• GAO: Medicare-Paid Physicians Decide How Much Money They Make

    A committee of Medicare physicians controls how much doctors providing services to the government program’s patients are reimbursed for their services, but don’t ask to see the reasoning behind their decisions.

    Physicians received more than $70 billion in such payments from the government in 2013.

    The reimbursement panel withholds information about its members and voting records from taxpayers even though conflicts of interests are all but certain. The panel is comprised of doctors who benefit from its decisions, according to the Government Accountability Office.

    The American Medical Association formed the Specialty Society Relative Value Scale Update Committee in 1991 to help the Centers for Medicare and Medicaid determine how much to pay physicians for each service. CMS relies heavily on the committee’s recommendations following nearly seven out of 10 of its recommendations.

    “Although the [committee] is currently the only comprehensive source of information regarding physician work, its recommendations may be undermined by … potential conflicts of interest,” GAO said.

    Eliminating the conflicts of interest, however, is difficult since Medicare-paid physicians are among the few experts on how much their services are worth.

    “This has got to have a lot of subjectivity to it,” said John O’Shea, a senior fellow at the Heritage Foundation and a practicing surgeon. He noted that a cardiologist and a primary care physician would disagree over how much each of their services were worth.

    Instead, O’Shea suggested that Medicare switch to a system that pays for a patient’s outcome, rather than a physician’s service. In other words, doctors are paid for the quality and efficiency of their patients’ recovery.

    “I think the system is starting to move toward that, but it’s a fairly slow process,” O’Shea said. “The fee-for-service system is going to be around in some shape or form for a while.”

    However, O’Shea admitted that a system based on care would also be flawed, since patient outcomes are often beyond a doctor’s control. Two patients could receive the same treatment for the same illness, but could see opposite results.

    If a patient-outcome system can’t be developed, there could at least be improvements to the current method.

    “This system can be made better, realizing this system has some inherent flaws,” O’Shea said. He agreed with the accountability office’s finding that the relative value committee lacks transparency.

    For example, the committee requires certain panels to “include a mix of physician and non-physician experts” to decrease conflicts of interest, but investigators found “detailed information on composition was frequently missing,” GAO said.

    The committee argued that it doesn’t disclose voting records “to protect members’ independence through the deliberation process from, for example, outside lobbying and potential negative feedback from colleagues.”

    Further, the relative value committee’s votes are usually unanimous, GAO said. “This unanimity typically results from members resolving disagreements about services during deliberation.”

    O’Shea believes more transparency is needed. “They say the meetings are open and that the public can go to them, but if you go, you have to sign sort of a nondisclosure form,” he said.

    Consequently, CMS can’t be transparent about the panel’s work, since it heavily relies on the opaque committee. A lack of transparency and data sources “may undermine payment rate accuracy,” GAO said.

    Inaccurate payment values could incentivize physicians to provide services that would give them a bigger payday from Medicare, “which affects patient care … Mis-valuation can also lead to unwise spending of taxpayers’ and beneficiaries’ money.”

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