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Tom Price, RUC, and Reasonable Physician Fees

Posted by Becky Martin, NPA Advocacy Director August 7, 2017 at 11:39 AM

Written by James Rickert, MD, NPA Board Member and Orthopedic Surgeon

CMS’ reliance on the American Medical Associations Relative Value Update Committee (RUC) to set physician reimbursement rates is misguided and should be curtailed.  Things were moving this way under the Obama Administration with officials within CMS taking greater and greater responsibility for determining appropriate payment rates for our nation’s doctors while using the RUC in an advisory capacity.  Unfortunately, the Trump Administration has now announced that they will defer completely to the AMA’s committee in physician rate setting.  While this may seem a relatively technical matter, in truth the effects of using the AMA’s RUC profoundly affect doctors and our healthcare system.

The RUC is an extremely poor tool for developing a fair and reasonable physician fee schedule.   The committee operates in secret with no meaningful attempt at transparency.  Its rate setting process is heavily dependent on coalition building among its members rather than on a published and reproducible methodology that attempts to fairly value the various forms of physician work.  Furthermore, it is not representative of the medical community; politically powerful physicians, like orthopedic and neurosurgeons, wield far more influence than primary care providers.  Furthermore, the current arrangement gives a politically active physician advocacy and lobbying organization, the American Medical Association, a monopoly over the task of valuing physician services.  Its committee members suffer from inherent conflicts of interest and tend to overestimate the required physicians’ work for medical procedures.

As an example of this from my and Dr. Price’s specialty of orthopedics, we are paid approximately 8-10 times more for a 20-minute knee arthroscopy than we are for a 20-minute conversation with a patient about serious problems such as narcotic overuse or the management of metastatic bone cancer.  I can assure readers that, despite the significant difference in reimbursement, such conversations take at least as much focused energy as does the surgical procedure.

This kind of skewed reimbursement has inevitably led to a chronic and continuing undervaluing of primary care services while procedures continue to be overpriced.  Among other effects, this has resulted in a reduced and demoralized primary care provider workforce as medical students are drawn to the unjustifiably higher paying procedural specialties while our nation’s primary care workforce languishes both in size and funding. This inadequate primary care base leads to significantly higher costs, lower quality care, a reduction in preventative care, care fragmentation, and an over reliance on medical procedures.

We at the NPA urge CMS to continue the work of the Obama Administration and further develop the capacity to set the value of physician codes through a transparent and direct analysis of physician work data and then publish their results for use by other payers.  Rate setting should be entirely dependent on direct measurement of the time and effort physicians spend in direct patient care. A primary result of such efforts would be a rebalancing of America’s physician workforce between primary and specialty doctors.  Longer term, we urge CMS to develop the methodology required to pay physicians based on the value their services provide and move completely away from our current arrangement of setting physician reimbursement rates based upon units of work.  This could lead us to a system of care that pays doctors to keep patients healthy and provides greater value to all our patients.

For more information read:
With Tom Price in charge, doctors are winning again in Washington, STAT (8/1/2017)

NPA Policy Statement
Principles for Reform or Replacement of the Relative Values Scale Update Committee (RUC)
(February 2012)

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