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Tip Sheets

How a secretive panel uses data that distorts doctors’ pay

By Joseph Burns 

Joseph Burns
Joseph Burns

One factor that makes health care costs difficult to manage is the system the federal government and health insurers use to decide how to pay physicians for the various services they deliver. In an article in The Washington Post, “How a secretive panel uses data that distorts doctors pay,” journalists Peter Whoriskey and Dan Keating explain that a committee of the American Medical Association meets in private every year to develop values for most of the services doctors perform. The AMA is the chief lobbying group for doctors.

“Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors,” Whoriskey and Keating wrote.

The problem with this secretive 31-member AMA committee called the Relative Value Update Committee (RUC) is that the AMA’s estimates of the time involved to do procedures are exaggerated by as much as 100 percent, according to an analysis by Whorisky and Keating.

“To more broadly examine the validity of the AMA valuations, The Post conducted interviews, reviewed academic research and conducted two numerical analyses: one that tracked how the AMA valuations changed over 10 years and another that counted how many procedures physicians were conducting on a typical day. It turns out that the nation’s system for estimating the value of a doctor’s services, a critical piece of U.S. health-care economics, is fraught with inaccuracies that appear to be inflating the value of many procedures,” they wrote.

Some officials quoted in the article say the AMA and specialty societies have been given too much influence over physician pay. The article explains the RUC system in detail, outlining its flaws and the power it yields over how federal and state governments and private insurers pay physicians.