Pricing for physician procedures based on bloated numbers

Washington Post investigation claims an American Medical Association (AMA) committee that determines values based on time and intensity of medical services has exaggerated the time it takes to perform many procedures--sometimes by as much as 100 percent.

Medicare and most private payers use the AMA panel's annual recommendations to determine what they pay physicians for the services.

According to the analysis, some doctors would have to average more than 24 hours in a day to perform the procedures that they report. It's not the volume or work that's the issue, the Post reports, it's the amount they are paid based on rates established by the government under the guidance of the AMA.

To illustrate the problem, the article points to the time involved for a colonoscopy. The AMA panel estimates it takes 75 minutes of a physician's time to complete the entire procedure. But according to the newspaper's investigation--which included an analysis of doctors' time and medical records, as well as interviews and reviews of medical journals-- the total time a physician actually spends on the procedure is approximately 30 minutes.

The Post says it appears that the AMA panel has inflated the value of many procedures. Part of the problem is the group determines the length of a procedure based on physician surveys conducted by associations that represent specialists and primary care physicians. Respondents know that the survey is used to set pay.

But the Post investigation reveals that the AMA committee, in conjunction with Medicare, is seven times more likely to raise estimates of work value than to lower them, even when productivity and technology advances should have reduced the time required.

In response to the Post story, Barbara Levy, chair of the AMA committee that sets the values, told the newspaper that "all of the times are inflated by some factor" but not by the same amount.

She told the Post that the committee makes sure that the relative values of the procedures are accurate--that is, procedures involving more work are assigned larger values than those that involve less. It is then up to Congress and private insurers to assign prices based on those values.

"None of us believe the numbers are fine-tuned," Levy told the Post. "We do believe we get them right with respect to each other."

To learn more:
- read the Washington Post article

Suggested Articles

Cigna chief David Cordani said it’s time to pump the brakes on calls for a healthcare system overhaul like “Medicare for All.”

As Senate lawmakers examined legislation aimed at curbing runaway healthcare costs Tuesday, solutions to surprise medical bills remained key points. 

A pair of ACA reforms could make coverage more affordable for consumers while also cutting federal spending, according to a new report.