Taking the Taxpayers for a Ride: The RUC

Tax DayThe RUC (pronounced ruck)  is a secretive 29 person panel run by the American Medical Association that steers the cost of healthcare services and guides the government on Medicare reimbursement.   RUC members must sign non-disclosure agreements prior to entering thrice-yearly meetings to review the value of healthcare services for physician reimbursement and discuss how doctors should get paid, based upon the “value” of the procedure they’re performing.  For Medicare, the RUC also establishes the baseline for payment of doctors for services rendered.  Health insurance companies generally follow these recommendations for reimbursement as well.  For example, Medicare pays $111.36 primary care physicians for a 30 minute well checkup per visit.  

Basically, there’s a secret committee that sets the rates doctors can charge if they participate in Medicare.  The government agrees to these payments, and the health insurance industry follows the pricing accepted by the Centers for Medicare & Medicaid Services (CMS).

Let’s examine how the RUC (remember, run by the AMA) influences the Federal Government to accept their proposed “rates” for services as part of the Medicare system.  According to PublicIntegrity.org, since 1991, the RUC has had a 94% success rate getting their fees accepted by Medicare. It could be said that the CMS is letting a non-governmental agency tell them what is the appropriate payment for services, on a government program without questioning the validity of the costs.

A little public policy education

The CMS as an agency of Health and Human Services is bound by the Federal Acquisition Regulations (FAR).  The FAR,  establishes the policies and procedures for acquisition within the Federal Government, and ensures the Government’s needs, CMS in this case,  are met by a supplier.  The following criteria must be accounted for:

  • cost
  • quality
  • timeliness
  • reduced administrative costs

Additionally,  the supplier must conduct business with integrity, fairness, and openness; while fulfilling other public policy objectives.

What’s interesting is that CMS is not contracting with the AMA for the RUC’s recommendations. Instead, the AMA is providing this information to the government as a “service,” and the government is taking these recommendations at face value.  It appears that CMS and the AMA are skirting the FAR with this process.

When Congress began inquires into the potential shortage of primary care physicians in January 2013, they heard testimony of how the RUC devalues preventative care,  it encourages doctors to choose a speciality instead of primary care as the reimbursement rates favor specialists, not primary care doctors. Unfortunately, other than this initial review, Congress hasn’t acted.  As taxpayers we should be contacting our representatives demanding they resolve this with action to eliminate the RUC.

While the RUC’s practice of setting fees for physician services and the CMS practices of accepting those fees carte blanche has gone unnoticed by patients and taxpayers, it hasn’t gone unnoticed by the General Accounting Office.

The GAO has reviewed the CMS’s practice of setting fees for physician services twice in the past ten years.  In the first review (GAO-05-06 on December 13, 2004), the GAO concluded “…CMS’s deviation from its own process in evaluating resource estimates for individual services has caused some physician and specialty societies to question the soundness of the process and CMS’s decision making.”

Then, in a July 2009 report (GAO-09-647): “…the RUC workgroup has not focused on services that account for the largest share of Medicare spending.”   The GAO also found:

The RUC and specialty societies may be limited in their ability to help CMS  quickly identify opportunities for further savings from efficiencies occurring when services are commonly furnished together. The RUC’s methodology for identifying additional services is not focused on finding savings for the Medicare program. Moreover, the RUC workgroup’s dependence on specialty societies limits its ability to make progress.”

It should be noted that the American Medical Association disagreed with the report and many of the GAO’s assessment of the RUC during this review. The GAO also provided examples of alternative analysis processes CMS could use to establish an efficient pricing structure for Medicare. Health and Human services agreed with the GAO findings that CMS could do a better job at evaluating the RUC pricing structure for services.  This GAO recommendation was included in the Affordable Care Act (ACA) as a new requirement for CMS.  It will be interested to see how this plays out under the ACA, as this could be a redeeming provision in the act.

The second problem I see with the RUC is patients don’t see the cost of care until after a visit with their doctor has been submitted to their insurance company, or Medicare, and they receive their explanation of benefits. As consumers, we don’t know our financial liability for services we’ve received until after we get the bill–the system lacks transparency overall.  That doesn’t happen when you go to a fast food restaurant or a 5 star restaurant.  It doesn’t happen when you take your car in to be serviced.  You know the cost before you receive the service.  While in emergency situations, we don’t want to be haggling over the prices of care or coverage during a life threatening event, over the course of everyday life, we still should be able to budget for the cost of regular preventive care before we receive that service.

As a patient advocate, it is my opinion that the RUC and its secret meetings need be replaced with transparency, including full disclosure of their members, the members’ voting record, and the proposed rates for all medical services.  CMS must additionally develop a transparent evaluation process for the rates proposed by the RUC.  From a public policy perspective, it seems reasonable that CMS would accept recommendations in accordance with the Federal Acquisition Guidelines.

Finally, hospitals, medical groups, doctors and insurance companies should publish rates for all medical services.   Publishing rates would force a truly open market and would decrease costs of medical care through a competition, allowing consumers to evaluate rates for medical providers as well as insurance reimbursement during Open Enrollment each year.  This gives patients greater control over their health insurance and medical care costs.

As consumers and taxpayers we need to let our Congressional Representatives and Senators understand that we think the RUC is taking the taxpayers for a ride.  We want them to do their jobs and make changes in law that require the Department of Health and Human Services, CMS to develop new measurements for establishing payments for based upon market conditions.

How can we do this?  Demand your Senators and Representatives require Health and Human Services and CMS to utilize and conform to Federal Acquisition Guideline by soliciting a Request for Proposal.  Then the AMA can compete with other government contractors to develop a new methodology for establishing measurement criteria based upon market conditions to establish payments for services.

Contact your Senator or Congressman with this proposed action.  I can tell you from experience of working Congressional Correspondence in the DOD that these letters are taken seriously.   Make sure you request a response from your representative in writing that explains how they plan to address the elimination of the RUC.

You can also contact the Secretary of Health and Human Services at the same time.

  • Contact your Senator HERE!
  • Contact your Congressman HERE!
  • Contact Health and Human Services HERE!

I’ve written letters you can download and send to your Senator, Congressional Representative!  Lets Flood Congress and take down the RUC and take back our healthcare!