What Determines How Doctors are Paid?
Medicare sets prices for 7,500 physician tasks based on the recommendations of the American Medical Association’s Relative Value Scale Update Committee (or RUC). How open and transparent is the process? Here is Barbara Levy, chair of the committee:
The general public is able to comment on individual procedures, and processes are in place to ensure that input from all stakeholders is considered by CMS. Finally, the AMA ensures transparency of the process, making the data and rationale for each RUC recommendation publicly available.
Here is Brian Klepper, a critic:
[Levy’s statement is] from an immensely influential Committee that refuses to share the identities of its members except by their societal affiliation, that keeps its proceedings private, and that cannot be observed except by an invitation from the Chair. If anything, the RUC’s goings-on have been secretive and opaque. Go into any health care professional audience and ask, as I have, for a show of hands of people who know what the RUC is. It has been virtually unknown except in wonkiest circles.
A price fixing committee is a necessary component of a rationing scheme, like the WWII Office of Price Administration.
It is impossible for such a committee to accurately estimate the market clearing price for all 7,500 activities Medicare pays for. Getting some prices wrong; too much for this procedures, too little that that one, guarantees a mismatch in the allocation of doctor specialties. It also impacts that allocation of services performed on seniors.
The way doctors are paid is nothing short of scandalous.
They are paid according to a Marxist formula.
After fifteen years in medicine I only make twenty-five dollars an hour. Doctors don’t make money. insurance companies do.
Interesting point. I want single centralised system of payment for health care.I always treasure this idea as being the best way to lower the cost of care for the consumer with the least impact to any given private provider’s operational budget. However that could put more pressure on the RUC to set lower than fair values on high dollar procedures. BTW – Initially setting fair market values for all coded procedures is a long hard process. However, the analysis on the incremental change from year to year is much easier to manage.
They are paid according to the rules of wild west capitalism.