In 1989, the Omnibus Budget Reconciliation Act mandated use of the resource-based relative value scale methodology for physician payments under Medicare Part B. Recent media attention has focused on its inaccuracy and the American Medical Association's apparent conflict of interest. Re-examination of this matter is long overdue.
The RBRVS was established to replace a payment system calculated from prevailing physician fees. While the federal government wanted to involve physicians in the process of formulating the new method, the Federal Trade Commission had antitrust concerns.
In a compromise, the government gave the task to William Hsiao and colleagues at the Harvard School of Public Health. According to the AMA: “Under terms from its subcontract from Harvard, the AMA's major role in the RBRVS study was to serve as a liaison between the Harvard researchers, organized medicine and practicing physicians.” Thus, the AMA was never meant to assume an important, direct role in rate-setting.