Why the Medicare physician fee schedule misvalues fee levels and how to fix it.

Abstract

The Centers for Medicare and Medicaid Services (CMS) relies on the American Medical Association's Relative Value Scale Update Committee (RUC) to estimate the physician work and direct practice expense associated with the Medicare Physician Fee Schedule (MPFS). However, as CMS notes in the 2026 MPFS proposed rule, the RUC's processes, which rely heavily on surveys and expert panels of physicians who are members of specialty societies, create conflicts of interest and overvalue specialty services. Although CMS and the RUC regularly assess MPFS codes for misvaluation, significant distortions remain, in part because the RUC develops new values by simply repeating the survey and expert panel processes that created the misvaluation in the first place. To correct this longstanding program, CMS should implement a technical expert panel to provide unbiased recommendations on the fee schedule, and Congress should require CMS to validate work and direct practice expense values using alternative, empirical data sources.