medicare Payment Advisory Committee, the bill would establish a panel of independent experts within CMS to review the work of the RUC, identify problems with the fee schedule, and develop evidence to justify more accurate updates. To avoid potential conflicts of interest, the panel would not have any direct interest in the fee schedule and would include Medicare beneficiaries.

The bill would require the panel to hold open meetings and publish minutes.

The current bill has already lined up the support of the American Academy of Family Physicians, which represents more than 110,600 family physicians, family medicine residents, and medical students. McDermott contends that the RUC has contributed to the primary care physician shortage by making specialties and subspecialties more financially lucrative.

Of course, the powerful AMA can be expected to flex its muscles and campaign purse strings. Rep. McDermott introduced a similar bill in 2011. It never saw the light of day after being assigned to two House committees: Energy & Commerce and Ways & Means.