US Senate Subcommittee Asks What the RUC is About

It has been a long time coming, but the issue of how the US Medicare and Medicaid system sets the fees it pays doctors, and hence sets the incentives on doctors that drive their health care decisions, finally got some public attention again.<br /><br /> The background is complex, and may glaze the eyes of readers hoping for simple solutions to simple problems.  One wonders if the complexity was deliberately created to discourage solutions.  Yet we have created a complex, obscure, opaque health care system.  If we want to meaningfully improve it, we must address its "inside baseball" qualities.  Those already familiar with and interested in the topic, skip the following section.<br /><br /><b>Background - the Resource Based Relative Value System Update Committee (RUC) </b><br /><br />We have <a href="http://hcrenewal.blogspot.com/search/label/RUC">frequently posted</a>, first <a href="http://hcrenewal.blogspot.com/2007/03/on-disparities-between-reimbursement-of.html">here in 2007</a>, and more recently <a href="http://hcrenewal.blogspot.com/2010/07/primary-care-and-hc-renewal-ruc-kus.html">here,</a>  <a href="http://hcrenewal.blogspot.com/2010/06/ruc-off-new-england-journal-once-again.html">here</a>, <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2011/03/getting-out-of-our-ruc-open-letter-to.html">here</a>, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or <a href="http://hcrenewal.blogspot.com/search/label/RUC">RUC</a>. <br /><br />Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients. <br /><br />As we <a href="http://hcrenewal.blogspot.com/2009/02/what-ruc-again-one-of-worlds-most.html">wrote before</a>, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the <a href="http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/medicare/the-resource-based-relative-value-scale/the-rvs-update-committee.shtml">RBRVS Update Committee</a>. The RUC is a private committee of the AMA, <a href="http://www.ama-assn.org/ama1/pub/upload/mm/380/toptenthings.pdf">touted</a> as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.<br /><br />However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."<br /><br />In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (<a href="http://hcrenewal.blogspot.com/2007/12/is-sustainable-growth-rate-main-problem.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/07/can-we-fix-medicare-while-pretending.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/12/no-such-ruc-new-england-journal-takes.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2010/06/ruc-off-new-england-journal-once-again.html">here</a>) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.<br /><br />That <a href="http://hcrenewal.blogspot.com/2010/10/ruc-it-up-how-us-government-fixes.html">changed</a> in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, <a href="http://online.wsj.com/article/SB10001424052748704657304575540440173772102.html">here</a> in the WSJ (also with two more spin-off articles), and <a href="http://www.publicintegrity.org/articles/entry/2571/">here </a>from the Center for Public Integrity (also <a href="http://www.kaiserhealthnews.org/Stories/2010/October/27/AMA-center-public-integrity.aspx">reprinted</a> by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.<br /><br />In 2011, after the "<a href="http://www.replacetheruc.org/">Replace the RUC</a>" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively <a href="http://hcrenewal.blogspot.com/2011/04/rucing-about-conflicts-of-interest.html">easy for me to determine </a>that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).   <br /><br />Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge <a href="http://careandcost.com/2012/05/19/medicare-physician-payment-the-rucs-hollow-victory/">dismissed the lawsuit</a> in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  And then everything was quiet again, until.... <br /><br /><b>A Senate Committee Takes Up the RUC</b><br /><br />Meanwhile, after the attempt at health care reform made by the Affordable Care Act (aka "Obamacare"), which aimed to increase insurance coverage, there has been growing concern that there will not be enough primary care physicians available to manage the larger insured patient population.  So, as <a href="http://www.washingtontimes.com/news/2013/jan/29/us-shortage-16000-doctors-health-care-act-kicks-in/">reported</a> by the Washington Times, a US Senate committee published a report on this issue:<br /><br /><blockquote class="tr_bq">The United States needs 16,000 more primary care physicians to meet its current health care needs, a problem that will only get worse if nothing is done to accommodate millions of newly-insured residents under President Obama’s health care law in the coming decade, according to a Senate<a href="http://www.washingtontimes.com/topics/senate/"></a> report released Tuesday.</blockquote><br />Mirable dictu, the report cited the influence of the RUC as part of the problem:<br /><br /><blockquote class="tr_bq">Mr Sanders said s<i>ome of the blame appears to rest with a board of 31 physicians who make reimbursement recommendations to the Centers for Medicare and Medicaid Services (CMS), which private insurers frequently adopt as well.</i><br /><br /><i>The American Medical Association's Relative Value Scale Update Committee, or RUC, is populated by many more specialists that primary care physicians</i>, multiple witnesses said Tuesday.<br /><br />'Therefore, it should come as no surprise that<i> it has accelerated higher payments — larger paychecks — to specialists over primary care doctors,'</i> Mr Sanders' report said.</blockquote><br /><br />Senator Sanders' subcommittee then held a hearing during which the RUC came up for more criticism, as <a href="http://www.medpagetoday.com/PublicHealthPolicy/WorkForce/37085">reported</a> by MedPage Today:<br /><br /><blockquote class="tr_bq">Sen. Bernie Sanders (I-Vt.), chair of the Senate Health, Education, Labor and Pensions Subcommittee on Primary Health and Aging, criticized the American Medical Association's Relative Value Scale Update Committee (RUC), which develops annual recommendations on physician pay updates for Medicare.<br /><br />Sanders noted that the RUC is dominated by specialists, whose opinions are accepted by Medicare more than 90% of the time.<br /><br />'Specialists sitting on the committee determine reimbursement rates,' he said during the hearing on the physician shortage<a href="http://www.help.senate.gov//hearings/hearing/?id=dc487385-5056-a032-522c-082a29c4a406" target="_blank"></a> that is anticipated as more people become insured under the Affordable Care Act (ACA). 'We have to look at that.'</blockquote><br />Several witnesses identified problems with the RUC:<br />  <br /><blockquote class="tr_bq">Andrew Wilper, MD, acting chief of Medicine at the Department of Veterans Affairs Medical Center in Boise, Idaho, told the senators that Congress could mandate further oversight of the RUC and create greater separation between physicians and the boards that dictate their payment rates.<br /><br />'At a minimum, <i>the public deserves transparency in decision making from the RUC,</i>' Wilper said. 'We should set <i>a process for rate-setting that is not encumbered by conflicts of interest and is not favoring specialties. A rational observer might conclude that the federal government and AMA are plotting to bring an end to the primary care workforce in the U.S.</i>'</blockquote><br />Also Modern Healthcare <a href="http://www.modernhealthcare.com/article/20130129/NEWS/301299968/senator-plans-bill-to-tackle-doc-shortage">reporte</a>d (subscription required) that Dr Wilper<br /><br /><blockquote class="tr_bq">described the RUC as '<i>a secretive group of physicians that wield tremendous influence</i>.'</blockquote><br />Furthermore,<br /><br /><blockquote class="tr_bq">Uwe Reinhardt, economics professor at Princeton University, said in addition to adding primary care physicians to the RUC, the panel <i>needs a third party to perform outside audits of the AMA panel's recommendations</i></blockquote><br />However, the AMA was there to provide their usual defense of the RUC, as per Medpage Today,<br /><br /><blockquote class="tr_bq">'The RUC is an independent group of physicians from many specialties, including primary care, who use their expertise on caring for Medicare patients to provide input to CMS [the Centers for Medicare and Medicaid Services],' RUC chair Barbara Levy, MD, said in a statement. 'More than 300 people participate in a typical RUC meeting and information on the panel is <a href="http://www.ama-assn.org/go/rbrvs" target="_blank">publicly available</a>.'<br /><br />Levy noted that 'CMS recently adopted RUC recommendations for the creation of codes to recognize the value of the work, often done by primary care providers, in transitioning patients from one care setting to the next.'<br /><br />The AMA also added two primary care-related seats to the RUC last February: a representative from the American Geriatrics Society and a rotating seat for a practicing primary care physician.</blockquote><br />Note that this brief response did not add anything to the more voluminous response the AMA made in 2009 to some of my posts on the RUC, all of which were easily countered (look <a href="http://hcrenewal.blogspot.com/2009/06/letter-from-ruc-and-my-reply.html">here</a>).   <br /><br /> After the hearing, per MedPage Today,<br /><br /><blockquote class="tr_bq">The problems with the RUC are 'one of the more important issues that arose out of this hearing,' Sanders told <i>MedPage Today</i> after it was over. 'I don't think we have the transparency we need.'<br /><br />Legislation to address the RUC -- as well as other factors exacerbating the PCP shortage -- is expected to come 'quickly' said Sanders.</blockquote><br /><b>Comments</b><br /><br />I salute Senator Sanders and his subcommittee for addressing the obscure and often quite <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic topic</a>, getting it some public attention, and at least raising the possibility of a legislative solution.<br /><br />However, this is just a baby step.  The hearing and report generated minimal media coverage (I included links to the most visible above).  Given that Senator Sanders is widely regarded as well to the left of most of his legislative colleagues, the likelihood that any measure he would craft on this would be passed is minimal. <br /><br />Meanwhile, questions we have raised again and again, most recently <a href="http://hcrenewal.blogspot.com/2011/04/rucing-about-conflicts-of-interest.html">here</a> in 2011, remain unanswered.<br /><br /> - How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry.<br />- Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC?<br />- How did the RUC become de facto in charge of this process?<br />- Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership?<br />- Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers?<br />- Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures?<br /><br />Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create <a href="http://hcrenewal.blogspot.com/search/label/perverse%20incentives">perverse incentives</a> for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.<br /><br />Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.  <br /><br />ADDENDUM (1 February, 2013) - see also <a href="http://careandcost.com/2013/02/01/the-ruc-health-care-finances-star-chamber-remains-untouchable/">comments</a> by Brian Klepper on the Care and Cost blog.<br /><br />ADDENDUM (3 February, 2013) - see also <a href="http://theincidentaleconomist.com/wordpress/its-past-time-to-dismantle-the-ruc/">comments</a> by Austin Frakt in the Incidental Economist blog. <br />  <br /><br /><b>References</b><br /><br />1. <span style="font-size: small;">Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link <a href="http://www.annals.org/content/146/4/301.full">here</a>.)</span><br /><span style="font-size: small;"></span><br /><span style="font-size: small;">2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link <a href="http://jama.ama-assn.org/cgi/content/short/298/19/2308">here</a>.)</span><br /><br />

US Senate Subcommittee Asks What the RUC is About

It has been a long time coming, but the issue of how the US Medicare and Medicaid system sets the fees it pays doctors, and hence sets the incentives on doctors that drive their health care decisions,…

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"Trouble Coming Every Day" as Discussed by our Fellow Health Care Skeptics

With apologies to the late Frank Zappa... even though we are going through the dog days of summer, the parade of health care troubles in the news is never ending, so I thought I would recap some of the more interesting issues discussed by some of my fellow health care skeptic bloggers.<br /><br />We have discussed the ongoing decline of <a href="http://hcrenewal.blogspot.com/search/label/primary%20care">primary care</a>. On DB's Medical Rants, Dr Robert Centor <a href="http://www.medrants.com/archives/5776">takes on </a>the topic: "The system has, without consciously meaning to, held primary care in contempt." The result is a "quiet rebellion: of primary doctors.<br /><br />We have <a href="http://hcrenewal.blogspot.com/2010/08/how-oligopolists-rationalize-their.html">discussed</a> whether the currently fashionable idea of "accountable care organizations" (ACOs) might turn out to be a cover for health care oligopolies. See what Paul Levy, CEO of the Beth Israel/ Deaconess Medical Center <a href="http://runningahospital.blogspot.com/2010/08/aco-global-payments-market-dominance.html">said</a> about them in his blog, Running a Hospital.<br /><br />We frequently talk about the <a href="http://hcrenewal.blogspot.com/search/label/manipulating%20clinical%20research">manipulation</a> or <a href="http://hcrenewal.blogspot.com/search/label/suppression%20of%20medical%20research">suppression </a>of clinical research studies by those with vested interests in the results pointing in a particular direction. On the Hooked: Ethics, Medicine and Pharma blog, Dr Howard Brody <a href="http://brodyhooked.blogspot.com/2010/08/spinal-fusion-devices-whats-fda-hiding.html">wondered</a> why the FDA will not even reveal the identities of the clinical researchers who did the studies on which it based its decision to approve the Infuse bone growth enhancement device.<br /><br />Prof Carl Elliott has done an outstanding job investigating commercially funded and implemented clinical research. Dr Brody <a href="http://brodyhooked.blogspot.com/2010/08/more-tidbits-from-white-coat-black-hat.html">reviewed</a> his new book, <em>White Coat, Black Hat</em>.  In the Carlat Psychiatry Blog, Dr Daniel Carlat <a href="http://carlatpsychiatry.blogspot.com/2010/08/making-killing-new-carl-elliott-article.html">reviewed</a> Prof Elliott's new article in Mother Jones on how a pharmaceutical company sponsored drug trial went badly awry. <br /><br />We <a href="http://hcrenewal.blogspot.com/2010/05/how-did-ceo-who-presided-over-company.html">asked </a>whether the former CEO of a for-profit hospital chain who resigned after the company paid a > $1.7 billion penalty to settle charges of fraud would be a proper candidate to be governor of Florida. After Rick Scott won the Florida Republican primary, Maggie Maher, writing in the Health Beat blog, <a href="http://www.healthbeatblog.com/2010/08/i-remember-rick-scott-a-great-makeover-but-still-the-same-guy-part1.html">took on </a>Scott's dubious past as prologue to a worrisome future.<br /><br /><em><span style="font-size: x-small;">Well I'm about to get sick</span></em><br /><em><span style="font-size: x-small;">From watchin' my TV</span></em><br /><em><span style="font-size: x-small;">Been checkin' out the news</span></em><br /><em><span style="font-size: x-small;">Until my eyeballs fail to see</span></em><br /><em><span style="font-size: x-small;">I mean to say that every day</span></em><br /><em><span style="font-size: x-small;">Is just another rotten mess</span></em><br /><em><span style="font-size: x-small;">And when it's gonna change, my friend</span></em><br /><em><span style="font-size: x-small;">Is anybody's guess</span></em><br /><br /><em><span style="font-size: x-small;">So I'm watchin' and I'm waitin'</span></em><br /><em><span style="font-size: x-small;">Hopin' for the best</span></em><br /><em><span style="font-size: x-small;">Even think I'll go to prayin'</span></em><br /><em><span style="font-size: x-small;">Every time I hear 'em sayin'</span></em><br /><em><span style="font-size: x-small;">That there's no way to delay</span></em><br /><em><span style="font-size: x-small;">That trouble comin' every day</span></em><br /><em><span style="font-size: x-small;">No way to delay</span></em><br /><em><span style="font-size: x-small;">That trouble comin' every day</span></em><br /><em><span style="font-size: x-small;">- Frank Zappa</span></em>

"Trouble Coming Every Day" as Discussed by our Fellow Health Care Skeptics

With apologies to the late Frank Zappa... even though we are going through the dog days of summer, the parade of health care troubles in the news is never ending, so I thought I would recap some of th…

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Harvard Cut Money for Primary Care "Step-Child"

This story, about cuts in the funding for Harvard Medical School's minimal program in primary care, has received little attention in the US. I was alerted to an article about it <a href="http://www.thecrimson.com/article.aspx?ref=528576">in the Harvard Crimson </a>by a news article in the British Medical Journal that was picked up <a href="http://www.medscape.com/viewarticle/706379">by Medscape</a>.<br /><br />Here are the main points, from the Crimson article,<br /><blockquote><em>Harvard Medical School has suspended funding for its Primary Care Division</em> as part of a broader departmental restructuring effort, prompting students and faculty to circulate a <a href="http://www.petitiononline.com/PCHMS/petition.html">petition</a> calling on HMS Dean Jeffrey S. Flier to reaffirm the School's commitment to primary care education.<br /><br />According to Nancy J. Tarbell, dean for academic and clinical affairs at HMS, <em>the School had provided roughly $200,000 in funding each year to the Division.</em> She said that the Division, which has not been disbanded but whose structure and administration is being reviewed, will remain affiliated with HMS. The Division has always been funded exclusively by the Medical School, according to HMS spokesman David J. Cameron.<br /><br />'The reorganization of this division is really a narrow administrative issue,' said HMS Dean of Medical Education Jules L. Dienstag. 'It has nothing to do with the commitment of HMS to primary care, which is unchanged, undiluted, and undiminished.'<br /><br />Nevertheless, as of Thursday afternoon, over 450 individuals had signed the online petition, including students, residents, faculty, and physicians from HMS and its affiliated hospitals. The petition calls for the School's administration to present a detailed plan of action for expanding institutional support despite the budget cut, expand loan forgiveness initiatives that financially enable students to pursue primary care specialties, support efforts to strengthen primary care in a reformed national health care system, and solicit and implement proposals from the HMS community to improve primary care education.<br /><br />The Division was previously part of the HMS-HPHC jointly administered Department of Ambulatory Care and Prevention (DACP), which Tarbell said was recently restructured and renamed as the Department of Population Medicine and placed solely under HPHC's administrative purview in order to better reflect its core research and teaching activities.<br /><br />Tarbell, <em>who seemed unclear about what actual services were provided by the Division,</em> said that the HMS administration is conducting a 'comprehensive review' of the its programs and that the Division has historically been 'relatively small.'<br /><br />'When you look at [HMS's primary care initiatives] as a whole, at the big picture, you can't make the argument that funding has decreased for primary care training at HMS,' Tarbell said, adding that the school is expanding its funding this year for a required third-year medical clerkship from $600,000 to $800,000.<br /><br />But despite administrators' reassurances that primary care education remains a top priority at the Medical School, <em>some students and faculty maintain that the cut sends a negative message about the School's priorities, which they say have traditionally centered on specialty medicine and research</em>. And the petition expressed concern about the future of outreach activities previously coordinated by the Division, including a Primary Care Mentorship Program, if funding or a Divisional home were to be eliminated.<br /><br /><em>'Primary care, from the perspective of the Medical School, was sort of a stepchild</em> [in the past], and not much was done to provide students with information about primary care careers or to connect them with role models in primary care,' said Susan Edgman-Levitan, executive director at The John D. Stoeckle Center for Primary Care Innovation.<br /><br />'Harvard's goal has always been to create leaders in medicine, with regards to basic science and new developing fields. <em>Primary care has never really been a major emphasis,</em> although I think on a global basis, Harvard has put a major emphasis on reaching out to the rest of the world,' said Martin P. Solomon, an assistant clinical professor of medicine at the Brigham. 'People like Jim Kim and Paul Farmer are all very important and have had an enormous impact on primary care worldwide, but <em>in our own backyard, Harvard has had very little impact</em>. [Primary care] <em>is not ... glamorous....'<br /></em></blockquote><br />Indicating where the medical school's priorities lie, during the month in which the cuts were announced, Dean Flier took the time to open, and thereby endorse the meeting of ACRE (the Association of Clinical Researchers and Educators). The grandiosely named group promotes unrestricted financial relationships among medical academics and health care corporations, and dismisses those concerned with the effects of these relationships (see our posts <a href="http://hcrenewal.blogspot.com/2009/07/stossel-and-acre-wheres-beef.html">here</a> and <a href="http://hcrenewal.blogspot.com/2009/07/blogscan-reports-from-acre-meeting.html">here</a>).<br /><br />It is true that the cuts in primary care occurred at a time of general belt-tightening, due to the sudden decline in the value of Harvard University's endowment. However, as reported in a muck-raking<a href="http://www.vanityfair.com/politics/features/2009/08/harvard200908"> article in Vanity Fair </a>by Nina Munk, even the reduced endowment is still the largest of any university in the US.<br /><br />Furthermore, primary care generated relatively small costs to the university. However, as reported by Vanity Fair, the current financial crisis was generated on the University's tremendous building binge during the years the endowment seemed like it would grow forever:<br /><br /><blockquote>... the university is facing the onerous financial consequences of over-building. Consider this: Over the 20-year period from 1980 to 2000, Harvard University added nearly 3.2 million square feet of new space to its campus. But that’s nothing compared with the extravagance that followed. So far <em>this decade, from 2000 through 2008, Harvard has added another 6.2 million square feet of new space</em>, roughly equal to the total number of square feet occupied by the Pentagon. All across campus, one after another, new academic buildings have shot up. <em>The price of these optimistic new projects: a breathtaking $4.3 billion.<br /></em></blockquote><br />The University also rewarded the managers of the endowment with pay sufficient to make them very rich.<br /><br /><blockquote>By the early 2000s, <em>Harvard’s top moneymen were making as much as $30 million to $40 million a year.</em> Finally, in 2003, seven members of Harvard’s class of 1969 wrote a strong letter of protest to the university’s president, Larry Summers. They spoke out loudly, publicly, informing any member of the media who would listen that compensation at Harvard Management Company was 'obscene.'<br /><br />At other American universities, where investing money for the institution is regarded as a kind of public service, Harvard’s swagger raised deep suspicion. <em>'Harvard became a bunch of mercenaries,'</em> the chief investment officer of another big private university told me. </blockquote><br />Most of these managers decamped, taking the money with them, before the endowment value crashed.<br /><br /><blockquote>By 2005, Jack Meyer had had enough. After 15 years at Harvard Management Company, frustrated by the circular fights about compensation, and sick of justifying himself to Summers and Rubin, <em>he walked out and started his own giant hedge fund</em>. <em>Shamelessly, he took many of Harvard Management Company’s best people with him, about 30 portfolio managers and traders, along with the chief risk officer, chief operating officer, and chief technology officer</em>. Harvard’s trading floor was decimated. </blockquote><br />No one in the current or past Harvard leadership has yet been held accountable for the overspending that seemed predicated on the absurd (at least in retrospect) assumption that the endowment would continue to grow indefinitely.<br /><br /><blockquote>At some point in the last five years, <em>the men and women who run Harvard convinced themselves that the endowment would grow at double-digit rates forever</em>. If Harvard were a publicly traded company, those people would have been fired by now. </blockquote><br />Because of the case of the Harvard endowment, the US Internal Revenue service is reportedly investigating how university endowments were run (e.g., see <a href="http://www.reuters.com/article/gc04/idUSTRE5711V420090802">Reuters</a>).<br /><br />But meanwhile, primary care, already a step-child, was cut.<br /><br />The case of primary care at Harvard shows how the leadership of academia, and academic medicine in particular, has become entranced by the glamorous, the glitzy, the high-tech, and the prospects of wealth to be made by their pursuit, while neglecting the core academic and health care missions that are the reasons for the existence of universities and medical schools.<br /><br />No wonder US health care is in a crisis. Those who want meaningful health care reform should find a way to push academic medicine to uphold its mission rather than enrich and glamorize its leaders, and to allow health care professionals to reaffirm their professionalism (regardless of <a href="http://hcrenewal.blogspot.com/2009/06/why-did-us-physicians-give-up-their.html">past interpretations </a>of US anti-trust law to the contrary).<br /><br />ADDENDUM (5 August, 2009) - see more comments on Harvard's failed governance <a href="http://www.goactablog.org/blog/archives/2009/08/#a000685">here</a> on the ACTA Blog.

Harvard Cut Money for Primary Care "Step-Child"

This story, about cuts in the funding for Harvard Medical School's minimal program in primary care, has received little attention in the US. I was alerted to an article about it in the Harvard Crimson…

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A Window on the Unworkable Settings in Which Physicians Practice

The Annals of Internal Medicine just published an important problem that helps explain why our health care crisis is so intractable. (Linzer M, Manwell LB, Williams ES, Bobula JA, Brown RL, Varkey AB et al. Working conditions in primary care: physician reactions and care quality. Ann Intern Med 2009; 151: 28-36. Link <a href="http://www.annals.org/cgi/content/full/151/1/28">here</a>.)<br /><br />The article arose from the MEMO (Minimizing Error, Maximizing Outcome) study. The study included an initial cross-sectional survey and then longitudinal follow-up of 422 physicians, roughly equal numbers of family practitioners and general internists, in 119 different ambulatory settings in New York City, NY, Chicago, IL, Milwaukee, WI, Madison WI, and smaller towns in WI. The surveys asked physicians about their work-flow and time pressure, the pace of their practice (from calm to chaotic), their ability to control their own work activities, and five aspects of organizational culture (emphasis on quality, emphasis on information and communication, trust, cohesiveness, and alignment of values between physicians and leaders.)<br /><br />The results showed how bad the practice environment in primary care/ generalist practice has become. Some important points were:<br /><br />- More than half of the physicians (53.1%) said they needed more time to do physical examinations, and nearly half (47.6%) for follow-up visits.<br />- <em><strong>Almost half (48.1%) described the pace of their offices as chaotic</strong></em>.<br />- Substantial majorities of physicians thought their workplaces' organizational cultures were deficient, if not hostile.<br />- Only 23.7% thought there was a high emphasis on quality.<br />- Only 28.2% thought there was a high emphasis on communication and information.<br />- <em><strong>Only 30.6% thought there was a great amount of trust</strong></em>.<br />- Only 33.9% thought there was high work place cohesiveness<br />- <em><strong>Only 14.2% thought there was great alignment between the values of leadership and physicians</strong></em>.<br /><br />So, to summarize, many physicians thought they did not have enough time to take care of each individual patient. Most thought their workplaces were nowhere near calm, and nearly half thought they were chaotic. Few thought that their workplaces emphasized quality or communication and information, or inspired trust or cohesiveness. Very few thought that their leaders' values were aligned with their professional values.<br /><br />This blog has focused on problems with the leadership and governance of health care organizations. We have discussed leadership that is:<br />–Autocratic, or “imperial”<br />–Insulated<br />–Uninformed about health care context, indifferent to health care values<br />–Incompetent<br />–Self-interested<br />–Conflicted<br />–Corrupt<br />We have shown that the governance of health care organizations may be:<br />- Unrepresentative<br />- Unaccountable<br />- Opaque<br />- Not Subject to Ethical Standards<br />and that such governance facilitates and enables bad leadership.<br /><br />I submit that the study by Linzer et al suggests how bad leadership can make the settings in which physicians practice unworkable. It may be that some of the time pressure that physicians face is due to the perverse incentives built into their pay schedules (e.g., see <a href="http://hcrenewal.blogspot.com/2009/06/ruckus-continues-former-medicare.html">this post</a>), and bureaucratic demands of insurers and government agencies. A fast paced and demanding environment is one thing, however, and a chaotic envirnoment is another. What else would explain chaotic work environments other than bad organizational leadership? Futhermore, how could well lead organizations ignore quality, and fail to inspire trust and cohesiveness? How could good leaders inspire four-fifths of the physicians to say the leaders of their organizations did not value what they value?<br /><br />This article strongly suggests that we cannot fix the health care crisis simply by changing financing mechanisms or money flows. We can only improve health care by improving the leadership and governance of health care organizations, and by rethinking the size and scope of health care organizations. The most crucial part of health care is what goes on between individual health care professionals and individual patients. Yet our system is composed of endlessly enlarging bureaucracies run by self-interested, often clueless, and sometimes dishonest, if not criminal leaders. This must change, unless we want this crisis to get much, much worse.

A Window on the Unworkable Settings in Which Physicians Practice

The Annals of Internal Medicine just published an important problem that helps explain why our health care crisis is so intractable. (Linzer M, Manwell LB, Williams ES, Bobula JA, Brown RL, Varkey AB …

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The RUCkus Continues: Former Medicare Administrator Calls the "RUC Process" "Incredibly Flawed," and the AMA Chair Says He's "Inaccurate"

We have posted frequently about the role of the RBRVS Update Committee (RUC) in fixing the rates at which Medicare pays physicians. These payment rates have been much more generous for procedures than for "cognitive" services, (that is, services including interviewing and examining patients, making diagnoses, forecasting prognoses, recommending tests or treatments, and counseling patients.) Several authors have suggested that how the RUC fixes payment rates is a major cause of the decline of primary care. (See our previous posts on this <a href="http://hcrenewal.blogspot.com/2007/03/on-disparities-between-reimbursement-of.html">here</a>, <a href="http://hcrenewal.blogspot.com/2007/12/is-sustainable-growth-rate-main-problem.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/05/payments-for-patient-centered-medical.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/07/can-we-fix-medicare-while-pretending.html">here</a>, <a href="http://hcrenewal.blogspot.com/2008/12/no-such-ruc-new-england-journal-takes.html">here</a>, <a href="http://hcrenewal.blogspot.com/2009/02/what-ruc-again-one-of-worlds-most.html">here</a>, and <a href="http://hcrenewal.blogspot.com/2009/06/letter-from-ruc-and-my-reply.html">here</a> and important articles by Bodenheimer et al,[1] and Goodson.[2])<br /><br /><strong>An Interview with a former Medicare administrator</strong><br /><br />Health Affairs just published an interview(3) with Kerry Weems, a recent administrator of the US Center for Medicare and Medicaid Services (CMS) under the Bush administration, who had some remarkable criticism for the RUC.<br /><br /><blockquote><br />Iglehart: The last question I wanted to ask you relates to the Specialty Society Relative Value Scale Update Committee [RUC] of the American Medical Association. The AMA formed the RUC to act as an expert panel in developing relative value recommendations to CMS. The twenty-nine-member committee essentially determines, through the relative values it establishes for the codes that form the basis of Medicare payments, how much doctors will earn from providing services to beneficiaries. <em>In recent years the RUC has come under criticism based on the view that its specialty- dominated composition undervalues primary care services and, in some instances, overvalues specialty services. I have two questions, Kerry, regarding the RUC. You have been in government for twenty-six years; have you ever heard of an administration that has seriously questioned the RUC process, and whether CMS ought to somehow internalize it or delegate it to another body?</em><br /><br />Weems: <em>I think there is a general consensus that the <strong>RUC has contributed to the poor state of primary care in the United States</strong>. In many ways the supposition behind the <strong>RUC process</strong>, behind the whole relative value scale, is incredibly flawed.</em> It's an input measurement system, so it asks, What's the cost of my inputs, and that's how I'm going to price my outputs. It has no relationship to perhaps the market value of what you might buy. <em>So because it's highly procedure based, it's prejudiced against just standard primary care evaluation and management [E&M] visits,</em> because in an E&M visit it's hard to document what happens in the same way that it is when you remove a mole, or perform some other procedure.<br /><br /><em>So the process itself is flawed. <strong>I don't think that we can make a change without a statutory change </strong>giving us the ability to do that. But it's something that is drastically needed. You know, it's funny that we talk about better coordination of care and creating the medical home. Well, the place where this can occur is in <strong>an E&M visit, which has been highly undervalued by the RUC</strong>.</em><br /><br />Iglehart: <em>You say that the RUC process is seriously flawed and needs to be overhauled. Was there ever any discussion during the eight years of the George W. Bush administration about doing that?</em><br /><br />Weems: <em>There were a number of discussions, <strong>but it's a hard nut to crack</strong>. Those discussions never ripened to the point where we could say we've got something better.<br /></em><br />Iglehart: But you'd anticipate under the Obama administration that those discussions will continue?<br /><br />Weems: Sure. And, you know, you can even see the early attempts at trying to crack that. Representative [Pete] Stark [D-CA] introduced last year the so-called CHAMP [Children's Health and Medicare Protection Act] bill, in which he proposed to develop a new payment approach that would have provided more money to primary care physicians. He split it up into several different categories. This probably wasn't the right approach, but again, he was trying to work through the problem, trying to provide more money for primary care. His heart was in the right place.<br /></blockquote><br />There are a number of important points here.<br /><br />First, a former CMS administrator charged that the RUC has a substantial role in the decline of primary care in the US. Such charges have been made by well-reputed academics who have analyzed the role of the RUC from the outside. But as we have said before, aspects of what the RUC does are obscure, especially because the proceedings of RUC meetings are not made public. But now someone more directly involved has made the same charges.<br /><br />Second, a former CMS administrator has called the "RUC process ... incredibly flawed." Even the second Bush administration felt these flaws were sufficient to have "a number of discussions," but found "it's a hard nut to crack." Hence he said that although there is something fundamentally wrong with the "RUC process," the government could not easily fix it.<br /><br />Yet RUC leadership has repeatedly said that the RUC is merely a private advisory committee which gives recommendations to CMS using its rights to free speech and to petition the government. (Note also that above, Inglehart first said that the RUC was formed as "an expert panel" to make "recommendations." But then he said the committee "determines ... how much doctors will earn.") If the RUC is simply an advisory committee, and CMS did not like the advice the RUC was giving, why couldn't CMS leaders simply ignore the RUC?<br /><br />Weems' remarks do not make sense if the RUC is merely an outside private group providing advice. But they do make sense if the RUC is acting like a government agency.<br /><br />So this interview once again raises the question: why does CMS rely exclusively on the RUC to update the RBRVS system, apparently making the RUC de facto a government agency, yet without any accountability to CMS, or the government at large?<br /><br /><strong>A response by the Chair of the Board of the AMA<br /></strong><br />Within days of this interview, Dr Rebecca Patchin, the Chair of the Board of Trustees of the American Medical Association (AMA), wrote a response to the Weems interview. (Amazingly, the response appeared as a <a href="http://healthaffairs.org/blog/2009/06/24/the-rucs-record-defending-primary-care/#more-1469">blog post </a>on the Health Affairs Blog.) <br /><br />First, she implied that a former CMS administrator did not know what he was talking about when it came to the RUC.<br /><br /><blockquote>In the interview, <em><strong>inaccurate statements were made</strong> about the role of the AMA/Specialty Society RVS Update Committee (RUC),</em> which advises CMS regarding the relative levels of reimbursement for different medical procedures performed by physicians.<br /></blockquote><br /><br />Now I feel like I am in good company. The leaders of the RUC have charged that I made inaccurate statements about the RUC as well (see post <a href="http://hcrenewal.blogspot.com/2009/06/letter-from-ruc-and-my-reply.html">here</a>).<br /><br />However, Dr Patchin failed to identify any particular statements by Kerry Weems or his interviewer as inaccurate, much less provide any evidence to that effect. Note that while the RUC leaders also charged me with making inaccurate statements, they did not specify any particular statements as inaccurate, much less produce evidence in support of their contentions.<br /><br />Next, Dr Patchin wrote:<br /><br /><blockquote><em>Every time the RUC has been asked to review payments for E&M</em> (evaluation and management) codes, the RUC has sent CMS recommendations that would lead to higher payments.<br /></blockquote><br />This may be so, but it ignores an important issue. While the RUC may have made some recommendations to increase payments for cognitive services, it has made many more recommendations to increase payments for procedural services. Furthermore, while payments for individual procedures went up, and the volume of procedures also went up, the global budget for physicians' services, called the Sustainable Growth Rate (SGR), resulted in across the board cuts. Since raises for procedures were larger and more frequent than raises for cognitive services, the net effect was that payments for procedures increased relative to cognitive services.<br /><br />Even more important, it begs that question: what has the RUC done at times when no one asked it "to review payments for E&M ... codes?" After all, the RUC leadership has argued again and again that it is only a private advisory committee (and see below for another such argument). As such, it should be able to choose how often it deals with payments for cognitive services. It should not have to wait to be asked to review them. So why wasn't the RUC reviewing these payments more frequently?<br /><br />Then, Dr Patchin reiterated:<br /><br /><blockquote>To clarify: <strong><em>The RUC makes recommendations</em></strong> to CMS, and then CMS makes its payment decisions. </blockquote><br />and again,<br /><br /><blockquote><br />Bottom line: <em><strong>the RUC makes recommendations</strong></em>, CMS makes payment decisions.<br /></blockquote><br /><br />This, once more, begs the questions. Why didn't the RUC make more recommendations to improve payments for cognitive services? Why doesn't CMS get recommendations about payments to physicians from sources other than the RUC? Why doesn't CMS make the process for setting physicians' payments, and updating and revising the RBRVS system more broad-based and transparent? Why did the administrator of CMS feel unable to change or ignore the "RUC process?"<br /><br />I don't have the capacity to find out the answers to these questions. Answering them might take some investigative reporting, or even a Congressional investigation. Given that physicians' payments are key incentives driving the health care system, and that payments favoring procedures are likely to be a major cause for rising volume and costs of procedures, which, in turn, is likely to be a major reason our health care system is so expensive, why do we know so little about how these payment rates are set?<br /><br /><span style="font-size:85%;">References </span><br /><span style="font-size:85%;"></span><br /><span style="font-size:85%;">1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. Link </span><a href="http://www.annals.org/cgi/content/full/146/4/301"><span style="font-size:85%;">here</span></a><span style="font-size:85%;">.</span><br /><span style="font-size:85%;">2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. Link </span><a href="http://jama.ama-assn.org/cgi/content/short/298/19/2308"><span style="font-size:85%;">here</span></a><span style="font-size:85%;">.<br />3. Iglehart JK. Doing more with less: a conversation with Kerry Weems. Health Aff 2009; </span><a href="http://content.healthaffairs.org/cgi/content/full/hlthaff.28.4.w688/DC1"><span style="font-size:85%;">http://content.healthaffairs.org/cgi/content/full/hlthaff.28.4.w688/DC1</span></a><span style="font-size:85%;"> </span>

The RUCkus Continues: Former Medicare Administrator Calls the "RUC Process" "Incredibly Flawed," and the AMA Chair Says He's "Inaccurate"

We have posted frequently about the role of the RBRVS Update Committee (RUC) in fixing the rates at which Medicare pays physicians. These payment rates have been much more generous for procedures than…

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