What Determines How Much Your Doctor is Paid?

It’s called the Relative Value Scale Update Committee (RUC) and it is perhaps the most blatantly corrosive mechanism of US health care finance, a star-chamber of powerful interests that, complicit with federal regulators, spins Medicare reimbursement to the industry’s advantage and facilitates payment levels that are followed by much of health care’s commercial sector…..

The RUC exerts its influence by rolling up the collective interests of the nation’s most powerful medical specialty societies and, indirectly, the drug and device firms that support and benefit from their activity. The RUC uses questionable “methodologies,” closed to public scrutiny, to value medical services. CMS has historically accepted nearly 90 percent of the RUC’s recommendations without further due diligence….

It has consistently over-valued specialty services and undervalued primary care services. Ophthalmologists performing cataract procedures are now paid 12.5 times the hourly rate of PCPs involved in a moderately complex office visit, arguably a more complicated activity.

More from Brian Keppler at the Health Affairs Blog below the fold.

At the same time, the erosion in primary care reimbursement has reduced office visit durations and undermined primary care’s moderating influence over specialty care. These dynamics are almost certainly responsible for the doubling of specialty referrals over the past decade.

The RUC’s excessive valuations of certain procedures — e.g., cardiac stenting, colonoscopies, back surgeries — have created lucrative incentives for over-utilization. 2008 OECD health data showed that, for every inpatient percutaneous transluminal coronary angioplasty (PTCA) performed on patients in the United Kingdom, New Zealand or Switzerland, we do more than four in the US. Then there are data showing a clinically inexplicable 15-fold increase in complex spinal fusions between 2002 and 2007, with adjusted mean hospital charges of $81,000.

All health care interests except primary care win under this arrangement. Everyone else loses.

Comments (6)

Trackback URL | Comments RSS Feed

  1. Larry says:

    Sounds awful.

  2. Evan Carr says:

    I think this article highlights the first go-to in any major policy adjustment.

    Step 1: Eliminate waste, fraud and profiteering.

    Step 2: Take further action.

    Befeore overhauling the whole health care system in the United States, why not eliminate fraud, abuse and profiteering first?

    Before drastic austerity measures or substantial tax increases,why not eliminate fraud, abuse and profiteering first?

    Of course, the answer is pretty simple. Just look towards the corruptive influence of money in policital elections and the immense power of special interests and lobbyists. There is no reason why the RUC should be closed from the public. If costs were priced accurately CMS could save taxpayers billions.

  3. H. James Prince says:

    “The RUC uses questionable “methodologies,” closed to public scrutiny, to value medical services.”

    Isn’t this completely counter to the perfect information assumption of economics?

  4. Andrew O says:

    Fraud, corruption, abuse…ridding those factors would go a long way in changing any social system for the better.

  5. Gabriel Odom says:

    We need to promote the benefits of general and osteopathic medicine. Primaries are completely swamped with patients, and they don’t have the time to deal with many complaints – so a specialist will be just what the doctor orders.

  6. drsam says:

    As a primary care doctor myself, I can say that almost everything in this post is true. The RUC nonesense not only strongly drives referals to sub-specialists , but also strongly drives medical students into sub-specialty training programs. Why should students want to go into general Internal Medicine, Pedatrics, or Family Medicine when they are basically entering a hamster wheel where every year they have to keep running faster and faster just to stay in the same place, and all the time knowing that eventually the wheel will get too fast for them to keep up?

    There are other very significant factors that also drive the increase in referals to sub-specialists. One is the absurd civil liability system we have in this country. One of the biggest liability risks in primary care medicine is the dreaded “failure to diagnose” suit. Even if I feel quite confident that my patient’s problem is not the rare one-in-a-million disease that could cause their symptoms, there is a strong incentive for me to not take that one-in-a-million chance that I could be wrong and put my entire personal livelihood at risk. It’s much easier to just make the referal or order the expensive test than to face the prospect of sitting in front of a jury of my “peers” trying to explain the rational behind appropriate ordering of tests and referals.

    I could go on, but I’m not stating anything new, nor anything that isn’t already well known and quite obvious, in spite of all the nonesensical arguments to the contrary from parties who have a vested interest in maintaining the status quo.