On June 14, 2016, during its annual meeting in Chicago, the American Medical Association’s (AMA) House of Delegates approved a resolution recommending the overhaul of CMS’s physician payment rate determination methodologies, arguing that CMS’s process for establishing pay rates for medical procedures is “arbitrary.”  As AMA’s resolution states, “[r]ecent CMS decisions have drastically devalued certain procedures, with the indirect effect of making those procedures less valuable—and it could be argued that the lack of checks and balances in CMS’ relative-value decision making process might potentially enable CMS to foster a two-tiered care system and/or abuse its power in other ways.”

CMS uses the Medicare Physician Fee Schedule to determine payments for physician services. The fee for each service depends on its relative value units (RVUs), which rank the resources used to provide each service.  This process takes into account resource costs, including physician work, physician practice expense and liability insurance costs.  The AMA participates in this process via its AMA/Specialty Society Relative Value Scale Update Committee, which acts as an expert panel in developing relative value recommendations to CMS.  However, during its annual meeting last week, AMA members contended that CMS routinely ignores the committee’s recommendations on setting payment rates.  In its resolution, the AMA argued that the lack of physician appeal rights or right to sue CMS over rate-setting is unfair, and, accordingly, the AMA should seek federal legislation imposing “checks and balances” on CMS’s relative value determinations.  The AMA further recommended the establishment of an appeals process allowing physicians to object to relative values set by CMS.

Materials from the 2016 AMA Annual Meeting are available by clicking here. 

Reporter, Katy Lucas, Atlanta, +1 404 572 2822, klucas@kslaw.com.