Congress moves to cut physician pay for medical procedures deemed overvalued

The Senate approved a bill Monday that calls for finding reductions of hundreds of millions of dollars in what the government spends for physician fees on overpriced medical procedures.

The measure follows years of criticism of the way that Medicare, and in turn the entire U.S. health market, decides how much to pay a physician for performing a procedure.

“This is absolutely a move in the right direction,” said Robert Berenson, a fellow at the Urban Institute and a longtime critic of the way the prices are set. The targeted cuts “keep the pressure on the process,” he said.

The House approved the measure last week.

Exactly what a physician earns for performing a given procedure or exam is in large part determined by a collaboration between the American Medical Association (AMA), which assigns points to virtually every task that a physician charges for, and the federal Medicare system, which assigns dollars to each point.

The Medicare prices form the basis of prices throughout the U.S. health-care system because insurance companies base what they pay physicians on the government prices.

The measure approved Monday instructs Medicare officials to review the value of some procedures and sets a target for reductions of misvalued codes of hundreds of millions of dollars. The bill also orders the Government Accountability Office to study the AMA process for setting the value of procedures.

In a statement, AMA President Ardis Dee Hoven expressed disappointment that a proposal for a broader set of changes in the way that the government determines doctor pay was not adopted.

“By cherry picking a few cost savings provisions from the context of a larger bill, the actions of Congress actually undermine” passage of a broader effort to reform how the government pays doctors, Hoven said.

The measure that passed Monday is a response to years of criticism, however. Congress’s Medicare watchdog, the Medicare Payment Advisory Commission, began raising questions about the pricing several years ago. Others noted that the AMA committee that sets the values met privately and that specialty doctor societies sometimes jockeyed to raise the values of procedures within their field.

More often than not, the government accepted the AMA’s estimates of value.

In July, The Washington Post reported that the panel’s methods for gauging the value of procedures were flawed, in part because the estimates it used for how much time it takes to perform a procedure were off in some cases by as much as 100 percent.

The AMA has sought to improve its methods, too. Last fall, the organization moved to open up its decision process and, to ensure the accuracy of the values, improved the methods used to survey doctors about what is involved in performing a procedure.

Peter Whoriskey is a staff writer for The Washington Post handling investigations of financial and economic topics. You can email him at peter.whoriskey@washpost.com.
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