Is current Medicare payment system illegal as well as unfair to PCPs?

August 17, 2011

The filing of a lawsuit by six Georgia primary care physicians has escalated the battle against the American Medical Association (AMA)-led process that favors higher payments to specialists at the expense of primary care. Read more to learn why plaintiffs maintain that government reliance on AMA?s Specialty Society Relative Value Update Committee (RUC) violates federal law.

The battle against the American Medical Association (AMA)-led process that favors higher payments to specialists at the expense of primary care physicians (PCPs) is quickly escalating into a war, with the filing of a lawsuit in federal court by six Georgia PCPs.

The lawsuit, filed in U.S. District Court in Maryland, maintains that the Centers for Medicare and Medicaid Services (CMS) and its parent agency, the U.S. Department of Health and Human Services (HHS), are in violation of federal law because they rely too much on the AMA’s Specialty Society Relative Value Update Committee (RUC) to set values for Medicare payments.

“CMS has failed to realize that 20 years of AMA RUC control over the physician fee schedule has resulted in a process that is irrational, arbitrary, and absolutely destined to lead to the continued devastation of primary care,” the lawsuit states.

The RUC was created in 1991 to make recommendations to CMS on the physician work component of the relative value units used to determine Medicare payments to doctors. The lawsuit, filed by physicians associated with the Center for Primary Care, a medical practice near Augusta, Georgia, claims that the RUC is an “unchartered and unofficial Federal Advisory Committee,” and thus is operating in violation of several laws, including the Patient Protection and Affordable Care Act passed last year.

In the past, the AMA has maintained that the committee is just an independent group exercising its First Amendment right to petition the federal government.

Plaintiffs point out that only two of the 26 voting members of the RUC represent primary care, yet the federal agencies “have relied and continue to rely upon the AMA RUC to make critical national policy determinations with regard to physician payment for primary care. This reliance continues despite 20 years of the AMA RUC’s failures to adequately address the disparity between payments and reimbursements to primary care physicians as opposed to specialist physicians.”

U.S. Rep. Jim McDermott (D-WA), a physician who introduced legislation to require CMS to consider input from neutral third-party analysts in addition to the RUC when setting reimbursement rates, said the lawsuit “brings to light another important point-that reliance on the RUC is not only bad policy, it may also be a violation of federal law.”

McDermott said that because of “distorted” Medicare reimbursement rates created by the RUC, “too many medical school students are choosing to become specialists because CMS pays specialists much more than primary care doctors,” which has exacerbated PCPs.

In June, the American Academy of Family Physician (AAFP) sent a letter to RUV chairwoman Barbara Levy, MD, insisting that changes be made to the committee’s makeup so that its determinations would be fairer to primary care. Those changes included adding four more primary care seats to the committee.

AAFP asked for a decision on those changes by next March, and, in July, formed the Primary Care Valuation Task Force to explore more appropriate ways to value evaluation and management (or E/M) services, the most common services provided by PCPs.

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