Thursday, August 21, 2014

What's Old is New: The AMA, Medicare and Value

Almost four years ago, we wrote about a little known committee, nestled deep in the bowels of the American Medical Association (AMA), that exercised outsized power over how much money doctors will receive in Medicare reimbursements:

"Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars"

As reported at the time in the Wall Street Journal, "the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous ... the impact of the decisions made by the doctors on the RUC goes well beyond physician fees"

And indeed, the effects are still incredible: that committee "with the assent of the government, has enormous power to determine Medicare prices by assessing the relative value of the services that physicians perform."

Pretty cozy: the government feeds them, and they divvy up the loot. Nice gig (for them).

But how does that affect thee and me?

Well, it's actually not that complicated: Primary Care docs (representing about 30% of US physicians) are at the bottom of the food chain, even though they are critical frontline actors when it comes to assessing a problem and recommending alternatives. And by "alternatives," we increasingly mean "specialists." And how does that work?

Well:

"[T]he committee has ... skewed Medicare fees in favor of expensive specialists over ordinary general practitioners ... Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect, contributing to a situation where primary care doctors are in general underpaid, underappreciated."

Now , we're not playing the Rich Doctor, Poor Doctor game here, but it's worth noting that the docs who are most involved in our initial care are the ones with the least time at the payment feeding-trough. Here's why: Medicare fees drive (to a significant extent) private insurers' reimbursement schedules. So when that Relative Value committee essentially sets Medicare's fees, they're also effectively setting Anthem's, and Aetna's and Humana's (to name a few). And since most (but not all) docs still accept insurance, the effect is magnified.

It's also worth remembering that the AMA itself represents less than 17% of all US physicians, yet wields this enormous power with little (if any) accountability or oversight. Food for thought.
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