Out of Whack: Pricing Distortions in the Medicare Physician Fee Schedule

Journal Article

Out of Whack: Pricing Distortions in the Medicare Physician Fee Schedule

December 13, 2010

Abstract

This issue brief describes the mispricing of services in the Medicare Physician Fee Schedule resulting from the flawed specialty society-driven process for setting and updating the relative value scale that forms the basis for fees. The paper advocates moving to an altered process using objective data for the core component of time spent providing a service. The paper also emphasizes the various reasons why even new payment approaches to paying for services will continue to rely on an accurate relative values and suggests that purchasers and commercial insurance payers, which use the Medicares relative value scale to guide their own fee schedules, should play an increased role in helping Medicare correct the current pricing distortions.

Research Area: 

Centers

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