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A heavyweight group of former Medicare officials and payment experts are calling on the federal government to overhaul how Medicare pays physicians, which they say has morphed into a system that is “mind-numbingly complex and nontransparent.”

One of the most integral components of this fee system is the American Medical Association’s Relative Value Scale Update Committee, or RUC, a group of 32 physicians that meets behind closed doors a few times every year. The group advises Medicare on how to value the 8,000 payment codes used for physician services by estimating things like the time it takes to do certain procedures and the overhead costs involved with each code. But in reality, Medicare and other health insurers follow a vast majority of the RUC’s recommendations, essentially resulting in physicians and their lobbying groups setting their own pay.


The AMA group’s judgments are based on unreliable, inaccurate data, according to a letter signed by six veteran policy experts who have either worked at the federal Medicare agency or sat on one of Medicare’s independent advisory committees. Misvalued payments consequently lead to too many procedures and tests, and “distort the clinical care offered to Medicare beneficiaries, unnecessarily compromising quality and raising spending.”

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