The Government Accountability Office (GAO) recently completed a review of the process used by the government to determine payment rates for over 7,000 services provided by doctors. It substantiated previous criticism of the process while acknowledging some recent movement towards making it better.
The lynchpin of the process is an American Medical Association panel of 25 doctors, called the Relative Value Update Committee, that sets the relative values of physician services. The committee’s membership, meetings and procedures for determining these values are closed to the public.
The committee estimates the time and expenses for each service and uses those estimates to determine relative values. The Centers for Medicare and Medicaid Services (CMS) nearly always accepts those values and translates them into the Medicare physician fee schedule.
This process has often been criticized for its inherent conflicts of interest, its historical tendency to favor specialists over primary care, and the overall lack of transparency.
The GAO offers recommendations to make the process more transparent and open by increasing the ability of other stakeholders to weigh in and determine when services are misvalued. GAO also suggested that CMS make better use of appropriated funds to collect information on physician services and their value.