Who decides how much doctors are paid?

A friend once asked me to explain why primary care doctors, neurologists, nephrologists, and other “cognitive” specialists earn less than surgeons, GI doctors, and other “proceduralists."

I answered that there is a secret cabal of doctors, dominated by proceduralists, who advise the Medicare agency (CMS) on what the rates should be.  That same rate formula is also used as the basis for physician fee schedules by all the private insurance companies.  My friend was incredulous. 

But, in fact, that’s the way it is.  This process has been documented many times in the media and on my blog.  It is directly responsible for the fact that well-intentioned young doctors who otherwise would consider careers in primary care instead go into other specialties.  It also explains why your primary care doctors only has 18 minutes for each visit, because he or she has to see many patients per day to earn a living.

In a forthcoming Medscape article, health care analyst Brian Klepper gives some insights.  This incestuous relationship began when President Clinton’s director of health care finance agreed to a plan by which the American Medical Association would be the convener for this session, called the Relative Value Scale Update Committee (RUC).  This relationship was continued under the Bush administration.  Later, though, Tom Scully, CMS administrator for Bush would say,  

One of the biggest mistakes we made … is that we took the RUC… and gave it to the AMA. …It’s very, very politicized. I’ve watched the RUC for years. It’s incredibly political, and it’s just human nature…the specialists that spend more money and have more time have a bigger impact… So it’s really, it’s all about political representation, and the AMA does a good job, given what they are, but they’re a political body of specialty groups, and they’re just not, in my opinion, objective enough.

There was recently a lawsuit challenging this relationship filed in the Southern Maryland Federal District Court by six Georgia primary care doctors.  Brian reports that Judge William Nickerson ruled against the doctors on May 9:

The opinion did not weigh the substance of the case, but instead focused on a procedural provision in which Congress bars the judicial system from considering how the relative value units (RVUs) of medical services are determined.

He notes:

The physicians argued that this flawed process has resulted in an over-valuing of specialty care, an undervaluing of primary care and a distortion of health care markets, utilization and cost. But the ruling ignored their argument, explicitly avoiding any evaluation or discussion of the requirement that federal advisory bodies adhere to [the Federal Advisory Committee Act.]

Brian elaborates:

Ironically, the previous week a Health Affairs study confirmed that CMS has accepted almost 9 of every 10 RUC recommendations. When combined with information about the RUC’s non-adherence to FACA – its lack of transparency, shoddy scientific methodologies, conflicts of interest, and non-representative panel composition -- this finding validates concerns about the RUC’s tremendous influence over public payment policy. Where this goes from here is unclear.  

He reports, “It is unclear at this writing whether the plaintiffs will appeal. Important legal challenges like this one are expensive and typically funded by large organizations, but this one was mounted by a few private physicians.”

Regardless of where this goes from here in the courts, I would like to make a simple proposal to President Obama, Secretary of HHS Kathleen Sebelius, and CMS administrator Marilyn Tavenner.  Keep the RUC but insist that all of its meetings and deliberations be made public.  That is within the immediate power of the Executive branch, requiring no judicial review.  This is an administration that has prided itself on transparency.  Surely they can insist that one their key advisory panels, one that will help determine the success or failure of health reform, should perform its functions in the open.  Let’s shine some sunshine on the process and logic used.  If the RUC’s methodology is sound, we will all learn from that.  If it is flawed, the public outcry will make it change its ways.