Last month, there were a couple of breathless articles about the RUC (Relative Value Scale Update Committee) published in
The Washington Post and
The Washington Monthly,
reporting as news the state of affairs that has prevailed for years in
the realm of re-setting the relative values of physician services
annually for purposes of the RBRVS -- which is at the heart of the
Medicare Physician Fee Schedule (MPFS) and which affects physician
reimbursement well beyond Medicare, since the RBRVS is used as a
touchstone in determining payment levels under commercial payor
agreements as well.
I thought this confluence of publications was a good excuse to call up Brian Klepper, who is an expert critic of the RUC, to discuss the latest stories and talk about the prospects for meaningful reform.
Have a listen to our conversation (about 30 minutes long):
Brian Klepper - RUC - HealthBlawg
A transcript is appended to this post.
As detailed in our conversation, the RUC is a committee of the
American Medical Association, and it operates behind a veil of secrecy.
When it issues its annual update recommendations, CMS generally accepts
the recommendation, and promulgates the update as a rule: the annual
MPFS rule. The RUC is dominated by specialists, so the system tends to
overvalue procedures and to undervalue "cognitive" services, or primary
care.
There is a case to be made that the RUC deliberations are subject to
the Federal Advisory Committee Act (FACA) requirements (open meeting
rules, opportunity for public comment, etc.); unfortunately, as Brian
describes, the Federal court system was not inclined to follow this line
of reasoning when a challenge to this process was brought.
The Sustainable Growth Rate rule creates a zero sum game for Medicare
physician reimbursement, so as specialty care reimbursement rises,
primary care reimbursement necessarily shrinks. Congress has kicked the
can down the road for years now, refusing to implement the zero-sum
approach to Medicare physician reimbursement changes on an annual basis.
Thus, there is a deferred Medicare accumulated physician pay cut
approaching 40%.
There is an argument to be made that none of this matters in the long
run, since we are moving away from fee-for-service medicine and in the
direction of bundled or global payments. However, bundled payment rates
are built on fee-for-service payment rates at some level, so the
influence of the RUC on the RBRVS will be felt in a bindled or global
payment system as well.
Given the paralysis on Capitol Hill, the court decision and the SGR
law mean that moving forward will be difficult, if not impossible.
There is a faint glimmer of hope in the form of a bill filed by Rep.
Jim McDermott (D-WA) that would bring the RUC within FACA and
reconstitute its membership to be more fairly representative. It was
filed last session and died in committee. In the current legislative
session it sits in committee as well, as H.R.2545, Accuracy in Medicare Physician Payment Act of 2013.
It remains to be seen whether any substantive changes will come about in the near future.
David Harlow
The Harlow Group LLC
Health Care Law and Consulting
HealthBlawg
Conversation of David Harlow and Brian Klepper on the RUC
July 26, 2013
David
Harlow: This is David Harlow at HealthBlawg and I have with me today
Brian Klepper, who is the principal and chief development officer of
WeCare TLC, a worksite clinic and medical management company. He is
also a columnist for Medscape and writes for The Self-Insurer online as
well. Welcome Brian.
Brian Klepper: Thanks, glad to be here.
David
Harlow: I am interested in speaking with you today about the recent
flurry of what I would call breathless articles about the resource-based
relative value scale used for Medicare payments of physicians and
specifically about the relative value scale update committee, the RUC,
that is operated by the American Medical Association and has an advisory
role in updating the RBRVS on an annual basis. There were some
articles (and I’ll link to them) in the Washington Monthly and the
Washington Post about this and my initial reaction, Brian, is that this
is old news. I am surprised to see this portrayed in the way that it
was, as fresh information. I am wondering if you could react to that a
little bit and maybe give us a thumbnail capsule of why we should care
about the RUC.
Brian Klepper: I have been interested in the RUC
since about 2007 when Roy Poses, who is a physician at Brown, told me
about it when we were both fellows at the Aspen Institute Health Forum
in Colorado and I begin to dive into it. At that time I wrote a piece
called “Bad Medicine: How the AMA Compromised Primary Care in America,”
which dove into it a little bit and then in October of 2010 I believe,
the Wall Street Journal ran a wonderful exposé by Anna Mathews and Tim
McGinty that was a devastating indictment of the RUC, in which Tom
Scully, who had been the CMS administrator under Bush 2, he called the
RUC indefensible, which in the context of one of the most important
newspapers in the country, was pretty damning. That was followed up the
following January by an article by Uwe Reinhardt in the Economix blog
of the New York Times, where he sort of explicated the function of the
RUC without really drawing the conclusions of how corrosive the process
has been. And then I got together shortly after that with David Kibbe,
who is my sometimes writing partner. Dr. Kibbe as you know is a genuine
thought leader, he is a family physician and he is one of the country's
top experts on electronic health records and the transfer and storage of
clinical information. David and I talked about it. He was at the
time, still is, working part-time for the American Academy of Family
Physicians and we said the RUC has been so destructive to primary care
that there really ought to be an effort to get the primary care
community to abandon participation in the RUC, saying that it is a
terrible process and by doing that delegitimize it, paving the way for
another process for valuation of medical procedures.
I should
stop here and do a sidebar and explain what the RUC is. The RUC is a
secretive AMA committee that was established in 1992 right after the
introduction of the resource-based relative value scale, which was an
effort to rationalize and give weight to different medical procedures
and a Harvard scientist by the name of Hsiao came up with the
methodology, which seemed like a good idea at that time, but it has
turned out to be crazy, and so the AMA stepped forward: well CMS really
does not have the resources to do a good job with this, but you really
need to get doctor input into the kind of work that they do; so let us
do it and CMS at that time under Gail Wilensky and then shortly after
that Bruce Vladek said sure, why not, that seems like a good idea and
that would be helpful. So what it ended up being was a lobbying group
which was utterly opaque, its proceedings were hidden from view. Their
scientific methodologies were laughable, they wouldn’t get past any
basic statistics class. They often made decisions based on survey
samples of their own doctors who knew that they would be paid based on
their response to surveys with fewer than 30 responses, and the
composition of the 29-member panel was not at all representative of the
numerical composition of physicians in the country. So for example,
primary care physicians are somewhere between 30 and 35% of all US
physicians and they represented only 3 of 29 members on the panel. So
they were a federal advisory panel that by the de facto rules should
have come under the auspices of the Federal Advisory Committee Act, but
never adhered to any of their rules. The Federal Advisory Committee Act
is a law that says that groups advising federal agencies must adhere to
rules that are in the public rather than the special interest. The
proceedings have to be open, the representational composition has to
reflect the real world, they have to use credible science, and so on.
The
impact of the RUC which has made a lot of its valuations and
determinations based on horse trading and lobbying and all kinds of
other behind-the-scenes, inappropriate methodologies has been
devastating, in terms of its impact on American healthcare. Say for
example, one taxonomy that you might point to is saying: Well, it has
consistently undervalued primary care relative to specialist care. So,
primary care's reimbursement is based on what are called E&M or
Evaluation and Management codes, which are based on office visits
duration and the complexity of an office visit. The payment for them is
very limited relative to speciality care. By contrast specialty care
has been amped up very, very high. So it has consistently overvalued
specialty care because the composition of the panel has been dominated
by specialists and it has undervalued primary care. Those two things
had a secondary impact, in the sense that it has inhibited primary
care's traditional capacity to moderate and hold accountable specialty
care and at the same time it has created tremendously lucrative
procedures by giving tremendous weight to certain procedures. So for
example after an increase in the valuation of complex spinal surgeries
in 2002, there is data showing that between 2002 and 2007 the rate of
complex spinal surgeries increased fifteen-fold with no clinical origins
to that -- purely driven by the financial incentives.
David
Harlow: So let me say here a couple of other things to frame this.
Number one, the differential between the primary care reimbursements and
specialty care reimbursements are much more pronounced now than they
were when the RBRVS was first adopted through Bill Hsiao's work, and the
other thing that’s worth mentioning is that there’s a zero sum game
going on. Under federal law there is a requirement that the total value
of Medicare reimbursement for physician services remain the same --
subject to some minor inflation adjustment -- so that as specialty care
reimbursement increases, whether by individual procedure or by overall
total, the primary care reimbursement necessarily decreases -- and this
is something that we are familiar with. We revisit this on an annual
basis as Congress overrules itself and allows a greater expansion of the
costs because this zero sum game doesn’t really work and we now have
accumulated about a 40% increase in total expenditures that at least
theoretically will need to be carved out of physician reimbursement at
some future date on the Medicare side. So that’s another aspect of this
system that further complicates it and is in need of fixing. So
between the increased differentials, between primary and specialty care,
and what's been called the “doc fix” that happens on an annual basis
when we are looking at the Sustainable Growth Rate for physician
expenditures. There is really a need for Congressional action in order
to get a handle on these expenditures. I guess the other thing I would
say here is that – we are talking about physician expenditures under
Medicare, but really this has a much greater impact because of other
expenditures that these physician expenditures are related to and I
wonder if you could speak to that as well.
Brian Klepper: Yeah,
everything which you say is absolutely true. It is important to say for
listeners that there are many, many nooks and crannies to this. It is a
very complex story. My wife is urging me to write a book that is sort
of like All the President’s Men. Starts off with, you know, Hsiao
creating this monster and going through all the ramifications. As you
say, the payment differentials, the valuation differentials are
tremendous. So, three years ago the Graham Center, which is a
subsidiary of the American Academy of Family Physicians, did a study
that found that on average a primary care physician is going to make
$3.5 million less than a specialty physician over a 30-year career. If
you compare their pay to orthopedists or neurologists, it is more like
$12 million. So, another offshoot of this is that nobody goes into
primary care anymore. The percentage of medical students going into
primary care has dropped to almost nothing and as a result of that we
are facing this tremendous primary care shortage over the next few
decades. The power problem associated with this is also very compelling
because not only is the AMA the largest single societal health care
lobby, but they are supported by not only all of the individual medical
speciality societies, which of course are much wealthier than the
primary care societies, but they are also supported by the rank and file
of all of the corporations that support specialty services and that win
from this windfall of lucrative services that in turn drives
unnecessary utilization. So it is a genuine cabal that extends not just
into Medicare but into every payment stream and the valuation values
that are set by the RUC – that are recommended by the RUC and almost 90%
of them over the last 20 years – 90% of the recommendations have been
accepted by CMS with no further due diligence. Those have then become
the basis for payments in virtually all of the other commercial and
other public health system reimbursement streams as well. So, it has
tremendous impact.
This is, in my opinion, the core of the
health care cost crisis. This is not by any means the only problem with
healthcare costs. There are many other problems, but this is the
deepest one and the most powerful and it will be the hardest to
dislodge.
Is it worthwhile here David to talk about the lawsuit and the implications of the finding?
David Harlow: Yes, that would be great.
Brian
Klepper: Well, so what happened was that Dr. Kibbe and I in January of
2011 published an article in Kaiser Health News called Quit the RUC,
which made this argument that it was this corrosive thing that was
harming primary care. At that time, we had I think a more immature, an
earlier stage understanding of what the RUC was about and how corrosive
it was, but we published this article and it set off a minor firestorm
and got some play and then I approached a physician, who has become a
longtime friend, by the name of Paul Fischer. Paul had been
controversial and impactful years ago when he was the first physician
expert witness in the tobacco trial and had played an important role in
that and so I asked him if he would become involved and he and 5 of his
primary care colleagues also from Augusta, Georgia, we found and
retained a constitutional attorney right outside of DC and they filed a
lawsuit against the US Department of Health and Human Services and the
Centers for Medicare and Medicaid Services over their longstanding
relationship with the AMA's RBRVS Update Committee for their refusal to
require the RUC to adhere to the common interest requirements of the
Federal Advisory Committee Act. The core assumption was that the RUC is a
de facto federal advisory committee and therefore should be required to
do that.
The case went on for a year – well a year and a half
and was resolved finally by an appeals court in January. Both the
district court and the appeals court ruled that the relationship between
CMS and the RUC were beyond the jurisdiction of the court and could
only be resolved by Congress and so therefore the courts could not
assess the merits of the contents of the suit. We thought that this was
a pretty surprising result because it meant that as a practical matter
the RUC is utterly unaccountable and almost impossible to dislodge and
that the only real way to get at it was to have an appeal in Congress,
which was made all the more difficult by Congress' open-arms policy to
lobbying contributions from the health care industry.
It is
worth mentioning here as aside that in 2009 when the health care reform
law was being formulated that data from Open Secrets from the Center for
Governmental Responsibility shows that the health care industry gave
Congress $1.2 billion in campaign contributions, it was an unprecedented
amount, in exchange for influence over the shape of the law. So that’s
an illustration of the level of their influence and their power and so
it makes it difficult to believe that a structure like the RUC that is
so advantageous to the industry could be dislodged.
David Harlow:
So both in terms of that, combined with the general logjam in Congress
these days and, I think, the extreme unlikelihood of CMS acting on its
own to revisit the relationship with the RUC and create a new structure,
makes it extremely unlikely that something will change in that respect
any time soon. I guess another approach to change has been the
increasing emphasis on moving away from fee for service for
reimbursement purposes, although the bottom line is there needs to be
some way of valuing services as they go into bundled payments and this
ends up being the de facto model for valuing these services.
Do you see any hope for a move away from the RBRVS in developing bundled payment amounts?
Brian
Klepper: No, I think you put your finger on it. If I am a hospital and
I am given a bundled payment for a patient with say, a whole range of
problems including orthopedic problems for example, and I do an internal
valuation of the contribution to care of the patient, the orthopedist
who has been making 10 to 12 times what the primary care physician has
for very capricious reasons that has to do more with lobbying than
actual value of his service, is going to come back and say wait a
minute, I am worth 12 times what the primary care doctor is, just look
at the RUC values -- and that makes it very, very difficult for a
bundled payment system to work in the real world. I think that that is a
real serious problem.
David Harlow: Well, I guess it is at
least theoretically possible for a strong-willed private payor to take a
step in the right direction and move away or make some adjustments to
these fee schedules. I know in the past some private payors used the
RBRVS as a starting point and would adjust certain ranges of codes by a
percentage up or down depending on where they feel they need to be and
hopefully that can continue in the future in an effort to rationalize
this system.
Brian Klepper: You know a couple of years ago my
wife had cataract surgery and so I got a chance to look at the bill from
Medicare and it struck me that it made sense to do an analysis and
compare what an ophthalmologist receives under Medicare for cataract
surgery -- it is referred to as a cataract extraction and intraocular
lens implant -- and compare that to a primary care office visit that is
moderately complex. This kind of artificial situation really sheds a
lot of light on how egregious the problem is.
First of all
there is this sort of myth that what primary care doctors do is easy and
therefore they are the dumb ones. What a primary care doctor is
actually faced with day after day is often seeing patients that they
know very little about, the patient presents with a set of symptoms and
they could be anything, a set of symptoms could be neurologic or
hormonal or an infection or anything else, and they have to figure out
in very short order what it can’t be, and then what it must be, and then
figure out from there whether they are capable of managing it or
whether they need to send it to a specialist. That’s an extremely
cognitively complex requirement.
By contrast, most specialists
have a very narrow set of things that they see over and over again. In
the case of a cataract, this is a 50-year-old procedure, all of the risk
pretty much has been filtered out, it’s almost completely automated and
it takes about 10 or 11 minutes to do this procedure. A moderately
complex office visit takes 20 to 25 minutes and the physician is
required to see at least three different problems that they deal with
and when you look at the reimbursement on an hourly basis, the
ophthalmologist is receiving 12-1/2 times what the primary care doctor
is -- for something that is arguably less complex. That kind of
real-world result is the direct outgrowth of the RUC's activities that
have happened behind closed doors, out of sight, and have resulted in
these tremendous, not only cost burdens on the American people, but also
differentials and distortions of the American healthcare system. It is
really worth understanding in those terms.
David Harlow: Yes
and so we hope that moving forward in order to try to rationalize the
system, to get a handle on costs and growth, that we will be able to
move forward and incorporate a more rational approach to reimbursement.
Brian
Klepper: Representative Jim McDermott, a Democrat from Washington, he
has set up a bill, I think it’s called the Accuracy in Medicare Payment
Act or something along those lines, which would require the RUC to be
treated as a federal advisory committee and therefore come under the
common interest rule. In addition to that it would also open up the
panel beyond physicians to include other important constituencies who
play a role in the system. So it would include patients and purchasers
and health care economists, all of whom could bring perspective and
expertise to the process. It is a very important bill and it would be
an important first step.
It makes a lot of sense. Representative McDermott is a physician and
he has crusaded on this issue, on the fact that he understands how
serious it is. I don’t know whether it will get any support, but it
certainly deserves the support of both sides of Congress.
The
final point is that health care is the most important single issue in
creating economic instability in the United States. There is a RAND
study from 2010 that shows that 80% of all of the growth in household
income over the last decade is now being absorbed by health care and
this out-of-control issue threatens to capsize the rest of the US
economy. So getting this under control is very important for the
national economic interest and this is the most important first step.
So I really appreciate the chance to talk about this with you. So thank
you very much.
David Harlow: This has been great. I couldn’t
agree more. McDermott's bill has been filed before and as often happens
with important legislation, it didn’t get passed the first time
through; it went to a couple of committees and sort of died on the vine
there, but I am hopeful as you are that in this session or maybe in a
future session of Congress, this bill can be enacted into law so that we
can bring this process within FACA, within the open meeting law and
have appropriate representation and broader process involved in dealing
with these issues.
Again, thank you very much, Brian, for speaking with us today. This is David Harlow on HealthBlawg.
#HealthLaw