Physicians

Fixing America’s Health Care Reimbursement System

A tempest is brewing in physician circles over how doctors are paid. But calming it will require more than just the action of physicians. It will demand the attention and influence of businesses and patient advocates who, outside the health industrial complex, bear the brunt of the nation’s skyrocketing health care costs.

Much responsibility for America’s inequitable health care payment system and its cost crisis is embedded in the informal but symbiotic relationship between the Centers for Medicare and Medicaid Services and the American Medical Association’s Relative Value System Update Committee — also known as the RUC. For two decades, the RUC, a specialist-dominated panel, has encouraged national health care reimbursement policy that financially undervalues the challenges associated with primary care’s management of complicated patients, while favoring often unnecessarily complex, costly and excessive medical services. For its part, CMS has provided mostly rubber-stamp acceptance of the RUC’s recommendations. If America’s primary care societies noisily left the RUC, they would de-legitimize the panel’s role in driving the American health system’s immense waste and pave the way for a more fair and enlightened approach to reimbursement.

As it is, though, unnecessary health care costs are sucking the life out of the American economy. Over the past 11 years, health care premium inflation has risen nearly four times as fast as the rest of the economy. Health care costs nearly double those in other developed nations have put U.S. corporations at a severe competitive disadvantage in the global marketplace.

Many health care experts believe that half or more of all health care expenditures — the costs of bloated transactional processes as well as inappropriate procedures, service sites and prescription drug levels — provide no value. For perspective, this year we’ll unnecessarily spend nearly $1.5 trillion on health care, an amount equivalent to the national debt. Though we continually have given physicians and the health care industry a pass on this issue, its impact can be understood as the difference between our national prosperity and decline.

The current system’s under-valuing of primary care is one of three structural flaws — the other two are fee-for-service reimbursement and a lack of cost, quality and safety transparency — that produce excess spending and block the health care sector from working as a true market. Overwhelming evidence shows that allowing physicians to serve as patient advocates and guides throughout the entirety of care results in better outcomes at significantly lower cost. Recently, patient-centered medical homes, super-charged primary care practices, have demonstrated measurable cost and quality successes, also proofs of the approach. These facts are indisputable and are, by the way, the reason why America’s corporations are stepping up the use of on-site primary care clinics.

Meanwhile, a spate of recent articles about the RUC have produced swift, strong responses within key circles. They have been passed virally among primary care physicians. Discussions have begun with people who might have influence over the process. And sensible changes in this advisory system seem possible.

Seizing that opportunity would first require mobilizing primary care doctors to demand that their professional societies, such as the American Academy of Family Physicians and the American College of Physicians, abandon the RUC. Then these physicians also would call on CMS to replace it with a more independent advisory panel. That effort would also launch a national discussion about how to more fairly value and pay for America’s health care.

But one man’s waste is another’s income. The current reimbursement system handsomely serves most of the health care industry: health plans; hospitals; specialists; and drug, device and technology firms. Threaten that revenue stream, and those organizations would direct their considerable resources to its protection. In 2009, records show that some members of Congress collected $1.2 billion in health care lobbying contributions – more than it had ever received from an industry on an issue – from health care interests. America’s 250,000 primary care physicians are simply no match for the combined power and influence of the rest of the health care industry.

In an influence-driven government like ours, it is the non-health care business sector that has the organization and leverage necessary to drive the health care changes America so desperately needs. The health care industry represents one dollar of every six dollars in the U.S. economy, but industries outside health care represent the other five. If American businesses, led by groups like the National Business Group on Health, the Pacific Business Group on Health, the Business Roundtable, the National Retail Federation, the U.S. Chamber of Commerce and the National Federation of Independent Business were to advocate for the same policies in national health care reimbursement policy that their members are often implementing in their own on-site clinics, it would have a dramatically positive impact on the nation’s physical and economic health.

Ironically, health care reform specifically avoided addressing the carnage that has been wrought by the RUC. If America’s primary care physicians, backed by the nation’s corporations, all working out of enlightened self-interest, were to focus on addressing this one structural defect, the corrective impact on our health system would be greater than all the reform bill’s cost-reduction provisions combined.

This article originally appeared at Kaiser Health News.

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

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Health Insurance is a Family Matter (Insuring Health) | Family Insurance TodayNTLRSSNjunkhashEdGeorgiann Cormier Recent comment authors
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[…] Price: $ 29.00 Price: [wpramaprice asin="0309085187"] Health Insurance is a Family Matter (Insuring Health) (Institute of Medicine) Report from the Commit…a […]

Ed
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Ed

Great post,very enjoyable read,and I agree with most of what you say,and by the way,here is a great info about Xbox 360 repairing

Georgiann Cormier
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Warning: long comment. I apologize before hand but I want to complement this helpful site with my own experience on wealth management . Right now, I work at a large hedge fund that primarily uses options so I’d say I have some insight into the financial sector. Between my husband and I, we’ve always looked up to Warren Buffet. When Buffett was a young man, he used leverage to became a multimillionaire by forming partnerships and sharing in their profits. He invested very little, but received a large portion of profits in exchange for his brilliant investment decisions. This was… Read more »

bgmd
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bgmd

Reformat Physician Reimbursement Methodology Dear Dr. Klepper: Efforts to clarify and improve the methodology used for determining physician reimbursement are overdue. Accuracy in presentation of information is needed to have an educated discussion. As such I would recommend immediate and significant updates to your website replacetheruc.com. Graphs that point to the increase cost of Medicare expenditures and those that show a significant disparity between primary care and specialist compensation are disturbing. Only 13% of Medicare costs are related to physician compensation. That percent has significantly decreased in the last 20 years. Is it possible your Replace the RUC battle will… Read more »

junkhash
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junkhash

I would be very interested in hearing about your thoughts on why the massive difference in income between primary care physicians and procedural specialists….the difference seems more than the factor of 1.23-1.54 that you have calculated. I understand that other factors may play a part in final income, but aren’t those supposed to be accounted for with the practice RVU and malpractice RVU? I do believe specialists should have higher incomes than primary care physicians….the factors you state seem more than reasonable. But the difference in incomes, from what I’ve superficially seen, seem way beyond that. Thanks for any thoughts… Read more »

NTLRSSN
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NTLRSSN

A few concepts off the top of my balding head regarding income disparity between primary care and proceduralists: 1. Volume. Specialists see more people in less time. Value of the care provided is not related to the amount of time required to provide the care, even though CMS uses time as a primary factor in setting relative value. 2. Hours worked. Specialists put in more hours to get to where the got and they continue to work more hours than their primary care colleagues. 3. Speed of care. If all you do is dermatology, you will diagnose and treat a… Read more »

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Wally Retan
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It may be unrealistic to expect much support from the American College of Physicians for a proposal to leave the RUC process. Recall that many of the ACP members are highly-compensated procedure-performing medical specialists.

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Tom
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Tom

Brian, Excellent post, I couldnt’ agree more with your conclusion- especially with my history of being a fourth generation family doc who has witnessed first had the dramatic decline of primary care in this country. The current drivers of the reform effort, supposedly centered around reducing costs and improving outcomes, has neglected the central role the RUC has played in driving provider behaviors in the exact opposite direction- towards high utilization, advanced procedures, and ‘high value’ specialty care. ACO’s, in all their wisdom, will not function effectively, nor succeed at all, if the current reimbursement paradigm is not fundamentally changed… Read more »

Peter Nesbitt
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Brian, you are on the right track but there are missing elements. Primary care docs must give something to get back their role as arbiters of care. Namely, they must agree voluntarily to treat patients with appropriate care. In other words, eliminate the waste and unnecessary treatment that so characterizes U.S. health care. An independent managed care system comprised of a national, all inclusive medical network, and an independent care management organization can manage care in such a way as to assure appropriate care. It can and must build an alliance between care providers, patients, and payers that respects the… Read more »

Peter
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Peter

Why does anybody think the “industry” is going to fix this? If you do you’re delusional. Who fixed the dysfunctional housing market prior to the “latest” meltdown – certainly not the industry. It’s all about preserving/saving/growing income, and personal greed is the principle driver, and getting that from premium payers is the game. Until there is a massive implosion of cost versus ability to pay, then this won’t get fixed unless government is the arbitrator/fixer. You can talk all day long about CDH, HDHP, capitation, none of it will mean anything unless the underlying COST (price) is addressed. Don’t look… Read more »

Julianna
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Is this your picture?Mr. Brain?Very nice.
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BobbyG
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Nice, Brian.

It is indeed a maddening perplex, is it not? Likely next-up-at-the-plate solution? Blame and punish the victims (i.e., the docs and patients).

I wrote 5 lengthy posts on health policy reform across the past couple of years over on my policy blog (linked in upper right corner).

http://bgladd.blogspot.com/

I’m not seeing that I missed much.

Now I work for one of the RECs (link in my name). Good LORD, what a shoot-aim-ready ride we got goin’ on.