The RUC Is Bad Medicine; It Has to Go

Brian Klepper, PhD

Disclosures

August 12, 2013

In This Article

RUC Is a Deep Root of Our Healthcare Crisis

"One of the biggest mistakes we made...is that we took the RUC...back in 1992 and gave it to the AMA...It's incredibly political, and it's just human nature...the specialists that spend more money and have more time have a bigger impact."[1]

Brian Klepper, PhD

This quote was from Tom Scully, former Administrator, under President George W. Bush, of the Centers for Medicare & Medicaid Services (CMS), previously the Health Care Financing Administration (HCFA). Scully was a panelist in a May 2012 Senate Finance Committee roundtable discussion by former HCFA/CMS Administrators and has become one of the RUC's most outspoken critics.

He was explaining how the American Medical Association (AMA) Relative Value Scale Update Committee (RUC), a group that sought to help the government by overseeing a valuation process for medical services, came to dominate and distort the pricing used in Medicare, Medicaid, and commercial health plans.

Mr. Scully shared this sentiment recently: "The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild...Having the AMA run the process of fixing prices for Medicare was crazy from the beginning."[2]

Gail Wilensky, HCFA Administrator under the first President Bush, was wistful. "It happened innocently enough."[3]

It is remarkable and compelling to hear these federal health program ex-stewards express regret about a fiasco that they had a hand in. Their mea culpas are almost palpable. Mr. Scully, in a recent Washington Post video interview, gave a quick aside: "It's partially my fault."[4]

The RUC Becomes Exposed to America

Before last month, hardly anyone in America had ever heard of the RUC, much less understood how it works. For almost 20 years, it mostly flew under the mainstream media radar. Then, in October 2010, the Wall Street Journal's Anna Mathews and Tom McGinty delivered a scathing exposé[4] that described the RUC's manipulation of healthcare pricing. Mr. Scully memorably called the RUC "indefensible."

Time passed. Then last month, Washington Monthly editor Haley Sweetland Edwards resurrected the topic with a witty explication of the RUC's "Special Deal." This was rapidly followed by a Washington Post front-page article[2] in which Peter Whoriskey and Dan Keating showed how the RUC's valuations are sufficiently skewed such that they permit Medicare to pay some physicians for more than 24 hours of work each day.

For a brief moment, the RUC was front and center in the American media. Here was a secretive, 31-physician, specialist-dominated healthcare star chamber, operating under the auspices of the AMA and directly complicit with CMS. It values medical services, often spun to panelists' interests. CMS historically has accepted nearly 90% of the RUC's recommendations, with no further due diligence.[5] A deliciously grand scandal, and one of the deep roots of America's healthcare crisis, taking advantage of us all.

The question, though, is whether anyone can do anything about it.

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