Physician Panel Determines The Fees Paid By Medicare

By Author: Ruskin Booth
Total Articles: 14
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Did you know that three times a year, 29 doctors gather around a table in a hotel meeting room to divide up billions of Medicare dollars? “It seems odd,” comments Alan Weinstock, insurance broker at MedicareSupplementPlans.com, “considering this group has no official government standing.”

However, the group is known as the Relative Value Scale Update Committee (RUC). It is a highly influential panel made up of representatives from various medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Secretive Panel Offers Medicare Recommendations

The purpose of the committee is to act as “an expert panel in developing relative value recommendations” for the Centers for Medicare and Medicaid Services (CMS). The panel's main focus is to estimate how much work it takes a physician to perform a given task. The CMS typically follows 90% or more of the physician panel’s recommendations in figuring out how much to pay doctors for their work.

The members of the RUC have an important task given that Medicare spends over $60 billion a year on doctors and ...
... other practitioners. Many private insurers and Medicaid programs also use the federal system to create their own fee schedules.

Issues with the RUC and Medicare RVS Process

While the RUC gives physicians a voice in shaping Medicare relative values, many have questioned whether doctors have too much control over the flow of taxpayer dollars in the $500 billion Medicare program. The chief complaint is that the committee enables the Medicare system to spend more money on sophisticated procedures and not enough on the essential primary care that could keep patients healthier and save more money.

“You have to ask whether it makes sense to have the interested party at the forefront of the decision-making process,” suggests Weinstock.

A recent analysis suggests that services can be paid too generously in some cases because fees are based on out-of-date assumptions about how the work is done. In one case, more than 550 doctor services that were being performed primarily as outpatient or in doctors' offices automatically included significant payments for hospital visits—typically part of an inpatient stay—after the day of the procedure.

The difficulty is that when Medicare pays more for a procedure, doctors become incentivized to do more of that procedure—along with all the associated costs for hospitals, lab tests and drugs; so overvalued Medicare codes could lead to increased Medicare spending. And with spiraling Medicare costs—up nearly 9% in 2009—and millions of new Medicare beneficiaries each year, the harsh reality is that the program is struggling.

Finding Balance in Medicare Fees

The hope is that with the federal health-care overhaul, which requires the government to insure that the doctor-fee values adopted by Medicare are accurate, it is up to the panel to detect and suggest fixes for payments based on out-of-date assumptions.

Though the procedure times used by the RUC to calculate values may sometimes be exaggerated, changes have been made over the years. And even though most feel that this system is imperfect, for the time being it is the best that’s out there.

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