What Determines What Doctors Get Paid?
Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs.
Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors.
But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals. (Washington Post)
“But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals.”
This is bound to happen. Fox guarding the hen house.
Just one more reason that we need a real market in health care.
“If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting.”
Exactly, market rate’s would take everything into account and not distort the prices
“To determine how long a procedure takes, the AMA relies on surveys of doctors conducted by the associations representing specialists and primary care physicians. The doctors who fill out the surveys are informed that the reason for the survey is to set pay. Increasingly, the survey estimates have been found so improbable that the AMA has had to significantly lower them, according to federal documents.”
“But she defended the accuracy of the values assigned to procedures, saying that the committee is careful to make 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”
The relative prices are good! I promise!
“more work are assigned larger values than those that involve less”
This doesn’t really tell us anything about how accurately they are valued, just that they aren’t complete morons.
“But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals”
Does this surprise anyone? Doctors often stop by for mere seconds. It’s probably very easy to mistake 30 seconds for 1 min.
Exactly. Doctors are famous for popping their head in only after the nurse/PA has done most of the extensive work.
I gets even worse than what is described. The specialists who make up the AMA committee heavily favor specialty physicians. Thus, they shortchange primary care doctors on fees. This results in two primary outcomes: 1) Poorly-reimbursed, primary care physicians, cannot afford to spend much time on any given patient. As a result, they tend to refer anything other than routine wellness visits to a specialist. 2) Specialists receive more referrals — which are more highly paid than would be the case if primary care physicians were adequately reimbursed.
But of course they’re estimated to be exaggerated…
Doctors meeting confidentially every year to determine value and pricing…sounds pretty distorting toward the market.
As usual, the Post ignores the forest while focusing on the exaggeration trees.
There’s a whole branch of economics devoted to figuring out what determines market clearing prices.
The Marxist Labor Theory of Value is not it.
I agree with Linda Gorman. Who (other than the doctors) really cares how long it takes to do a procedure? I have no idea how long it took various people to manufacture my automobile, and neither does the U.S. Department of Transportation.
Imagine if we allowed the government to determine how much cars cost based on the amount of time and “intensity” of work of the various people who build and distribute them.
The U.S. DoT would ask the professional organizations representing various engineering specialties and other occupations how much time it took for them to do their work on a Toyota Camry, a Porsche 944, et cetera; and put figures into a big spreadsheet.
And we would wonder why productivity never increased!
John Graham makes a valid point that nobody seems to realize. The only reason why anyone cares how long it takes to perform, say, an appendectomy is because someone other than the patient (i.e. a third-party) is paying our bills. When my car is in the shop, my mechanic provides an estimate based on a standardized database of time required for various services multiplied by the shop’s hourly rate. There usually over-estimate the time required but all auto repair shops use these estimates. However, the hourly shop rate differs. If a firm wants to remain competitive, they can lower the shop rate. If I don’t like the cost, I can go elsewhere.
The problem is the AMA panel. Rather, it’s a symptom. This AMA panel is an artifact of a third-party bureaucracy.