Again, a congressional committee is studying a fix to the Medicare Sustainable Growth Rate (SGR) problem. Last year’s attempt led to a three committee compromise plan that never came before congress for a vote. The plan was an over-reaching attempt to change the entire physician compensation system. This produced a minefield that incorporated concepts that, so far, have proven to be ineffective and/or expensive, viz., using controversial guidelines to guide the already failed pay-for-performance mantra and tying payments to physician participation in alternate payment models (APMs) such as patient centered medical homes (PCMHs). So far this latter entity has been ill-defined and unsuccessful even though, in the future, thoughtful development may make this a viable optional medical care delivery system. Rather than attempt to re-write all of Medicare it would be wiser for the committees to focus on two rather simple things that they have been unable to accomplish: repeal of SGR and revision of the flawed RBRVS payment system. This latter contributes to the present inappropriate physician payments and to the demise of primary care. For a discussion of a quick fix for both of these problems read…http://wp.me/p4MwV3-4j
Getting a Twofer
There is a quick fix to the inequity of Medicare and Medicaid payments to primary care physicians. It is hidden in the Conversion Factor. So bear with me.
It is generally conceded that medical care reform in our country depends on redeveloping a strong primary care base. At the present time payments for primary care physicians services are not competitive with those of specialties that perform procedures. Not only does that reward doing procedures whether they are indicated or not but it overvalues the time spent doing procedures as compared with time spent in personal, comprehensive and coordinated care. Furthermore it has driven downward the interest of medical students to choose the primary care specialties for their careers, a decrease of 50% in the last16 years. The result is the expectation that we are going to have to add 52,000 to the expected number of primary doctors over the next 12 years.
The Affordable Care Act does little to address this problem. Recent rules by the Centers for Medicare and Medicaid Services (CMS) to provide separate payment for transitional care (care from facility back to community) are pitiful and loaded with extra paperwork and bureaucracy. The same is true of the three proposed Complex Chronic Care Management payments to begin in 2015.
Medicare’s formula for calculating the physician payment schedule is complex. It starts with the hundreds of CPT codes which describe all reimbursable doctor patient encounters (office visits, surgeries, etc.) Then each code is given a composite RVU (Relative Value Unit) made up of three basic RVUs, (1) the Physician Work RVU, (2) the Practice Expense RVU, and (3) the Malpractice RVU. Additionally, each of the basic RVU’s is assigned a modifier based on the geographic area (the GPCI) where the service is billed. Each RVU is then multiplied by its GPCI. The three results of these three actions are then added together to produce the composite RVU. This result is then multiplied by a conversion factor (CF) to convert the composite RVU into a dollar amount. This conversion factor is updated annually by a formula prescribed by Congress and it is the key. However, before CMS can use this conversion factor it has to apply a “budget neutrality” to it in order to insure that it does not exceed its annual budget by more than $20 million. Now we come to the Sustainable Growth Rate (SGR). This was enacted by Congress in1997 and is designed to add a final revision of the Conversion Factor for the next year’s payments. Since 2003 Congress has voted annually to postpone the calculated fee cuts.
Much attention is being paid to the whole fee-for-service problem and there are many ideas about what to do. They range everywhere from abandoning fee-for-service to totally revising the codes, definitions, and values in the present system. Any and all of these could take years to accomplish if Congress could ever agree on what to do. As noted above, the formula for the Conversion Factor is a statutory prescription.
The Fix: Only Congress can change it. It would only take a simple bill to direct CMS to use two different conversion factors, one for primary (Evaluation & Management) codes and one for procedural codes. The RVU calculations could remain the same but at the end the RVU’s could be split into two groups and the Conversion Factor for E&M increased to a level to provide a 25% increase in primary care payments. The Conversion Factor for procedures could be reduced proportionally to maintain budget neutrality. An even better twofer would be to combine this with wording to eliminate the SGR.
Admittedly, this quick fix would not solve the cost and quality problems of our present system but at least it would help put the brakes on the loss of our primary care infrastructure. It would have the secondary benefit of improving accessibility and thereby enjoying the documented decrease in medical spending created by a stronger primary care base.
The Disappearance of Primary Care
As Uwe Reinhardt, the Princeton University economist writes, “Surely there is something absurd when a nation pays a primary care physician poorly relative to other specialists and then wrings its hands over a shortage of primary care physicians.”(1) Improving Medicare in preparation for an expanded Medicare-For-All can start here.
It is generally understood that any solution to the high costs and compromised quality and access to our medical system will depend on developing an adequate primary care base. Over the last 16 years the number of U.S. medical graduates choosing family practice residencies has dropped from over 50% to 8% (1500/year). Among pediatric and internal medicine residents only 2% will go into primary care. The rest are going into subspecialties. Half of the family practice residencies positions are being filled by graduates of foreign medical schools.(2) 21% of the U.S. populations live in physician shortage areas where primary medical care is badly needed. Now, with the Affordable Care Act, there will be an increasing demand for primary medical care because of increased insurance coverage. The aging population and aging family doctors will add to this need. It has been estimated that we will need to add an additional 52,000 primary care doctors by the year 2025.
So why do we face the disappearance of primary care physicians? It starts with money, of course. Costs for medical school leave school loans averaging $140- to $200,000. Then just as the student starts his/her 3 year residency program the loans start accumulating interest. After that the income from family practice is half that of the procedure oriented specialties. As with the rest of our society higher income implies higher status. This concept carries over into most medical schools where the family practice program is treated as an afterthought (although there is more lip service these days). The result is that any initial interest in family practice is soon suppressed.
Please bear with me for a brief history of the physician pay discrepancy.
One of the many ironies in our health care crisis is the role the American Medical Association has played in killing off primary medicine. This, of course, has been done with the approval of Congress and the Center for Medicare & Medicaid Services (CMS). Since 1991 Medicare fees for physicians have been based on the Resource-Based Relative Value Scale (the RBRVS). This system places high value on procedures and tests and low value on the thoughtful diagnosis, coordination and the caring for patients in their vast variety of medical needs. The values are applied to the items in the Current Procedural Terminology (CPT), a book published by the AMA for which it receives millions in royalties.(3) In1991 the AMA formed the Relative Value Scale Update Committee (RUC) to advise CMS on updating the relative value units. Because the CMS accepts 90% of its recommendations physician pay is essentially determined by this committee. This allegiance by CMS is unbelievable considering that the AMA represents only about 17% of practicing physicians in the U.S.(4) And the 31 member RUC has only 7 members representing primary care.(5) Until recently the membership on the committee has been undisclosed. And the minutes and proceedings of the committee were still kept secret. Under pressure the RUC is now releasing minutes but not the voting records of individual members. It should be noted that private insurers use the same relative value system but may pay somewhat more than Medicare by using a different conversion factor (with the same bias toward expensive procedures). Any permanent solution to this problem will require a different payment system for physicians. At the present time there is no unified and effective force that can address and solve this workforce problem.
So we have a non-representative medical organization (guild) designing a national physician payment plan that has effectively put primary medical care out of business. We might ask how they obtained so much power. The answer, one suspects, might revert back to the money. Since 1990 the American Medical Association has spent $30,097,082 on political contributions and $286,377,500 on political lobbying.(6) It would have been nice if this money had been spent on developing a primary care based universal health system for the United States.
It is time to move beyond the incrementalism of SGR and RBRVS debates, the no-value-added administrative costs and insurance company profits and the complexities of a 2900 page lobbyist-written health care law (Obamacare), the restricted access to care and the defects in quality care when compared to other countries. It is time for medical system reform powered by single payer financing. This would be improved Medicare for all. This is urgent. We have already lost almost a whole generation of primary care physicians.
- Uwe E. Reinhardt The Little-Known Decision-Makers for Medicare Physicians Fees. http://economix.blogs.nytimes.com/2010/12/10 /the-little-known-decision-makers-for-medicare-physicans-fees/
- National Resident Matching Program. Results and Data 2013 Main Residency Match. http://www.nrmp.org/data/resultsanddata2013.pdf
- Why The American Medical Association Had 72 Million Reasons To Help Shrink Doctors Pay. http://www.forbes.com/sites/aroy/2011/11/28/why-the-american-medical-association-had-72-million-reasons-to-help-shrink-doctors-pay/
- American Medical Association Membership Woes Continue. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3153537/
- Replace the RUC. Adding Seats: The RUC’s Slight of Hand http://www.replacetheruc.org/2012/02/14/ adding-seats-the-rucs-sleight-of-hand/#more-
- Opensecrets.org. The American Medical Association. Heavy Hitter http://www.opensecrets.org/orgs/summary.php?id=D000000068&cycle=A
Katie Jennings in POLITICAL gets after a problem I have been harping on. The AMA and the RUC’s role in killing off primary care for decades. In my blog, “Primary Care Dissed by AMA” , http://wp.me/p4MwV3-1D I spelled out this issue. This committee has always been super secret. Now, under pressure, they are releasing their numbers but still no meeting notes or conflict of interest. report. This is a 31 person committee which only recently increased the primary care representation to 7 members. This committee uses their copyrighted procedure manual (CPT) to make pricing “recommendations” to CMS which follow them 90% of the time. We should elaborate that the AMA represents only about 17% of practicing physicians.