Should a secret panel of doctors define Medicare payment rates?

Does a secret panel of physicians handpicked by medical specialty trade groups wield too much power over Medicare fees?
That's a question the Wall Street Journal has raised in an article on the Relative Value Scale Update Committee (RUC). That's a panel of 29 doctors handpicked by medical specialty trade groups and convened by the American Medical Association. Its main focus is to estimate how much work a physician must do to perform a task.
While the group has no official government standing, CMS usually follows at least 90 percent of its recommendations on how much to pay doctors for their work.
A Wall Street Journal analysis of Medicare and RUC data suggest that services received too much money in some cases, because the fees were based on obsolete assumptions. For example, more than 500 doctor services that are performed as mostly outpatient or in doctors' offices in 2008 still automatically include significant payments for hospital visits the day after the procedure, which would usually be part of an inpatient stay.

Opponents of the panel say the committee promotes a system that spends too much money on fancy procedures, while giving basic primary care that could keep patients healthier from the get go and save money short shrift. Critics also point to a conflict of interest.

"It's indefensible," Tom Scully, a former CMS administrator and now a lawyer in private practice, told the WSJ. "It's not healthy to have the interested party essentially driving the decisionmaking process."

Robert Berenson, vice chair of the Medicare Payment Advisory Commission (MEDPAC), a Congressional Watchdog, noted that the setup "produces increased spending for Medicare and for the rest of the system."

Within the panel, some clashes between primary-care doctors and a surgical factions have occurred. In one instance, primary-care doctors called for the addition of another primary care seat on the panel, but got voted down. According to J. Fred Ralston, president of the American College of Physicians, the panel seemed more heavily weighted to specialties that are more procedure-oriented.

Dr. Barbara Levy, a Seattle-area gynecologist who heads up RUC, told the WSJ that the panel is not meant to be representative. And she seemed to deny any conflict of interest. "The outcomes are independent of who's sitting at the table from one specialty to another," she said.
To learn more:
- here's the Wall Street Journal article on the physician panel
- check out this Wall Street Journal article on a conflict among panel members in which primary-care doctors clashed with a surgical faction
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