On May 10th, the US Senate Finance Committee, co-chaired by Senators Max Baucus (D-Mont) and Orrin Hatch (R-Utah), convened a remarkable panel of four former Administrators of the Health Care Finance Administration (HCFA) and the Centers for Medicare and Medicaid Services (CMS): Gail Wilensky, Bruce Vladeck, Thomas Scully and Mark McClellen. (See the video here.) Against a backdrop of intensifying budgetary pressures, the roundtable was to provide perspectives on Medicare physician payment, including several controversial issues: the Sustainable Growth Rate (SGR) formula, the Resource-Based Relative Value Scale (RBRVS), and the RVS Update Committee (RUC).

Ironically, the day before, a Maryland Federal District judge dismissed a suit brought against HHS and CMS by six Augusta, GA primary care doctors over CMS’ longstanding relationship with the RUC, based on a procedural technicality and without weighing the substance of the complaint.

The physicians challenged CMS’ refusal to require the RUC to adhere to the public interest rules of the Federal Advisory Committee Act (FACA) that typically apply to federal advisory bodies. The suit described the harm that has accrued to primary care physicians, patients and purchasers as a result of the RUC’s highly politicized process. To a large extent, the plaintiffs’ concerns closely reflected those of the former CMS Chiefs.

This was a deeply experienced and dedicated group, all with long government-involved careers. Surprisingly, independent of their divergent political perspectives, there was broad agreement on the direction that physician payment should go. All believe we need to move away from fee-for-service (FFS) reimbursement and toward alternative reimbursement paradigms, like capitation or bundled payments. All agreed that FFS would likely remain present in various forms for many years. There was a general sense that the RBRVS system was built on a series of errors, and that CMS’ relationship with the RUC started off, to use Dr. Wilensky’s term, “innocently enough,” but has become increasingly problematic over time.

Here is Dr. Wilensky’s description of how the CMS-RUC relationship came about.

It [the RUC's formation and relationship with HCFA] happened innocently enough. Once you had the Relative Value Scale in place you needed to have a way to update relative values and to allow for a change. The AMA, as best we can tell…- sometime after I left to go to the White House, after he -[Bruce Vladeck] was sworn in, there was a lot going on, it was relatively new, in its first year – the AMA approached the Agency about whether it would allow it or like to have the AMA be the convener that would include all physician groups and make some recommendations which initially were very minor adjustments that hardly affected the RBRVS at all. The Agency accepted the offer.

Tom Scully, CMS’ Administrator under George W. Bush, took responsibility for helping facilitate the AMA’s involvement and was perhaps the most passionate that it had been an error.

One of the biggest mistakes we made … is that we took the RUC…back in 1992 and gave it to the AMA. …It’s very, very politicized. I think that was a big mistake…When you go back to restructuring this, you should try to make it less political and more independent.

I’ve watched the RUC for years. It’s incredibly political, and it’s just human nature…the specialists that spend more money and have more time have a bigger impact…So it’s really, it’s all about political representation, and the AMA does a good job, given what they are, but they’re a political body of specialty groups, and they’re just not, in my opinion, objective enough. So when you look at the history of it, CMS is starting to push back more, which is a good thing, I think it would be much better to have an arms-length transaction where the physician groups have a little more of an objective approach to it. And, look, that is the infrastructure of $80 billion of spending. It’s not a small matter. It’s huge.

But perhaps the most striking statement was made by Bruce Vladeck, HCFA Administrator during the Clinton Administration. In speaking about the problems generated by RBRVS (and by inference, the broader issues of SGR and the RUC as well) in the face of severe economic stresses, he called for the leadership and will required to simply do the necessary course correction.

I’m hopeful that some combination of the need to address overall deficit reduction strategies more generally and a different kind of political climate in the relatively near future will create the opportunity for people to say, “We made a mistake in 1997. We created a formula that produces irrational and counterintuitive results, and we’re just going to abolish it and start all over again in terms of some kind of cap on Part B payments. It’s the only way we’re going to get out of this morass.”

In a policy environment less susceptible to influence and more responsive to real world problems, the gravity of consensus on display at this roundtable would justify a call to action. As it was, it validated what many know: that we are rushing headlong down a catastrophic path, steered by forces other than reason and responsibility. The best we can hope for is that someone with authority and courage is listening.

Brian Klepper, PhD, is an independent health care analyst, Chief Development Officer for WeCare TLC Onsite Clinics and the editor of Care & Cost. His website, Replace the RUC, provides extensive background on the issue.

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8 Responses for “Will Anyone Listen When Former CMS Chiefs Call For More Objective Physician Payment?”

  1. Mr. Klepper, please lead us to a more precise solution.

    Any program where the government fixes payments will suffer what Hayek called the “pretense of knowledge”. It is not possible for either politicians or bureaucrats to determine the value to patients of medical services or devices. So, they rely on influences which act with unconstrained self-interest (i.e. the RUC).

    Besides which, there is no objective measurement of value. The value of any good or service is determined by the user – the patient. Value is subjective.

    Nor do I understand how the specialists beat the primary-care docs via the RUC. There’s not an internal logic to the claim. Are specialists better lobbyists by dint of their personality?

    My best guess is that PCPs have lost out versus specialists because of the increasing dominance of the 3rd-party (actually 4th-party) payer, which also suffers from the “pretense of knowledge”. It is far easier for an insurer – either commercial or government – to delude itself into believing that it can determine thevalue of a hip replacement than the more “touchy feely” daily activities of a PCP.

    • BobbyG says:

      “Value is subjective.”

      I would take issue with that. That’s simplistic.

    • Thomas kline md says:

      The RUC votes. Primary care is outnumbered four to one by those doing high-priced procedures. The rock needs to go needs to be replaced by an independent commission. Five commissioners who listen to testimony and set prices based on a global per hour rate. Surgeonsmight argue that he or she has more training and I should have a multiplier. They would have to stand before a commission and argue with that multiplier should be. Same would be true for all procedures specialites. All would argue for multipliers. Experience should also count and the equation. Every five years for you should increase for experience. Commissioners would be appointed and would not be political. Once the book of multipliers was in place it would be used forever. The only change would be the hourly rate. A simple and fair
      solution. Doctors would not run the commission. But the commission should have some representation of the medical profession. The AMA would not be involved. The AMA does not speak for me nor for the majority of physicians in the United States. The commissioners couldn’t call any experts they wished to collaborate information that would feed into the multiplier. There would be a lot of front end work perhaps for a couple of years but after that very little work need to be done except for an occasional appeal that could be granted or not granted. Medical professionals would have to stand on the run 2 feet before the commission and present cogent and logical arguments

  2. Mr. Graham,

    My colleagues and I have explicated the structure and dynamic’s of the RUC in many articles that typically first on Kaiser Health News or the Health Affairs Blog, but then have been aggregated to a single site, http://www.replacetheruc.net.

    Primary care has largely been outmaneuvered by votes on the RUC, and they’ve been astonishingly clueless about the power dynamics, claiming victory when geriatrics and primary care were given next seats in May, when in fact the numerical balance of power did not change.

    The most important change that is necessary is for the RUC to adhere to the rules of the Federal Advisory Committee Act, which requires that the process be structured in the public rather than the special interest. This is the basis of the Augusta PCP’s lawsuit. If carried out in concert with an aggressive effort to reevaluate/recalibrate high value and high frequence codes, it would rectify much of the damage that the current system promotes.

  3. Replacetheruc.net is a very well organized and persuasive website. It tells the story very well. As an opponent of PPACA, I know how effective a well-designed lawsuit can be. But I still just can’t see how any committee can determine these relative values. Let me go metaphorical.

    The current Administration believes that turning Medicare into a voucher (cf. Paul Ryan) would be an abomination. To be consistent, the Administration should advocate cancelling Social Security monthly deposits and channeling that money to providers of, e.g., housing. How would it determine what prices to pay to design, build, and rent seniors’ housing?

    Every year that passed, it would become more difficult to figure out value. The government (presumably the Departmend of Housing and Urban Development) would have to gather experts to tell it how much architects should be paid to design housing; how much contractors should be paid to build housing; how much carpenters, electricians, and plumbers should be paid for their services; how much brokers and agents should be paid to move seniors into their units; etc.

    The expert committees would have to be comprised of people from those professions. They would fight amongst themselves in a political struggle, and some would do better than others.

    The solution would not be to redesign the committees or make the process more open. It would be to eliminate it entirely.

  4. Thomas Kline MD PhD says:

    Abandon RUC – then what. It has to be outside the AMA/CMS.

    Imagine if you will a Commission for Payment, created by CONGRESS as a quasi agency. Set aside the details and listen to the strategy. Seven Board Members from various medical and non medical fields would be
    “impartial judges” or “commissioners”. They would be protected from influence by law – like judges. They would have nice budget and plenty of staffers (congressional subcommittee model)

    First job: establish a global hourly figure for average physician work, by what ever means THEY thought.

    Then each of the medical fields would appear, with their rational arguments and ask the Commission and ask for multipliers: ” I live in NYC and want 20% more”, I trained longer, i do surgery, I have more responsibility because I work in the ICU, I spend one hour supervising
    care for chronic ill for every hour I see patients, I can only see 1.2
    patients per hour at home saving millions in unnecessary admits so
    I want a 3 multiplier, etc etc Imagine!

    Providers ask for what ever multiplier they want. I twill be interesting to see why a surgeon would ask for 500% of the hourly. For the first time
    an impartial panel would listen and rule fairly, based on evidence, on
    a case by case basis.

    Once the multipliers are in a book,, the base hourly fee would be corrected
    once a year for inflation (the reason primary care fees are down 10% over
    6 years is failure to correct for cost of living, just like this year)

    Then there would not be much for the commission to do. They could
    down size and listen to periodic appeals for change. But just like the
    legal system it would be modeled after, one a decision is made on
    the multipliers, only compelling reasons would be granted.

    How about that.

    Thomas F. Kline MD
    Raleigh

  5. Dr. Kline:

    A free-for-all scenario is not the only or likely one. There are precedents for good government. The Augusta GA PCP’s lawsuit against CMS and HHS is based on those agencies refusal to adhere to the stringent rules of the Federal Advisory Committee Act, which most other federal advisory committees do follow.

    These rules are designed to ensure that regulation is formulated in the public rather the special interest. They call for transparent proceedings, for panel compositions that reflect the real world, for credible scientific methodologies and for avoidance of financial conflicts. The RUC currently violates all these basic principles, but making them a requirement of the RUC’s role would solve many issues.

    Other commentators have suggested that, rather than the simplistic and misleading surveys the RUC uses, medical services valuation data should be gathered from best-of-class health systems and physician groups. This would also take care of many problems with the current methodology.

    The implications of this corrupt process are too important to simply throw up our hands and say that its OK, because all processes are corrupt. That approach solves nothing. There are clear paths to better governance. Since the fate of the US economy is demonstrably riding on this single structure, it makes sense to address it with some foresight.

  6. I’m don’t particular the best place you happen to be obtaining your info, however wonderful topic. I has to spend some time determining far more or even hitting the gym a lot more. Thank you for fantastic information and facts I became searching for this info in my assignment.

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