Changes in the RUC: None.. How come we let a bunch of self-interested doctors decide what they get paid?

On February 2, 2011, I posted a piece titled Outing the RUC: Medicare reimbursement and Primary Care, describing the activities of this group, officially the “Specialty Society Relative Value Scale Update Committee” but known as the RUC, which is convened annually by the American Medical Association (AMA) to set the relative value of different kinds of work done by doctors. I included the accompanying graph, from the Robert Graham Policy Research Center of the American Academy of Family Physicians (AAFP). It shows the relative income of different specialists over time (FPs are the line at the bottom) and suggested that this might well impact specialty choice by students. I noted that the reason for the income disparities was the different weight given the work done by different specialists, and that the RUC was dominated by subspecialty societies. I pointed out that the real problem is that this encourages expensive procedures (by making them expensive) and that this skews the entire health care system.

I did not, however, call the RUC “The shadowy cartel that controls Medicare”. No, that is the title of a lengthy recent investigative piece in the Washington Monthly by Haley Sweetland Edwards that documents, in detail, the creation, formation, function, and results of the RUC’s activities that justifies this sobriquet. The problems documented are profound. Medicare has to pay for the work that doctors do, and it is pretty obvious that performing heart surgery should be paid more than freezing a wart. But how much more? And how does that relate to your doctor’s office visit or doing and interpreting a CT scan? And that doctor’s visit; is it for a cold or to manage 5 different chronic diseases? It’s complicated stuff. So the Center for Medicare and Medicaid Services (CMS) relies (90% of the time or more) on the recommendations of the AMA-convened RUC.

Note, above, that in the full name of the RUC the term “specialty society” is included; the members of the RUC are appointed by medical specialty societies, but are then told to then be completely objective and not look out for the interests of those societies, the specialists, or themselves! “Put your RUC hat on,” Edwards describes the chair of the committee telling its members, But even if you believe that this is possible, the outcome of RUC decisions would demonstrate that it is not in fact the case (“…in talking to a half-dozen current and former RUC members, including both generalists and specialists, the image of the committee that emerges is less a gathering of angels, cloaked by some Rawlsian Veil of Ignorance, and more akin to a health care-themed Game of Thrones.”) While the RUC only makes recommendations for Medicare, because all other payers base their payment rates upon Medicare, it is essentially controlling the cost of the entire health care system.

Medicare spending is like a pie, a fixed amount of dollars divided up based upon RUC recommendations. The original basis for this division, the Resource Based Relative Value Scale (RBRVS), developed by William Hsiao, may not have been equitable for primary care, but the modifications since then have been a disaster. When the first Bush administration gave the task of making these decisions to the AMA, “…the most powerful interest group in the industry,” Hsaio says “…that was the point where I knew the system had been co-opted….It had become a political process, not a scientific process.”

Edwards goes on, in great detail, to show the ways that the AMA maintains power – and makes lots of money – by controlling the RUC and the charge codes that are associated with it. And also describes, in detail, how it has a negative impact on primary care (“These manipulated prices are also a major reason why specialists are in oversupply in many parts of the country, while a worsening shortage of primary care providers threatens the whole health care delivery system. It’s precisely because the RUC has overvalued certain procedures and undervalued others that radiologists now make twice what primary care docs do in a year—that’s an average of $1.5 million more in a lifetime”) and why (“While the primary care docs make up roughly 40 percent of physicians nationwide, they have only 14 percent of the votes on the RUC.”). I would argue with the math, though; over a 30-year career every $100,000 of additional annual income results in an additional $3 million in lifetime income, and many sub-specialists earn several times $100,000 more than primary care doctors.

The idea of having independent, non-governmental, groups advise on policy is not necessarily a bad one. An excellent example of this is the US Preventive Services Task Force (USPSTF), which makes recommendations, based on the scientific evidence, about which preventive tests are effective and which are not. In Guidelines, bias, and your health, June 30, 2013, I cite an article by 2 USPSTF members who are concerned that by tying payment for services to positive recommendations by USPSTF, the Affordable Care Act (ACA, “Obamacare”) could politicize their work. The RUC has no such compunctions. While USPSTF is intentionally composed mostly of primary care physicians and examines only the scientific evidence, the RUC is dominated by specialists, who are appointed by specialty societies, who have a great financial stake in its decisions. And if the cartoons attached depict the doctors as poker players, the AMA is the “house”, which not only takes a cut of all decisions, but owns them and sells them back to anyone who wants to use them.

Edwards’ article is full of quotes from important – especially those who were formerly important in public life, both Republican (e.g., Gail Wilensky and Thomas Scully, heads of CMS during the GHW Bush and GW Bush administrations respectively) and Democratic (e.g., Bruce Vladeck, who headed CMS under Clinton), who are extremely critical of the entire process behind the RUC, see it as corrupt, and see it as a major contributor to a US health system that spends incredible amounts of money in a wrong-headed, upside-down way to reach mediocre health outcomes. Unfortunately, none of them changed it when they had government power (if they even tried to).

I would like to add two notes:
  1. All specialists are not paid the same. Some (e.g, psychiatrists, some subspecialty pediatricians, some neurologists) are earn much the same as primary care doctors. Some (e.g., radiologists, orthopedic surgeons, neurosurgeons, anesthesiologists) earn several times more. Much of this is built into the RBRVS, which vastly overvalues procedures compared to cognitive care, and exacerbated by the RUC.
  2. The last time I wrote about the RUC, I received a response from the AMA (AMA response to "Outing the RUC", February 5, 2011). It said "The entire premise of this column is false.” If you wish, you can read my reply in that blog piece. Nice to know they read it.
In summary, the flaw is not just the RUC, but the entire nonsensical non-system of medical care we have in the US. Medical care should be paid for by a single payer, and rates determined by an independent body without a financial stake in the outcome. Health care should be a lot more than simply medical care. And the health of our people will be most impacted by investment in the core functions of society: housing, food, education and jobs.

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