The Washington Post has a story on the 'secretive panel' of doctors who come up with the pricing on all medical procedures:
Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs.
Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors.
But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals.
If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting. This volume of work does not mean these doctors are doing anything wrong. They are just getting paid at the rates set by the government, under the guidance of the AMA.
So, who's surprised by this? And it gets better:
To determine how long a procedure takes, the AMA relies on surveys of doctors conducted by the associations representing specialists and primary care physicians. The doctors who fill out the surveys are informed that the reason for the survey is to set pay. Increasingly, the survey estimates have been found so improbable that the AMA has had to significantly lower them, according to federal documents…
In the late 1980s and early ’90s, the United States called on a group at Harvard University to develop a more deliberate system for paying doctors.
What they came up with, basically, is the current point system. Every procedure is assigned a number of points — called “relative value units” — based on the work involved, the staff and supplies, and a smaller portion for malpractice insurance…
This point system is critical in U.S. health-care economics because it doesn’t just rule Medicare payments. Roughly four out of five insurance companies use the point system for the basis of their own physician fees, according to the AMA. The private insurers typically pay somewhat more per point than does Medicare.
Once the system developed by the Harvard researchers was initiated, however, the Medicare system faced a critical problem: As medicine evolved, the point system had to be updated. Who could do that?
The AMA offered to do the work for free.
Has no one heard of the fox in the hen house? Sheesh. It's one thing for the doctors' groups to be consulted – they should be – but to drive the entire process? That's absurd.