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September 20, 2017

A panel of physicians helps set Medicare payment rates. Is that a conflict of interest?

Daily Briefing

    An American Medical Association (AMA) panel of physicians that gives recommendations to CMS on payment rates is pushing back against criticism from industry stakeholders who say the panel represents a conflict of interest.

    About the panel

    The panel, called the Relative Value Scale Update Committee (RUC), is comprised of 31 physicians. The panel meets annually to determine how much various medical tests and procedures are worth based on factors including:

    • Malpractice costs;
    • Overhead expenses;
    • Time required to complete them; and
    • Work required to complete them.

    According to Axios, RUC issued nearly 3,200 pages of recommendations for 2018. And while CMS usually agrees with about 70 percent of the panel's suggestions, the agency this year—in its proposed physician fee rule—approved nearly every single recommendation RUC made, Axios reports.

    RUC draws criticism

    The panel has long drawn criticism, Axios reports, from stakeholders who say it enables "doctors [to make] recommendations about their own pay, and it's often skewed in favor of higher-paying specialists who tend to put higher values on specialty services at the expense of primary care." And according to Axios, criticism has swelled this year given CMS' decision to accept nearly all of the panel's recommendations.

    For instance, the Medicare Payment Advisory Commission in a letter wrote, "There is evidence that certain procedures are overpriced ... and CMS is missing an opportunity to address this inequity."

    Axios highlighted one suggestion in particular, in which CMS went with the RUC's recommendation regarding ultrasound payments and proposed paying less for complete arm and leg ultrasounds but more for limited ultrasounds. According to critics, that proposal would result in more patients receiving costly MRIs or the limited ultrasounds, a move that would benefit radiologists.

    Colin Edgerton, a rheumatologist from South Carolina, explained, "Radiologists do not currently perform musculoskeletal ultrasound—as MRI is more profitable, and they certainly will not start offering this lower-cost service after the proposed cuts."

    CMS officials have defended the agency's approval of nearly all of RUC's recommendations, saying the agency believes "the majority of practitioners ... would prefer CMS rely more heavily on RUC recommended values in establishing payment rates."

    RUC responds

    Earlier this month, RUC Chair Peter Smith, a heart surgeon at Duke University, in a letter pushed back against the criticism, citing RUC members' expertise and emphasizing that the panel has no control over CMS' decisions.

    Smith in the letter defended physicians' role when it comes to making payment suggestions, writing, "Ultimately, there is no substitute for relying on input from experienced physicians when gauging how much work, time, and resources go into one medical service or another." He added, "No one knows more about what is involved in providing services to Medicare patients than the physicians who care for them."

    Stating that RUC "welcomes a critical review of its recommendations by CMS," Smith also pointed out that stakeholders could relay their concerns directly to CMS via public comment. "The truth is that the RUC does not control the Medicare payment system, nor does it set rates for medical service," Smith concluded. "The regulatory process affords hospitals, home health agencies, nursing homes, private health insurers, and others the same opportunity that the RUC has to provide input into the policies that determine Medicare payment rates. Yet only physicians are singled out for criticism when making recommendations in a manner so organized, thorough, and accurate that those recommendations often are accepted" (Baker, "Vitals," Axios, 9/18; Herman, Axios, 9/14; Smith, RUC statement, accessed 9/18) .

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