Last month the Government Accountability Office (GAO) released a report summarizing its investigation into Medicare’s physician payment rate setting mechanisms. The current Medicare rate setting process relies heavily on the American Medical Association’s Relative Value Scale Update Committee (AMA RUC).

In its report, the GAO analyzed both the AMA RUC’s recommendation process and the Medicare rate setting process. The GAO noted that because the RUC’s recommendations are based on data submitted by physicians, there is a degree of inherent bias. The GAO also found that RUC recommendations are often based on input from a relatively low number of physicians. Analysis of the Medicare process was far more critical. The GAO noted that Medicare doesn’t follow a standardized process for reviewing RUC recommendations and does not have other reliable data sources for rate setting.

The GAO made recommendations to Medicare to improve its process by increasing transparency and obtaining better data. Recommendations include:

  1. Improve the documentation of the process for establishing relative values for Medicare physicians’ services, including the methods used to review RUC recommendations and the rationale for final relative value decisions.
  2. Develop a process for informing the public of potentially misvalued services as identified by the RUC, as CMS already does for potentially misvalued services identified by CMS or other stakeholders. (GAO clarified that this does not have to be completed through rulemaking.) 
  3. Incorporate data and expertise from physicians and other relevant stakeholders into the process, as well as develop a timeline and plan for using the funds appropriated ($2 million annually). 

CMS generally agreed with the recommendations outlined by the GAO.

Read the report – MEDICARE PHYSICIAN PAYMENT RATES: Better Data and Greater Transparency Could Improve Accuracy