The Fix Is InThe hidden public-private cartel that sets health care prices.
Posted Wednesday, Sept. 2, 2009, at 12:13 PM ET
Living in Massachusetts should, by all indicators, mean having access to good health care. Following the landmark passage of a health insurance mandate in 2006, the state today enjoys the nation's lowest percentage of uninsured citizens. Major cities like Boston have the nation's highest numbers of doctors per capita and anchor some of the world's largest and most prestigious medical centers. And Massachusetts isn't stingy—it spends more on health care per person than any other state. Yet, as a remarkable NPR documentary reported last year, patients calling Massachusetts General Hospital—ranked the fifth best in the nation by U.S. News and World Report—were informed that Harvard's massive academic hospital was no longer accepting new patients needing primary care. And that problem isn't limited to Massachusetts General—it's occurring throughout the state. Despite near-universal insurance, oodles of doctors, reams of cash, and no dearth of bright minds, the average person in Massachusetts can't find a new primary care doctor.
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StumbleUponThe nation soon may face the same fate. To have any hope of meaningful national health reform, therefore, we must address the perverse financial incentives that created and continue to inflame this problem.
The root of the shortage can be traced to 1985, when a Harvard economist named William Hsiao developed a scale to measure the relative value of every single one of the thousands of services provided by doctors, a job later compared to measuring "the exact amount of anger in the world." For example, Hsiao's team deemed that a hysterectomy required 3.8 times more mental effort and 4.47 times more technical skill than a psychotherapy session. In 1992, Medicare formally adopted Hsiao's concept; private insurers followed suit. Today, this relative value-based system sets the prices—and therefore drives the priorities of American medicine.
Here's how it works. Doctors do a job—like placing a coronary artery stent, reading an EKG, or spending an hour examining and diagnosing a patient with a complex problem like insomnia—and earn something called "relative value units." In 2009, according to Medicare, the stent guy scores about 24 units for his relatively quick procedure, the EKG person gets 0.5 units for the 10 seconds his job requires, and the poor internist gets only 2.5 units for his hour of time. Figuring a doctor's total take per task is straightforward: Medicare adds up a doctor's total RVUs, multiplies the total by a fixed amount (roughly $40 right now), and writes the check.
It's clear that Medicare and all major insurers place far more relative value on fancy procedures like stents, EKGs, skin biopsies, CT scans, and bowel clean-outs than they do on actual face-to-face time with patients. Procedures, they have decreed, require more mental effort and skill than seeing actual people. The implications are obvious. Just visit any hospital: The dermatology, radiology, and cardiology centers that depend on high-volume, relatively quick procedures have gleaming new facilities, while the primary care and psychiatry clinics languish, since they earn their keep from poorly compensated face-to-face time with patients. And, obviously, specialists make more money than primary care doctors. (Even trainees grasp this; recently, only a single graduating internist out of a class of 50 residents at Massachusetts General Hospital planned to become a primary care doctor.)
Fundamentally, the entire payment model of American health care drives medical centers, doctors, and hospital managers to push for more fancy procedures at the expense of primary care doctors. How'd we get here? Since 1992, Medicare has depended almost entirely on the American Medical Association for guidance on how relative values should be set. In a devastating critique published in the Annals of Internal Medicine, scholars from the Urban Institute and the University of California-San Francisco explained that Medicare uncritically accepted 95 percent of the AMA's recommendations, which are formulated by the group's Relative Value Scale Update Committee, or RUC.
Of the committee's 29 members, 23 are appointed from subspecialties like cardiology and dermatology. Just three represent primary care, even though half of all Medicare dollars are spent on face-to-face encounters. Their meetings are closed to uninvited observers. Unsurprisingly, over time, the relative values of various procedures far outpaced face-to-face "evaluation and management." In 2000, for example, the RUC recommended relative value increases in 469 specialty procedure codes but made no change in codes related to evaluation and management—which are used by primary care doctors for outpatient visits for physicals, back pain, headaches, and so on.
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For more than two decades, the AMA's RUC has been recognized for providing clinical expertise to CMS. The physicians who dedicate their time and knowledge to the RUC work actively to provide guidance that benefits all physicians. It is disappointing to see such glaring inaccuracies included in this article, and I am compelled to correct them.
§ The writer's characterization of the RUC's recommendations are way off base. The Committee has recommended substantial increases to evaluation and management services each time payment codes have been submitted to MedPAC for review. In fact, RUC recommendations led to $4 billion in annual increases to Medicare payments for evaluation and management services beginning in 2007.
§ The statistics the writer offers his readers are false and misleading. For example, an internist spending an hour in a consultation with a patient accrues 6.38 in relative values, not 2.50.
§ It is simply untrue to claim the RUC is dominated by procedural specialists who do not understand the evaluation and management responsibilities of primary care physicians. Nearly every physician - no matter the specialty - must report evaluation and management services to Medicare, creating a thorough understanding of the work involved in this process.
§ It is just plain wrong to allege that MedPAC does not recognize the significance and clinical expertise of the RUC. MedPAC has stressed its concerns with misvaluations in the system and has suggested that other experts should also be involved. In response the RUC developed recommendations to address these misvaluations, which CMS began implementing in 2009.
§ To use an inflammatory phrase like "death panel" is baseless and shameful. The AMA and the RUC are committed to bolstering the ranks of physicians to ensure there are enough physicians to treat all of America's patients now and in the future.
-- Rebecca J. Patchin, Board Chair, American Medical Association
(To reply, click here)
I appreciate the AMA's response to my article; however, I disagree with their characterization of my opinions and data.
In specific response to Dr. Patchin's points:
1. It is disingenuous of Dr. Patchin to assert that a $4 billion increase in face-to-face visit reimbursement is meaningful without providing any context for this number. For example, Medicare's annual budget is almost half-a-trillion dollars. To my way of thinking, an additional $4 billion allocated to face-to-face visit reimbursement doesn't seem meaningful. Further, the Annals of Internal Medicine paper referenced in my article (the full text PDF is linked) disputes the claims that the AMA had advocated in any meaningful way for primary care doctors (though, there is a small proposed increase in such codes proposed most recently).
2. According to the Medicare web site referenced in my article (one can download the actual spreadsheets with all the RVU codes), in 2009 the "Fully Implemented Facility Total" RVU for a 99215 (the highest level available) visit for an established outpatient patient is 2.73. One can quibble with precise details of this value since there are some modifiers often available, but the estimate is accurate.
3. If Dr. Patchin claims the RUC is not dominated by procedural specialists, then it would be helpful to explain how the membership and voting structure of the RUC reflects these priorities.
4. The MedPAC has clearly has serious issues with the RUC's influence on the RVU setting process, as evidenced by the report (again, full text PDF) to which my article is linked. I would invite the AMA to respond clearly to the recommendation made by the MedPAC, and also then issue a policy statement endorsing all of the MedPACs recommendations fully.
5. The phrase "death panel" was not attributed specifically to the AMA's leadership, but rather to opponents of greater transparency in health care spending. Some of the opponents are arguably the beneficiaries of some of the AMA's financing. If this is incorrect, then I would invite the AMA to divest any campaign contributions or lobbying largesse from any candidate who fails to disavow the claims that expansion of the MedPAC raised the specter of a government "death panel."
I'd invite any other readers or informed observers to offer their thoughts on this thread as well.
-- Darshak Sanghavi
(To reply, click here)