The AMA’s Little-Known Committee that Sets Physician Service Prices

The Relative Value Scale Update Committee (RUC) meets three times a year to consider changes and additions to the “relative value” of more than 10,000 billing codes in the Medicare physician fee schedule. Each year, in a textbook example of what economists call agency capture, the Centers for Medicare and Medicaid Services sets physician service prices based almost entirely on the RUC’s recommendations, which systematically overweight technical skills like surgery and underweight the cognitive skills used in primary care. The RUC’s 32-person roster includes one voting member for each of the 27 medical specialties recognized by the AMA.

The results are one of the primary roadblocks to achieving better health at lower costs from America’s wildly overpriced health care system – the dearth of primary care physicians. Orthopedic surgeons and invasive cardiologists wind up earning, on average, over $600,000 a year. In comparison, family physicians and pediatricians earn around $250,000, according to the latest Modern Healthcare survey of physician compensation consulting firms (subscription required). The spread between the highest and lowest paid doctors has gone up by nearly $75,000 over the past decade — despite the AMA’s insistence that it is taking steps to redress an imbalance that discourages more young doctors from entering primary care.