ATLANTA -- Anew way of paying doctors is in the works, and it's got the American medical establishment on tenterhooks.

It's called relative-value scales, or RVS, a proposed Medicare payment scheme that churned up the biennial American Medical Association meeting here this month. Some doctors called RVS their only hope. Others feared it signaled encroaching socialized medicine.

From the patients' standpoint, RVS would represent the first benchmark for comparing doctors' fees. For Medicare, it's a plan to control the share of the federal budget that goes into doctors' pockets. Higher-paid specialists such as surgeons may suffer. Lesser-paid colleagues such as family doctors and pediatricians may benefit.

RVS would replace a system in which physicians or surgeons can bill Medicare any fee that is "usual, customary, and reasonable." Instead, RVS would specify the worth of a medical service that could easily be used to make a complete fee schedule, with a dollar amount for all services from an appendectomy to an annual physical.

Sounds simple, but it's filled with land mines. Some AMA officials even hint that if Medicare implements RVS in a way physicians don't like, many doctors might boycott Medicare patients. Specifically, the AMA is choleric about rumors that Medicare might demand that RVS-determined levels be accepted by doctors as payment in full.

Though the RVS plan is still being fine-tuned for Medicare at the Harvard School of Public Health, the 400 doctors who make up the AMA's policy-making House of delegates were fully aware that it might change their lives and their tax brackets.

Doctors take Medicare changes very seriously because, in practice, anything Medicare does is soon adopted by private insurers as well.

The reason AMA leadership tentatively endorses the RVS concept is that the alternative reforms seem worse. One was a plan to pay physicians a set fee per diagnosis. Another, also repugnant to the AMA, was a set annual fee per patient. For the past two years, the AMA has used RVS as an argument against the other plans. So in a sense doctors have painted themselves into an RVS corner.

But some doctors are ambivalent about RVS, and not all are ready to accept it without a fight. In fact, RVS theatens to pit some medical specialties against others in an internecine struggle.

At the AMA meeting, surgeons were particularly worried. They questioned the methodology used to create Harvard's RVS model, and they protested against endorsing any plan sight unseen. Internists and family practitioners, on the other hand, seemed quite sanguine about RVS. Indeed, Dr. James Sammons, the AMA's executive vice president, predicted RVS could well end historical fee inequities, which have meant a surgeon's time, for instance, is much more "valuable" than a pediatrician's or family physician's.

The key debate at the meeting was over whether all specialties would trust Sammons and the AMA's Board of Trustees to dicker with the government about the final form of the RVS plan, which will be released in July. This became an issue because the next meeting of the AMA House of Delegates will be in June, too early to pass judgment on the plan. Some delegates saw this a possible anti-AMA conspiracy rather than a coincidence. "Perhaps an accident," said urologic surgeon Arthur L. Dick of Los Angeles, "perhaps not."

To Sammons and the AMA Board, a delay in responding to the RVS plan until the next meeting in December would be fraught with peril, as Medicare might decide in the interim to implement the system with elements unacceptable to the AMA.

So when discussion of RVS came before the House, the board asked for permission to respond to the plan on its own, without prior review by the delegates. It was a dramatic moment for the House -- in effect the AMA's Tonkin Gulf resolution.

In support of the measure, Dr. Ceylon S. Lewis of Tulsa, representing the American College of Physicians, an internists' group, pointed out that "the fate of a lot of us in this room rests on these issues." He pleaded with delegates, "Don't tie the hands of the leadership."

In the end, the delegates gave Sammons and the board freedom to deal with the RVS proposal. "If it's bad news, we're not waiting till the next House {meeting in December} to say it's bad," said Sammons. "We'll try to eliminate the bad points. If it's good, we'll work with the HHS secretary on implementation, which may be rapid."

The Harvard RVS plan, done with AMA as a subcontractor, essentially assigns a relative value to each and every service offered by a physician or surgeon. It will attempt to account for the amount of time, the skill, judgment and training required of the physician, risk to the patient, and practice costs. From this, RVS will determine a number, not a dollar amount. A formula chosen by Medicare or any other insurer -- or physicians themselves -- may be used to convert the scale to a schedule of physician fees.

This plan is viewed widely as being as significant for physicians as Medicare's 3-year-old DRG system is for hospitals. It used to be that more days in the hospital meant more money for the hospital. Now, with DRGs -- diagnosis-related groups -- Medicare pays hospitals a single set amount for a hospitalization, the fee depending on the diagnosis. A hospital is paid the same for a heart-attack patient who goes home in a week as one who goes home in a month, a system that, in theory, promotes efficiency.

Similarly, the old "usual, customary, and reasonable" payment system for physicians, which did little to discourage high Medicare charges for the past 20 years, may yield to the reform of RVS. Physicians' greatest fear about RVS is that it might be accompanied by a provision that would force them to accept the RVS-determined level as payment in full. In the past, physicians have been able to collect charges above reimbursement rates directly from patients. Doctors call this balance billing, and they treasure it dearly. The converse is known as mandatory assignment. Doctors despise it.

"AMA is not committed to adoption of the Harvard RVS," said Dr. William Hotchkiss of Chesapeake, Va., the AMA president. "We continue to exert all our efforts to shape it into an acceptable form, but there are possible provisions that we vigorously oppose that could result in our rejection of the entire project. One of these would be a mandatory-assignment clause."

Dr. James Todd, the AMA's senior deputy executive vice president, called mandatory assigment "involuntary servitude." If Medicare imposed it, he warned, "our concern is that physicians will stop caring for Medicare patients."Jon Hamilton is Washington bureau chief of Physician's Weekly; Mark Bloom is managing editor, in New York.