Hugh Pickens DOT Com writes "Peter Whoriskey and Dan Keating report at the Washington Post that Medicare annually pays $69.6 billion for physician services according to an arcane and little-known price list, known as the Relative Value Update over which doctors themselves exercise considerable and less-than-totally-transparent influence. A 31-member committee of the American Medical Association (AMA) recommends what Medicare should pay for some 10,000 procedures — with the fees based in part on how long it takes to complete each one. But this time-and-motion study often fails to take full account of changing technology and other factors affecting physician productivity, so anomalies result. For example, if the AMA time estimates are correct, then 41 percent of gastroenterologists were typically performing 12 hours or more of procedures in a day, which is longer than the typical outpatient surgery center is open and and one gastroenterologist in the Post story would have to work 26 hours, according to the committee time estimates, to accomplish what he gets done in a typical workday. Here's how it works: Medicare pays for a 15-minute colonoscopy as if it took 75 minutes resulting in a median salary for a gastroenterologist of $481,000. It is possible that in 1992, critics allow, when the price list was first developed, a colonoscopy actually took something close to 75 minute when doctors had to hunch over an eyepiece similar to that of a microscope for a look. But technology has advanced and now the images are processed and displayed on a large screen in high-definition video. Responding to criticism that the nation's method of valuing medical procedures misprices payments, a bipartisan group of legislators has drafted a bill that would reshape the way the nation pays doctors. The bill would require Medicare officials to collect data such as how much time doctors spend doing procedures and reducing the doctor payment for overvalued services. 'What started as an advisory group has taken on a life of its own,' says Tom Scully, who was Medicare chief during the George W. Bush Administration. 'The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild.'"
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