Wreck the RUC

Yesterday, the Government Accountability Office (GAO) released a withering report on how Medicare sets the fee schedule for paying physicians.

The American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) has a process in place to regularly review Medicare physicians’ services’ work relative values (which reflect the time and intensity needed to perform a service). Its recommendations to [CMS], though, may not be accurate due to process and data-related weaknesses. First, the RUC’s process for developing relative value recommendations relies on the input of physicians who may have potential conflicts of interest with respect to the outcomes of CMS’s process. . . . . Second, GAO found weaknesses with the RUC’s survey data, including that some of the RUC’s survey data had low response rates, low total number of responses, and large ranges in responses, all of which may undermine the accuracy of the RUC’s recommendations. For example, while GAO found that the median number of responses to surveys for payment year 2015 was 52, the median response rate was only 2.2 percent, and 23 of the 231 surveys had under 30 respondents.

. . . [T]he evidence suggests—and CMS officials acknowledge—that the agency relies heavily on RUC recommendations when establishing relative values. For example, GAO found that, in the majority of cases, CMS accepts the RUC’s recommendations and participation by other stakeholders is limited. Given the process and data-related weaknesses associated with the RUC’s recommendations, such heavy reliance on the RUC could result in inaccurate Medicare payment rates.

This isn’t the first time the RUC has come in for serious criticism. Nor will it be the last. Rife with conflicts of interest and not especially transparent, the RUC is a specialist-dominated committee that “donates” more than $8 million of its own services each year to Medicare, presumably out of the goodness of its heart.

The RUC’s job is to tell CMS how much time and effort it takes to provide medical services in the hopes of influencing how Medicare pays physicians. Since CMS has been starved of the resources necessary to independently review physician services, the agency has little choice but to rubber-stamp most of the RUC’s recommendations.

In recent years, Congress has taken modest steps to fix the problem. The Protecting Access to Medicare Act of 2014, for example, appropriates $2 million each year to enable CMS to collect information directly from physicians about the relative value of their services. But CMS doesn’t have a plan about how it will spend that money, and in any event $2 million won’t go far when it comes to reviewing thousands of physician services.

Doing the job right would cost real money, but it’d be a pittance when compared to the $70 billion spent on physician payments in 2013. If we insist on running Medicare on a shoestring, we shouldn’t be surprised when it doesn’t work very well. Sometimes you get what you pay for.


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