"Congress. They're price controlled. However, most providers prefer dealing with them over straight Medicare."
Once again, your opinion doesn't match the facts...
healthbeatblog.org
"Who Decides How Much Specialists Are Paid?
If you’ve read the post above about specialists vying to do lucrative procedures like colonoscopies-- while avoiding equally time-consuming procedures that just don’t pay as well--you might have wondered: who sets and updates the fees for each procedure?
The answer: a Medicare advisory committee called the RVS Update Committee (or RUC). The RUC flies under the radar. It’s quite secretive and many people have never heard of it. Yet it is enormously powerful. It sets the prices for Medicare’s fee-for-service payment schedule, a price-list that has become the basis for most private insurers’ payments as well.
Who is on the RUC? It’s dominated by specialists. So, it should come as no surprise that a specialist’s time is deemed to be worth far more than an internist’s or a family doctor’s time. An article in the June 2007 Annals of Internal Medicine provides a quick example.
In 2005, the 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). By contrast, Medicare’s fee for a gastroenterologist in the outpatient department of a Chicago hospital performing a colonoscopy (CPT code 45378)--which also takes about 30 minutes—was $226.63. And if the specialist performed the procedure in his own office, where he pays for equipment and nursing time, he could charge Medicare $422.90 for his thirty minutes. (Of course the primary care physician also has to pay for staff and equipment, though the equipment may not be as expensive.)
Keep in mind that the gastroenterologist spent more time training in his specialty, and in that sense it is fair that he should be paid more. But should he be paid that much more per half hour? And, assuming he practices medicine for twenty-five years, at what point (if ever) do you stop paying him 2 ½ times as much for every 30 minutes that he works?
And the questions don’t stop there. As the Happy Hospitalist’s post above illustrates, some specialists and some procedures fetch much higher fees than others. Why?
It turns out that in the 1ate 1980s, Medicare asked Harvard economist Dr. William Hsiao to set prices for the thousands of individual procedures that doctors perform. And Hsiao decided that to be fair, prices should be based not just how much time the procedure takes but also on the mental effort and judgment involved, the technical skill and physical effort required, and the stress entailed. To calibrate the precise amount of mental effort, stress and technical skill involved in everything from cataract surgery to performing a hysterectomy on a woman with cervical cancer, he and his team interviewed thousands of doctors. (At the time, they determined that cataract surgery involves just slightly less work.)
In 1992, Medicare adopted Hsiao’s fee schedule, and private insurers soon followed suit.
But the schedule was not carved in stone. As medical technology changes, some procedures become easier, while others become more elaborate. Thus the master schedule of some 6,000 procedures will always remain a work-in-progress, rather like a cathedral that outlives its original architects.
And who fine-tunes the schedule on a regular basis? The rather secretive committee stacked with specialists that I described earlier—the RUC. It has 30 members, with 23 of them appointed by “national medical specialty societies.”
Given that decisions are based on “how much stress” a physician experiences while dong a particular surgery and the amount of “technical skill involved,” clearly the RUC is called upon to make some pretty subjective judgments. Nevertheless, its decisions are rarely questions.
Writing in the Journal of the American Medical Association in November, Harvard’s John Goodson MD, describes the RUC and its relationship with CMS this way:
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 s RUC's recommendations are accepted and enacted by CMS. [my emphasis]
“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…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.”
(Thanks to Brian Klepper, an analyst based in Atlantic Beach, Florida, who works on health care reform, for calling my attention to this article and the piece quoted above from the Annals of Internal Medicine in his December 17 post on The Health Care Blog: “Bad Medicine: How The AMA Undermined Primary Care in America.")
In fairness to specialists, some are just trying to maintain their incomes. In recent years, Medicare has been doing its best to keep fees flat—yet inflation means that a specialist’s overhead continues to rise. The cost of labor, real estate, equipment and malpractice insurance all are climbing. In order to keep up, many physicians are trying to do more procedures and more lucrative procedures. And while some (particularly primary care physicians and other generalists) have watched their incomes drop, overall doctors have succeeded. According to the 2007 annual report of the Boards of Trustees of the Medicare trust fund, Medicare fee-for-services spending growth rates began to accelerate in 2000, rising to $35,936 billion from $33.348 billion in the prior year. By 2005, the total had jumped 73 percent in just six years.
MedPAC, the independent Medicare Payment Commission that advises Congress on Medicare spending, realizes that it needs to find a better way to determine specialists’ fees. Testifying before the House Ways and Means Committee’s Subcommittee on Health last May (see www.medpac.gov), MedPAC chairman Glenn Hackbarth noted that the RUC’s three most recent reviews, completed in 1996, 2001, and 2006,
“recommended substantially more increases than decreases in the relative values of services, even though one might expect many services to become overvalued over time. We have noted that physician specialty societies have a financial stake in the process and therefore have little incentive to identify overvalued services.”
Responding to that problem, MEDPAC recommended “that CMS establish a group of experts, separate from the RUC, to help the agency conduct these and other activities. This recommendation was intended not to supplant the RUC but to augment it. To that end, the new group should include members who do not directly benefit from changes to Medicare’s payment rates, such as physicians who are salaried, retired, or serve as carrier medical directors and experts in medical economics and technology diffusion.”
But this would be only a temporary fix. Ultimately, many members of MedPAC realize that Medicare must move away from fee-for-service altogether. Until Medicare replaces fee-for-service with another payment system, many physicians will respond to any attempt to contain costs by increasing the volume of work that they do. This means that they have to work faster, spending less time with each patient, undermining the quality of care, and frustrating both the doctor and the patient.
Long-term, the best solution would be for Medicare to adopt a system that reimburses both doctors and hospitals for each episode of care, from beginning to end with a bonus to doctors and hospitals that achieve the best and most efficient outcomes.
I’ll be talking about this proposal in a future post where I return to my pie chart on “Health Care Spending” to examine what percentage of our health care dollars are used to pay for physician’s services—and whether it would be feasible to trim their share without affecting the quality of care. |
