Why Congress Should Pass the Accuracy in Medicare Physician Payment Act

With the recent release of two mainstream exposes, one in the Washington Post and another in the Washington Monthly, the American Medical Association’s (AMA) medical procedure valuation franchise, the Relative Value Scale Update Committee (RUC), has been exposed to the light of public scrutiny. “Special Deal,” Haley Sweetland Edwards’ piece in the Monthly, provides by far the more detailed and lucid explanation of the mechanics of the RUC’s arrangement with the Centers for Medicare and Medicaid Services (CMS). (It is also wittier. “The RUC, like that third Margarita, seemed like a good idea at the time.

For its part, the Post contributed valuable new information by calculating the difference between the time Medicare currently credits a physician for certain procedures and actual time spent. Many readers undoubtedly were shocked to learn that, while the RUC’s time valuations are often way off, in some cases physicians are paid for more than 24 hours of procedures in a single day. It is nice work if somebody else is paying for it.

Two days after the Post ran its RUC article on the front page, it reported that the AMA is already visiting Congress in force, presumably to protect its role defining the value of medical services for Medicare. The question now is whether Congress will take steps to remedy the situation.

It won’t be easy. In January of this year, a federal appeals court upheld a lower court ruling, rejecting a legal challenge by six Augusta, GA primary care physicians to CMS’ longstanding reliance on the RUC to determine the relative value of medical procedures. The core of the physicians’ argument was that the RUC is a “de facto” federal advisory committee and therefore subject to the common interest rules associated with the Federal Advisory Committee Act (FACA). FACA requires, for example, that a panel’s composition , say of medical specialists, reflects their distribution in the real world. It also requires that applied scientific methods are credible and that proceedings are conducted transparently.

The RUC has flouted these principles, and operated opaquely. The RUC’s Chair, the AMA’s CEO and47 medical specialty societies have also publicly dismissed the idea that other stakeholders in the cost process — e.g., patients, purchasers (like health plan representatives) or health care economists — should participate in valuation activities. Their stated view is that only physicians can understand what the rest of us should pay for care.

The court’s ruling effectively meant that the RUC’s position is all but unaccountable and unshakeable. So now we are down to the nub. Only Congress can alter the RUC’s status by requiring it a follow FACA’s rules.

A bill introduced last month by Rep. Jim McDermott’s (D-WA) would require just that, providing an important first step toward fiscal responsibility in American health care. The Accuracy in Medicare Physician Payment Act (HR 2545) would bring the RUC under FACA’s transparency rules, and provide Medicare with external expertise, including from non-physicians, to objectively evaluate the RUC’s recommendations. Passage would be a clear statement by Congress that it seeks an end to special interest favors that have driven egregious levels of health care waste for decades.

Rep. McDermott, a physician himself, has taken a bold position here, but it remains to be seen whether his colleagues will stand by him. No doubt the RUC’s recent negative press has exerted some pressure on Congress to meaningfully address a serious problem for the American people. Getting a bill passed, though, will require overcoming the intense resolve from medical specialty societies and the corporations that support them to maintain their very lucrative status quo.

Brian Klepper, PhD is an independent health care analyst and Chief Development Officer for WeCare TLC Onsite Clinics. His website, Replace the RUC, provides extensive background on the role that the AMA’s RVS Update Committee has had on America’s health care cost crisis.

Paul Fischer MD is a primary care physician at the Center for Primary Care in Augusta, GA. With five other primary care colleagues, he filed a suit in Maryland Federal Court challenging CMS’ refusal to require the AMA’s Relative Value Scale Update Committee (RUC) to adhere to the requirements of the Federal Advisory Committee Act, even though that panel has been CMS’ near sole advisor of medical services valuation for nearly 20 years.

Klepper, Brian & Fischer, Paul., Why Congress Should Pass The Accuracy In Medicare Physician Paymnent Act. Health Affairs Blog, 9 August 2013. Copyright ©2013 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

4 replies »

  1. Reminds me of a story, that really happened. While standing on the front lawn of a large Naval Hospital (a long time ago) at a 4th of July picnic I had the following conversation:
    Navy anesthesiologist: “I only get paid 20% of what I’m worth when I moonlight at X hospital.”
    Me: “How do you figure?”
    Him: “Well, blah, blah, blah this and blah, blah, blah that…”
    Me: Well, if that’s true why do you do it?”
    Him: “It’s damn good money!” (Humor unintentional)

    But seriously, the search for the perfect scientific price fixing scheme will never work. We all know this. And how much money are we wasting on setting these prices- billions maybe? My solution- deregulate the medical profession and let the market set prices. Require everyone create a tax free health savings account, say $5,000 per year per person with subsidies for the truly needy (this is just a placeholder real numbers to be determined by actuaries) and require everyone in the county to have a high deductible plan (kick in threshold to be determined by actuaries). And let the markets work.

  2. Doc A gets $200 for procedure A, and does 3 a day
    Doc B gets $300 for procedure B, and does 2 a day
    RUC changes it so that Doc A gets $250, so now Doc B only gets $225.
    In both instances (before and after the RUC change) Medicare pays out $1200 per day IF THE NUMBER OF PROCEDURES STAYS THE SAME. But the number doesn’t stay the same. Doc A now does 4 per day because its more lucrative to do so, and Doc B has to do 3 per day to make up for the unexpected shortfall.

  3. I need something clarified: I keep hearing things like what Platon20 writes above. Their basic claim is that all the RUC does is shift money away from general practitioners and towards many of the specialties, while the total amount spent is unchanged as a result of RUC. But is that right?

    If the RUC is saying how much time something takes, and it is on average underestimating how much time procedures take, doesn’t that result in higher actual billings than the RUC predicted would occur? When CMS sets fees using RUC data, does it continue to assume a procedure takes 30 minutes when in reality it takes 15 minutes, and so set its prices using faulty assumptions about how much will be billed at a given price? I’ve read about the RUC dozens of times, but still don’t understand this.

  4. The RUC does NOT set overall prices, it simply distributes the proportional breakup of the total “pie” of money given to it by the federal government.

    If we replaced every doctor on the RUC with a layperson, guess what happens to the total number of dollars paid to doctors? Answer: it stays the same or increases.

    If the RUC gives extra proportion of RVUs to a subspecialist, then to keep the pie at 100% it MUST take away an equal proportion from other doctors.

    The RUC controls the PROPORTION of money that is divided among doctors, it does NOT control prices. Why do so many people (including healthcare economists) fail to understand that?