Details on the proposal

Since the early 1980s, the U.S. government has relied on AMA to maintain billing codes, also known as the "current procedural terminology" (CPT) codes, to determine how roughly a fifth of Medicare Part B's budget is spent.

Specifically, AMA runs a panel of doctors called the Relative Value Scale Update Committee (RUC) that meets three times a year to discuss how physician services should be priced, factoring in things like the amount of time a service or visit takes and how much practices spend on supplies and malpractice insurance.

The RUC then sends its recommendations to Medicare, which publishes physician payment updates each year. Medicare isn't required to accept the RUC's recommendations, but it does between 60% to 80% of the time, according to estimates from the Government Accountability Office.

According to people familiar with the process who spoke to the Financial Times, Kennedy is working on plans that would reduce the role played by AMA in determining Medicare payments. He is instead considering how the process could be done by CMS.

The proposal is still in its formative stages, and one source who spoke to STAT said people close to Kennedy are seeking feedback on how the change might work. It's unclear exactly what a replacement model would look like.

In addition, given Kennedy has yet to be confirmed by the Senate, policy proposals are currently speculative.

Discussion

Kennedy has previously decried the influence of big business in the healthcare industry and promised to "free the agencies from the smothering cloud of corporate capture."

In a post on X following his nomination as HHS secretary, Kennedy said he would "clean up corruption, stop the revolving door between industry and government, and return our health agencies to their rich tradition of gold-standard, evidence-based science."

The RUC has also drawn criticism from health policy experts in the past, who have argued it's unethical and a conflict of interest for physicians to set their own Medicare payment rates.

Robert Berenson, a physician, former CMS official under the Clinton administration, and fellow at the Urban Institute, said in 2022 that RUC's recommendations are often based on unreliable data and are biased toward specialties that perform higher-priced procedures.

"It's amazing that other clinicians accept it, which suggests that it's really a political process and not an objective evaluation of work," he said.

However, Berenson added that changes to the codes "would cause chaos without a flight plan about what's next."

Berenson noted that some other Medicare billing codes are already determined by CMS, but he said that even if an alternative was found, doctors and AMA would be "very unhappy" with the change.