Bad Medicine: How The AMA Undermined Primary Care in America – Brian...

Bad Medicine: How The AMA Undermined Primary Care in America – Brian Klepper


On Tuesday’s Wall Street Journal website, Dr. Benjamin Brewer describes
physicians’ reactions
to the 10.1% cut in Medicare physician payments
that will take effect January 1. He argues that the onus will fall,
once again, disproportionately on primary care physicians, who are
already losing the struggle to keep their heads above water.

He is right, of course. There is no question that Medicare must rein in
But the cuts are approximately the same across specialties and
therefore regressive. Insensitive to its distinct role, its lower
revenues and its high operational costs, they hit primary care harder
than they do specialties. Given its already battered status, the cuts’
impact on primary care could translate to real consequences this time.

American primary care is a shambles, and it is now clear that it will not be viable in the future unless significant changes occur in our national attitude about its value and in the way we pay for it. While, in other developed nations, 70-80 percent of all physicians are generalists and 20-30 percent are specialists, in America the ratio is reversed, the result of a payment system, the Resource-based Relative Value Scale (RBRVS), that was originally intended to account for and financially lessen the differences between specialties. Instead, RBRVS has evolved to reward expensive care and penalize proactive management, even though the data are unequivocal that higher percentages of primary care within a community results in healthier, lower cost populations.

Specialists typically take home at least double the income of the generalist. While the knowledge base and options have exploded in all areas of medicine, the demands on generalists, who must maintain reasonable expertise across all areas, have been intense. Medicare’s payment system, which is the basis for most commercial payment as well, favors specialists in two ways. It pays them a higher rate for their time (implying that what they do is more difficult and more valuable), and it allows them to earn money through procedures that are unavailable in primary care.

In a June 2007 Annals of Internal Medicine article explicating the primary care crisis, Bodenheimer et al, provide this example:

Under the RBRVS system, the 2005 Medicare fee for a typical 25- to 30-minute office visit to a primary care physician in Chicago was $89.64 for a patient with a complex medical condition (Current Procedural Terminology [CPT] code 99214). The fee is calculated by multiplying the relative value unit (RVU) for the 99214 CPT code (2.18) by the 2005 Medicare conversion factor (37.8975) and adding a geographic adjustment. The 2005 Medicare fee was $226.63 for a gastroenterologist in the outpatient department of a Chicago hospital performing a colonoscopy (CPT code 45378), which is of similar duration to the office visit. Colonoscopy performed in a private office in Chicago, which differs from the hospital setting because the gastroenterologist pays for equipment and nursing time, would cost $422.90. Office visits are considered evaluation and management services (history, physical examination, and medical decision making), whereas colonoscopies are an example of a procedural service.

The career-choice implications of these financial dynamics are not lost on medical students, who have been diverted in droves away from what many apparently see as an unrewarding primary care office existence. Between 2000 and 20005, the percentage of medical school graduates choosing Family Medicine dropped from a low 14% to an abysmal 8%. Among Internal Medicine residents, an astonishing 75% now end up as hospitalists or sub-specialists rather than office-based general internists.

Of course these numbers beg several questions. Who will oversee care as the boomers enter their most medically intensive years? Who will keep up with the knowledge explosion and manage our individual patients and the nation’s health? There is no question that rapid progress in expert systems and more effective use of medical extenders will help us develop better approaches to evaluation and management, but do we honestly think the nation won’t need more primary care physicians?

How did we get here and who bears responsibility for it? The short answers:

  • The American Medical Association, which has sponsored a proprietary, secretive advisory committee, the RVS Update Committee (or RUC) that is heavily dominated by specialists and that has been the main source of Relative Value Unit recommendations regarding Medicare physician reimbursement.
  • CMS (the Centers for Medicare and Medicaid Services), which has, to a disturbing degree, taken the RUC’s advice and implemented their recommendations, apparently without much other outside counsel. In its reports to Congress, MedPAC (the Medicare Payment Advisory Commission) has pointedly expressed its concern over the imbalance in physician reimbursement, as well as over its likely impact on the future of the physician labor force.

Writing (amazingly) in the Journal of the American Medical Association last month, Harvard’s John Goodson MD, describes the RUC and its relationship with CMS this way:

The American Medical Association (AMA) sponsors the resource-based relative value scale update committee (RUC) both as an exercise of “its First Amendment rights to petition the Federal Government” and for “monitoring economic trends . . . related to the CPT [Current Procedures and Terminology] development process. Functionally, the RUC is the primary advisor to CMS for all work RVU decisions. The RUC has 30 members (the chair only votes in case of a tie) with 23 of its members appointed by “national medical specialty societies.” Meetings are closed to outside observation except by invitation of the chair. Only 3 of the seats rotate on a 2-year basis. Other members have no term limits.

Seventeen of the permanent seats on the RUC are assigned to a variety of AMA-recognized specialty societies including those that account for a very small portion of all professional Medicare billing, such as neurosurgery, plastic surgery, pathology, and otolaryngology. Proceedings are proprietary and therefore are not publicly available for review. Traditionally, more than 90% of the RUC’s recommendations are accepted and enacted by CMS.

In other words – and it is important to be clear about this – the premeditated actions of the specialist-dominated RUC, operating under the auspices of the AMA and in alliance with CMS, appear to have played a direct role in the current primary care crisis by driving policy that financially favored specialty care at the expense of primary care. Equally important, this relationship has been key in establishing drivers of our health systems relentlessly explosive cost growth with its attendant impacts on the larger US economy.

Dr. Goodson describes the cascade of links between the AMA, CMS and the economy this way:

The RUC has powerfully influenced CMS decision making and, as a result, is a powerful force in the US medical economy. Furthermore, by creating and maintaining incentives for more and more specialty care and by failing to accurately and continuously assess the practice expense RVUs, the decisions of CMS have fueled health care inflation. Doing so has affected the competitiveness of US corporations in the global market by contributing to years of double-digit health care inflation that have consistently increased the costs of manufacturing and business in the United States over the last decades.

Certainly, these revelations should give pause to primary care physicians, and constitute grounds for reconsidering the relationships they and their specialty societies’ have with the AMA. Not that the AMA would care. Their members represent only a small minority of American physicians, and only a relatively small percentage of those are generalists.

But our Congressional representatives and the American people almost certainly don’t know these details. Most Americans and, for that matter, most health care professionals, are utterly unaware of the roles of the AMA and CMS in shaping the primary care crisis and our larger health system problems. Most believe the AMA speaks for all physicians.

So what should we do?

The consequences are upon us. There is little value now in recriminations or in arguing with the AMA about their role. That would only waste precious time and resources, and distract us from the real task, which is to re-stabilize primary care.

Ideally, if Congress were responsive to the common interest, the special problems associated with primary care would be heard and immediately addressed through a revised payment system. But in our special interest-driven system, that will be difficult. The most influential lobbyists – the AMA is one of Congress’ largest contributors, as are the drug and device organizations who sell to specialist physicians – appear to have the ear of Congress. (On the other hand, this year it does not appear that that influence will be sufficient to avert the cuts.)

The discussions about primary care’s dilemma and how we got here have been led by highly respected and credible thought leaders, and taken place in and on prominent health care publications and websites. But realistically, the conversation has taken place primarily within the health care community. To effect change, the American public and, more importantly, influential non-health care decision-makers, must be made aware of the problem, and what its dynamics mean for their and the nation’s short and long term prospects. Only then can the hope exist of replacing the old paradigm.

Some of that is already afoot. The National Committee for Quality Assurance recently proposed a new model for primary care reimbursement that would reward physicians for their time spent managing chronic conditions and communicating with patients. What is promising about this effort is that it appears to have the buy-in of the major primary care specialty societies, and the involvement of major insurers and employers. The question now is whether it can gain the traction required to rapidly change what we ask of primary care physicians and how we pay them.

Another interesting, and perhaps more far-reaching proposal (Download finalpcppaper.doc) has been made by Norbert Goldfield MD and his colleagues. Dr. Goldfield is a highly respected health care innovator, who has been a central force behind the development of 3M’s health care analytical tools.

His group has argued that primary care physicians should be paid for the services they provide, multiplied by a coefficient that appreciates the patient’s burden of illness (or severity) and then multiplied again by a coefficient that appreciates that physician’s willingness to engage downstream providers as the patient’s fiduciary. This is an entirely different role than “gatekeeper,” and would require the PCP to be directly involved in specialty care as the patient’s advocate and guide. Physician performance would be gauged against quality and cost values expected under a traditional, non-PCP-involved system.

To me, Dr. Goldfield’s proposal has tremendous merit. Recognizing the primary care physician’s value by imbuing him/her with the authority to serve as the patient’s advocate throughout the continuum of care, and then paying him/her to do that would accomplish several important objectives. It would:

  1. Reduce unnecessary specialty care services.
  2. Reduce the income disparity between primary and specialty care.
  3. Re-incentivize young physicians to enter primary care.

One last observation. The background reading for this post reminded me of Jared Diamond’s great, cautionary book, Collapse. Diamond describes society after society in which leaders knowingly made decisions that undermined their survival. But they couldn’t course correct because the decision-makers were benefiting from the current circumstances. I wonder whether we’ll be able to avoid that fate.

Finally, deep thanks to my friend and colleague Roy Poses MD at Health Care Renewal, who has written about these issues as well, and who brought them to my attention.

Recommended Resources

  1. Bodenheimer, T. et al., "The Primary Care-Specialty Income Gap – Why It Matters," Annals of Internal Medicine, June 2007; 146: 896.
  2. Goodson, J., Unintended Consequences of Resource-based Relative Value Scale Reimbursement, JAMA, November 21, 2007; 298: 2308 – 2310.
  3. Maxwell S, Zuckerman S, Berenson RA. Use of physicians’ services under Medicare’s resource-based payment system. N Engl J Med 2007; 356: 1853-1861.
  4. Newhouse JP. Medicare spending on physicians – no easy fix in sight. N Engl J Med 2007; 356: 1883-1884.
  5. Poses, R. A (Well Deserved) Rant about the RUC, Health Care Renewal, 11/27/07.

Brian Klepper is a health care analyst and commentator based in Atlantic Beach, FL.

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44 Comments on "Bad Medicine: How The AMA Undermined Primary Care in America – Brian Klepper"

Dec 13, 2007

Nice piece. Appreciated some of the insights of AMA’s activity around RVUs and their influence on MedPac.

Al Borges MD
Dec 13, 2007

Very nice article. Thanks for the effort. I hope that those in the AMA read it.

Dec 14, 2007

Please feel free to send them the link.

Philip R. Alper, M.D.
Dec 14, 2007

Excellent discussion of an affliction of American medicine that get worse every year. Why any primary physician has continued membership in the AMA during the past 20 years mystifies me.

Dec 14, 2007

AMA is out of touch with primary care. They seem to support only expensive propositions like CCHIT that have no proven track record in improving patient care.

Dec 14, 2007

“Ideally, if Congress were responsive to the common interest”
There lies the real problem.

Dec 14, 2007

Your article is dead on. From the employer’s perspective, the one who bears most of the burden of cost, the implications are staggering. Fewer PCPs mean more specialist which means more costs. Talk about a formula for increasing already bloated healthcare costs.
As an employer, what would use suggest as a solution or tactic to combat the expected result? It the system will not support PCPs who can service their employees and dependents, the employer should take steps to fill the void.
I think a followup article addressing solutions might be appropriate.

Dec 14, 2007

Great piece. I hope Dr. Goldfield’s proposal contiues to gain momentum. Three comments:
1) another example of physicians being their own worst enemy. Physician’s highest priorities including autonomy and independence, are the very things that have kept them from advancing the practice of medicine in a way that is sustainable – particularly primary care, or advances the quality of medicine one bit. Our system is incredibly broken and I place a great deal of the blame on the physicians and their inability to lead medicine in the right direction.
2) I believe physicians have a difficult time with any kind of message to the public that implies that they don’t get paid enough. They are percieved as being “rich” already and the public is not receptive to the idea that they should be paid more.
3) Does anybody stop to think about why CMS might cut physician payment across the board? I don’t think its because they think physicians are overpaid as individuals. Perhaps they think it might serve as an incentive to move medicine into more cost effective, higher quality models. On the other side of the payment cuts is a growing trend of pay for performance. Perhaps there is a message there? And I don’t think it has anything to do with autonomy and independence.

Dec 14, 2007

Brian, thanks for bringing more light to this important issue.
Just one technical error in your piece needs to be corrected: you conflate MedPAC with CMS. The two are in fact entirely distinct, and it is CMS that approves RUC payment changes…not MedPAC.
MedPAC is an advisory body to Congress, appointed by the Comptroller General and therefore a part of the legislative branch of government. If you’ll take the time to read their opinions from 2005 and 2006, you’ll see that MedPAC members are deeply critical of the RUC payment update mechanism and have called for alternatives to the RUC. See in particular chapter 3 of “Report to the Congress: Medicare Payment Policy (March 2006)”.
Here’s where you can get detailed information on MedPAC (as well as access to their reports, which are all publicly available).
No part of the executive branch of government (CMS included) has any direct influence over MedPAC, and similary, MedPAC has no direct influence over CMS, which is part of the executive branch of government. MedPAC certainly has no direct power over the RUC. MedPAC’s only policy lever is to inform members of Congress…who can take MedPAC’s recommendations or leave them.
Again, thanks for the piece. But be careful where you target your criticism…MedPAC is not the problem.

Dec 14, 2007

This time, at least, the cuts affect specialists disproportionately. Additionally, the article seems to ignore the fact that specialty training is longer and more competitive to obtain than primary care training. Furthermore, the procedures performed carry higher risks than seeing patients in clinic. Those risks need to be paid for somehow.
That said, primary care needs to have better reimbursement. No question about it.

Dec 14, 2007

The fundamental question is not “How are medical prices determined?” but “Who determines medical prices?” For most of medical care it is a central government bureaucracy. For other goods and services in the U.S. it is a disorganized mob of buyers and sellers, a.k.a. “the market”.
The U.S. and state governments purchase computers, automobiles, pencils, and labor – but they take the prices; they don’t make them.
Goldfield et al’s proposal is great, as is that of NCQA and allied bodies. But, with respect, we can all write a nice white paper. What we cannot do is anticipate the unintended consequences of that which we propose; nor what the bureaucrats will do when they get their mitts on it.
We must abandon the idea that setting prices is the appropriate job for the government in our moderm welfare state. Rather, it’s job should be to send checks to patients and allow them to set prices.

Dec 14, 2007

John, never underestimate the power of a guild to set prices in opposition to market attempts at getting competitive pricing. The government buys goods and services through competive bids and negotiation. In Canada phyician payments are negotiated then set as a result of the negotiation. Works much better for healthcare.

Dec 14, 2007

Oh, that’s a nice opening! I published a short paper just two days ago on the physicians’ guild-like behavior and prospects for their collective bargaining in the U.S.! (Available at my website as my latest monthly Health Policy Prescription.)

Dec 14, 2007

I often disagree with Brian Klepper, but not this time. This is a well thought-out analysis and worth distributing widely (which I intend to do). It is interesting that Dr. Goldfield’s approach is already being adopted, though outside of the third-party payment system. I’m speaking of the growth of “concierge” medicine in which primary care physicians play precisely the role he describes.

bev M.D.
Dec 14, 2007

Good article; I am amazed that CMS allows the AMA to have such disproportionate influence, given their obvious position of conflict of interest. Also, I think I can state accurately that most physicians I know do not feel that the AMA speaks for them.
However, one must keep in mind the internal attitudes of the “guild” about primary care physicians. Most specialists do not have a very high opinion of primary care docs’ competence, and this attitude starts in medical school as students begin to think about what areas in which to specialize. Part of this is because modern medicine really IS too complex for a generalist to keep up well – but consensus guidelines for management of various chronic conditions could ameliorate this. But there is another reason, prefaced by my apologies ahead of time to all those primary care docs who still read the literature and expend great effort on their patients – there are many of them. However, the other reason is that many primary care docs currently function as simply “referral machines”. They record your symptoms and then call the specialist most closely related to those symptoms, without much cerebral activity as to diagnostic possibilities. As a hospital-based physician, I saw hospitalized patients who had a consultant for every organ system – and in one of our hospitals, there were even rumors of a “cabal” in which the primary care docs called in as many of their buddy consultants as possible for them to make money on the consultations. (I will not even venture to speculate what benefit the primary care docs received for that behavior.)
My point is this – I heartily agree that more primary care docs are needed and they should be better compensated. But then, more should be expected of them too – not to just manage a diabetic by calling a nephrologist to manage his kidneys, an endocrinologist to manage his insulin, a cardiologist to manage his cardiac meds, etc., etc. Or else you will wind up paying EVERYONE more per patient – the primary care doc and the specialists too.
OK, so now I wait for the storm of criticism to strike. Like I said, to those of you primaries who don’t fit that mold, my apologies. But I bet you know colleagues who do.