On May 9, 2012, a Maryland federal court judge determined that Congress precluded the courts from reviewing the method by which Medicare determines how much doctors get paid by Medicare. Six Georgia physicians had brought a federal lawsuit challenging the method by which the Physician Fee Schedule (PFS) was formulated to determine how much health care providers are paid for various procedures under the Medicare program.

The Plaintiffs’ Allegations

In particular, the physicians challenged the dominating influence that the American Medical Association’s Relative Value Update Committee (RUC) has on the way the “relative value units” (a major component of the fee structure) are calculated. They argued that certain medical specialties are disproportionately represented on the RUC and therefore primary care physicians, like the six physicians in this case, are undercompensated under the PFS. They also argued that there is over-use of unnecessary medical procedures by RUC-favored specialists that results in major harm to the national health care system and negatively affects health care spending due to the over-reliance on RUC in formulating the PFS.

In Simple Terms, What Are The Plaintiffs Claiming?

In short, the argument was that the medical specialists on the Committee have undue influence in determining who gets paid what by Medicare, and that they tend to protect their own specialists’ financial interests at the expense of others, such as primary care physicians.

What Were The Plaintiffs Seeking?

The Plaintiffs wanted the Maryland federal judge to find and declare that Medicare was violating the Federal Advisory Committee Act (FACA) because the RUC’s influence is so dominating in the process that it is actually acting as a Federal Advisory Committee (FAC) and therefore subject to the provisions of FACA, and was violating FACA, the Administrative Procedures Act, and the Patient Protection and Affordable Care Act.

The Judge’s Discussion Of The Relevant Medicare Law And The Plaintiffs’ Claims

The Maryland federal judge stated in his written opinion as follows:

Medicare, Title XVIII of the Social Security Act, is a federal health insurance program for the aged and disabled. This action relates to Part B of Medicare, a voluntary supplemental insurance program that covers payments for physician’s services and other healthcare services…Fees paid to physicians who elect to participate in the program are capped by the annual PFS which sets the fees for hundreds of types of specific services. Payment amounts under the PFS are calculated by multiplying (1) the relative value of a service; (2) the conversion factor for the particular year; and (3) the geographic adjustment factor applicable to the locality in which the service was provided…This case relates to the determination of the first component, the relative value of a service, which is calculated by combining three subcomponents, each of which is measured in terms of relative value units (“RVUs”). The three subcomponents are (1) the work component; (2) the practice expense component; and (3) the malpractice component…

The RVUs are revised each year by CMS. According to the Complaint, RUC has met each year since 1991 to “debate relative values based upon input from surveys distributed to specialty societies.” …RUC then makes recommendations to the Secretary of HHS. Although Plaintiffs acknowledge that the Secretary rejects some of those recommendations,…Plaintiffs assert that most RUC recommendations are routinely adopted into the final PFS.

Accepting as true that RUC plays a major role in the formation of the PFS and also accepting as true that this role unfairly skews the PFS toward certain medical professions and procedures, the Court, nonetheless, finds that Congress has precluded courts from reviewing, not only the final relative values and RVUs, but also the method by which those values and units are generated. Section 1395w-4(i)(1) of Section 42 of the United States Code provides: There shall be no administrative or judicial review under section 1395ff of this title or otherwise of–(A) the determination of the adjusted historical payment basis (as defined in subsection (a)(2)(D)(i) of this section), (B) the determination of relative values and relative value units under subsection (c) of this section, including adjustments under subsections (c)(2)(F), (c)(2)(H), and (c)(2)(I) of this section and section 13515(b) of the Omnibus Budget Reconciliation Act of 1993, (C) the determination of conversion factors under subsection (d) of this section, including without limitation a prospective redetermination of the sustainable growth rates for any or all previous fiscal years, (D) the establishment of geographic adjustment factors under subsection (e) of this section, and (E) the establishment of the system for the coding of physicians’ services under this section.

Therefore, the Maryland federal judge concluded, “the Court finds that Plaintiffs’ claims are barred by 42 U.S.C. § 1395w-4(i)(1). Accordingly, Defendants’ motion to dismiss will be granted.”

You can read the Judge’s Memorandum opinion by clicking here.

We can relate to the primary care physicians’ concern and allegations stated in their federal lawsuit that a small but powerful group of medical specialists were unfairly and with undue influence dictating how much they were being compensated for the services they provided to their patients. In a very similar manner, we are concerned that a small but powerful group (that is, lobbyists for the health care industry) is unfairly and with undue influence dictating how much victims of medical malpractice may receive in compensation for their injuries and losses because of arbitrary caps that many states have placed on the amount of noneconomic damages that they can recover as a result of the lobbyists’ efforts.

If you or a loved one were injured as a result of medical malpractice, you may be entitled to monetary compensation for your injuries and losses. The prompt advice from a local medical malpractice attorney may help you decide if you want to proceed with a medical malpractice claim.

Click here to visit our website or call us toll free at 800-295-3959 to be connected with medical malpractice lawyers in your state who may be willing and able to investigate your possible medical malpractice claim for you and represent you in a medical malpractice case, if appropriate.

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