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The RUC’s Defense

By BRIAN KLEPPER

On Wednesday, 47 American medical specialty societies sent Rep. Jim McDermott (D-WA) a letter, with copies to all members of Congress, containing a detailed defense of the American Medical Association’s (AMA’s) Relative Value Scale Update Committee’s (RUC). For 20 years, the RUC has exclusively advised the Centers for Medicare and Medicaid Services (CMS) on physician procedure valuation and reimbursement. On its face, the letter responds to a seemingly minor piece of legislation introduced by Rep. McDermott, H.R. 1256, the Medicare Physician Payment Transparency and Assessment Act, that would require CMS to use processes outside the RUC to verify the RUC’s recommendations on medical services values.

Conspicuously absent from the letter’s signatures were the nation’s three main primary care societies: the American Academy of Family Physicians (AAFP) – which has formally endorsed Mr. McDermott’s bill – the American College of Physicians (ACP) and the American Academy of Pediatrics (AAP). Last week, the New Jersey Academy of Family Physicians sent a letter to its parent organization, AAFP, “strongly encouraging” it to quit the RUC. It is as though the long-compromised primary care physician community, that makes up one third of American physician and handles half of our office visits, is suddenly mobilizing.

The medical societies’ letter is more than a response to just Rep. McDermott’s bill. It also responds to the primary care physician community’s stirrings. Marshaling the influence and discipline of a medical establishment obviously distressed by the prospect of having its economic franchise disrupted, it was the third public defense of the RUC in a little more than a week, following a column on Kaiser Health News by the RUC’s Chair, Barbara Levy MD, and a letter this past Tuesday to Rep. McDermott by AMA CEO Michael Maves. After 20 years of easily-validated intentional obscurity – ask virtually any room of physicians what the RUC is and watch the majority’s blank responses – this open activity favoring the RUC is unprecedented.

The letter is also obviously orchestrated, using many of the same tactics and arguments that Drs. Levy and Maves employed in their defenses. It carefully avoids talking about the abysmal real world consequences of the RUC’s historical approach. It ignores the dramatic under-valuing of primary care, the plummeting rates of medical students choosing primary care, the over-valuing and over-utilization of a wide variety of specialty procedures, and the inherent incentive for the RUC to focus on under-valued rather than over-valued procedures.

Instead, it obfuscates. To counter the McDermott proposal that CMS should use means other than the RUC to assess the RUC’s recommendations, the letter argues that past efforts to use contractors have failed. Therefore, it is senseless to go down this path again.Continue reading…

Accountability? Heaven forbid!

At a recent talk, Dartmouth’s Elliott Fisher facetiously remarked that we cannot yet be sure whether accountable care organizations (ACOs) will actually be accountable, caring, and organized. Well, if some providers have their way, they certainly won’t be accountable.

This story by Jordan Rau in the Washington Post relates comments being made as Medicare writes its rules governing the ACOs. Here are some quotes:

[S]ome prominent doctor and hospital groups are pushing for features that some experts say could undermine the overall goal – improving care while containing costs. They’re seeking limits on how the quality of their care will be judged, along with bonus rules that would make it easier for them to be paid extra for their work and to be paid quickly.

Here’s the one I like best:

The Federation of American Hospitals, representing for-profit facilities, goes further, urging that ACOs be allowed to choose their patients. “Providers are better positioned than CMS to determine which of their patients would be appropriate candidates,” the federation wrote.

So, we are happy to be held accountable, but only if we get to choose which patients are part of our network.

Continue reading…

Replace The RUC

A few weeks ago, my writing partner David C. Kibbe and I ran an article on Kaiser Health News called “Quit the RUC!“ that has caused some turmoil within the physician community, particularly in DC.

First, it noted that the RUC, the informal specialist-dominated AMA panel, has made recommendations for 20 years about the value of medical procedures within the highly arcane and jiggered Resource-Based Relative Value Scale (RBRVS). As the Wall Street Journal recently reported, CMS (and its predecessor, HCFA) has accepted some 90 percent of its recommendations, apparently almost without question. It shouldn’t surprise anyone that the vast majority of recommendations involve payment increases to specialists that have come at the expense of primary care.

This combination – a highly conflicted advisory panel making methodologically questionable recommendations about payment to a blithely accepting regulatory agency – is at the heart of the American health care cost crisis and the greatest reason why the American economy is literally being bankrupted by its health care costs. This year alone, we’ll spend about $1.3 trillion on health care products and services that provide no value. This is two-thirds again more than we’ll spend over the next decade on the economic stimulus package.Continue reading…

AMA Opens Online News Archive

Ama American Medical News, the award-winning newspaper published by the American Medical Association  (AMA), announced today it is offering unrestricted access to its online news archive at amednews.com.

The online news archive dates back to January 2000, with selected earlier content. It represents a rich resource on issues confronting physicians and trends in medicine. Content includes in-depth reporting on the business and regulatory sides of health care, practice management and hot issues in public health and patient care.

“The American Medical Association hopes the accessible online news archive, and digital conveniences offered by American Medical News, will better help readers stay on top of the trends and forces shaping a complex, ever-changing medical environment, said AMA President Cecil B. Wilson, M.D.

Continue reading…

So That’s How The Rates Are Set

The Wall Street Journal published a very important article this week. Written by Anna Wilde Mathews and Tom McGinty, it is entitled, “Secrets of the System: Physician Panel Prescribes the Fees Paid by Medicare.

Here’s the lede:

Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars.

The group, convened by the American Medical Association, has no official government standing. Members are mostly selected by medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Yet the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous. The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules.

Continue reading…

AMA and Congress: Playing “Chicken” Again

Nine times in the past eight years, Congress has, at the last second, delayed the automatic cuts in doctors’ Medicare fees that it decreed some 13 years ago to prevent Medicare spending from outpacing other consumer expenditures.

The AMA threatens that doctors, especially primary care doctors, will stop accepting Medicare patients if the cuts go through. Congress hurtles toward the head-on collision, citing runaway budget problems. Doctors are kept in suspense, their claims held in abeyance while carriers wait for Congress to fix the problem retroactively if it has missed its deadline. The AMA claims credit when the wreck is averted, and urges doctors to continue paying their dues while it feverishly works for a permanent “fix.” Only the AMA, it implies, stands between Congress and certain disaster.

Every time cuts are postponed, the next scheduled cut gets deeper. It’s like a balloon mortgage payment in reverse.

And the controversy gives columnists another occasion to rail against those greedy overpaid doctors, unwilling to assume a bit of shared sacrifice despite the economic downturn.

Continue reading…

Can a Collection of Official Statements Be Called a “Blog”?

American Medical Association president, J. James Rohack has begun sharing his thoughts on the U.S. health care system, health reform and other issues affecting patients and physicians in a new blog, according to the AMA.

There’s one problem: the AMA presidency is an elected position whose occupant has roughly the same freedom of expression as a senior Iranian clergyman or a member of Vladimir Putin’s cabinet. The AMA, so virulent for so many years in opposition to the group practice of medicine, yields to no one in its practice of group consensus medical politics. All communications by AMA officers and board members are strictly scripted to adhere to official positions.

In other words, an AMA blog is simply repackaged blarney. Don’t consult Dr. Rohack expecting even the barest glimpse of a genuine “second opinion.”

Michael Millenson is a writer, consultant and frequent speaker on healthcare topics. His work appears frequently in these pages and on other blogs, including the Huffington Post.

Commentology

THCB reader JB wrote us to say: Commentology

"I guess you guys are probably aware of the huge backlash that is going
on with various medical societies  around the US, due to the AMA and
other physician groups endorsement of HR 3200, and the subsequent
"meltdown" of this bill??

State medical societies and
associations are "seceding" from the AMA, and threatening to further
distance themselves from AMA because their memberships massively
disagree with the purpose and positions of this proposed "healthcare
reform bill." 

State Medical Associations, specialty groups
(American College of Surgeons, American College of Physicians, American
Academcy of Pediatrics, etc.) are all in full back-pedal spin mode to
try and fend of their furious doctor constituent-members, who generally
were ambushed by their professional societies full-fledged endorsement
of HR 3200. 

This has created multiple rifts, and further
undermined support of this measure, even though Obama and Pelosi want
the public to believe this abomination of a bill is fully endorsed by
organized medicine as well as physicians in general.  NOTHING could be
further from the truth."

Is Wal-Mart Leading the Charge on Health Reform?

ParikhLast Wednesday’s  headline in the Wall Street Journal may have surprised you.  It read:  “Wal-Mart Backs Drive to Make Companies Pay for Health Coverage.”  The article discussed Wal-Mart’s open support for an employer mandate requiring all but small businesses to provide care for its workers, a stance that other retailers have opposed for obvious reasons.

I’ve been following the story of Wal-Mart and health care reform for the past several years.  While some see this move as the company’s way of trying to level the playing field between it and other retailers, it nevertheless has taken several actions over the past decade to make health care more accessible and affordable.

Wal-Mart’s transformation began in 2006, when then CEO Lee Scott shook hands with Andy Stern, the head of the Service Employees International Union. In the past, such a handshake would have been unimaginable.  Wal-Mart had earned a reputation for failing to provide its workers with health care, and the SEIU was one its strongest critics.

That changed with rising health care costs.  Wal-Mart, like labor, recognized the need to provide affordable health care.  The Scott/Stern handshake was a call for affordable care for all Americans by 2012.

This handshake can be seen as a bookend to another handshake decades ago, described by Malcolm Gladwell in a 2006 New Yorker piece.  This first handshake was, like this one, between two powerful men representing labor and industry:

“The president of General Motors at the time was Charles E. Wilson, known as Engine Charlie. Wilson was one of the highest-paid corporate executives in America, earning $586,100 (and paying, incidentally, $430,350 in taxes). He was in contract talks with Walter Reuther, the national president of the U.A.W. The two men had already agreed on a cost-of-living allowance. Now Wilson went one step further, and, for the first time, offered every G.M. employee health-care benefits”

Thus, American health care: –employer based, brokered by private insurers, and provided by doctors on a fee-for-service basis.  The kind of care that has created the fragmented market that most of are a part of today.  The kind that has left 48 million Americans uninsured and millions more underinsured and just one illness away from bankruptcy.   The kind of health care that led Wal-Mart the SEIU and the Center for American Progress to write a letter to the White House today in support of change.

As reported in the Journal, Wal-Mart has taken sincere steps to provide health care to its employees.  Today, as a result of cutting the time of eligibility in half and increasing choices of plans, 52% of Wal-Mart U.S. employees are covered by the company.  That’s compared to 45% of the rest of the retail industry.

Wal-Mart hasn’t just stepped up to increase coverage for its employees–in 2005, it became the first company to offer $5 generic prescriptions–a breakthrough price for people who previously needed to decide between taking their meds or eating dinner.

Wal-Mart has also been in the lead in opening walk-in clinics in its stores. Although the recession seems to have slowed the initial enthusiasm for retail medicine, the idea, in principle, has the potential to offer convenience at a very affordable price for people who have minor ailments like sore throats.

Finally, Wal-Mart has also recently started offering an electronic medical record to doctors.  While it remains to be seen whether it will sell, you have to give credit to the big box retailer for taking the initiative.

Whether you like or loath Wal-Mart (and all of us seem to fall into one or the other category), its efforts to shape up American health care shouldn’t go unnoticed. In fact, I would dare “real” health care groups, like the American Medical Association, to show that they can match Wal-Mart’s initiative and drive to improve health care.  So far, all we’ve seen from the AMA in the past few weeks has been a lot of lip service trying to assure us that they’re on the side of reform while behind closed doors, the Association’s members are still fighting about its future.  And remember, the AMA represents at best 20-30% of doctors in this country, which is one reason why the New York Times’ Nicholas Kristof urged “President Obama, don’t listen to the A.M.A. on this issue. Instead, for starters, call your doctor!”

Careful What You Wish For

On the left are those who would like health reform to include a strong public plan, one that could negotiate large provider discounts, driving down the cost of medical care. On the right are those who think health insurance should be provided only privately. I’m neither left nor right. I consider myself a realist and an empiricist.

A reasonable reading of the political tea leaves suggests that health insurance for the non-elderly will remain largely a private affair. (See the Debating the Public Option in The American Prospect by Paul Starr, Robert Reich, and Robert Kuttner.) Therefore, I’d like the private insurance market to work well. I’m also very familiar with the Medicare experience (and its problems) with both public and private provision of insurance.

So is Kerry Weems, the former acting administrator of the Centers for Medicare and Medicaid Services (CMS), the agency that oversees Medicare and Medicaid. Weems was interviewed recently by John Iglehart, the founding editor of Health Affairs, a respected journal of health policy (Doing More With Less: A Conversation With Kerry Weems, Health Affairs, 18 June 2009). Based on his experience managing Medicare and Medicaid, Weems had some interesting things to say, some of which I summarize below.

In general he paints an ugly picture of a public plan. If you’re hoping health reform includes a strong public plan you should be careful what you wish for, and you should read the interview to see what problems a public plan might have. This is not to say a public plan is better or worse than private plans. It is just to say that one should expect that a public plan will likely experience certain types of problems. Now on to the summary of the Weems-Iglehart interview.

On Congress. Congress has not treated CMS well because funding it is not as sexy as funding other agencies overseen by the same appropriation subcommittees: the National Institutes of Health and the Centers for Disease Control and Prevention. A consequence is that CMS has insufficient resources to fight waste, fraud, and abuse. For example, according to Weems,

“CMS’ annual expenditures [are]…more than the economies of all but twelve nations, and CMS carries out its responsibilities with a staff of 4,600 people. Social Security is of comparable budget size and handles its dollars with about 66,000 people…”

On Medicare Advantage. Weems feels that private plans under Medicare advantage can offer “better care at lower or the same costs” as traditional fee-for-service Medicare.

On Payment Errors. Medicaid has a payment error rate of 24 percent, meaning that the payments paid to providers are either incorrect or unverifiable 24 percent of the time.

On Waste, Fraud, and Abuse. Investigations of waste, fraud, and abuse under Medicare and Medicaid have yielded a return of $17 for every $1 spent. However, far too little is spent in the fight. Therefore, a considerable amount of waste, fraud, and abuse exist under Medicare and Medicaid. (See the recent stories on fraud in Miami, Detroit, and Denver.)

On a Public Plan under Health Reform. Weems thinks a public plan is “a bad idea because the government has a difficult time selecting only those providers who deliver high-quality care. There is a risk that a lot of resources will be wasted on poor care.

On Political Pressure. CMS administrators get a lot of pressure from Congress to treat certain providers more favorably than they might deserve. Such political meddling is a handicap in properly administering a public insurance plan.

On Physician Payments. The American Medical Association (AMA) has considerable influence on physician payments through its Resource Based Relative Value Scale (RBRVS) Update Committee (RUC). Weems thinks the resulting payments have “contributed to the poor state of primary care in the United States.” (Weems’ anti-RUC statements sparked a blogosphere debate (hat tip: Kate Steadman of Kaiser Health News). Rebecca Patchin, Chair of the Board of Trustees for the American Medical Association wrote on the Health Affairs blog that CMS is under no obligation to follow the RUC’s recommendations and she cites examples where it has not done so. On the Health Care Renewal blog, physician and Brown University professor Roy Poses asks “why does CMS rely exclusively on the RUC to update the RBRVS system, apparently making the RUC de facto a government agency, yet without any accountability to CMS, or the government at large?”)

On balance, it is clear that Weems is not impressed with the public provision of health insurance under Medicare and Medicaid. Some of the sources of problems could in principle be remedied. However, if Congress were to implement a public plan under health reform there is no assurance it would not suffer from at least some of the problems that plague traditional Medicare and Medicaid. I think the most challenging are political pressures, including rent seeking on the part of providers, and a potential inability for a public entity to selectively contract based on quality.

The Incidental Economist holds a joint appointment at a major research
university and a federal government agency.  In his current position,
he studies economic issues pertaining to U.S. health care policy with a
focus on Medicare. His writings can be found at www.theincidentaleconomist.com

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