The RUC Is Bad Medicine: It Has To Go

Brian Klepper

Posted 8/12/13 on Medscape Business of Medicine

BK 711“One of the biggest mistakes we made … is that we took the RUC … back in 1992 and gave it to the AMA. … It’s incredibly political, and it’s just human nature…the specialists that spend more money and have more time have a bigger impact.”

This was Tom Scully, former Bush II Administrator of the Centers for Medicare and Medicaid Services (CMS), previously the Health Care Finance Administration (HCFA). He was a panelist in a May 10, 2012 Senate Finance Committee RoundTable discussion by former HCFA/CMS Administrators and has become one of the RUC’s most outspoken critics. He was explaining how the American Medical Association’s (AMA) Relative Value Scale Update Committee (RUC), a group that asked if it could help the government by overseeing a valuation process for medical services, came to dominate and distort the pricing used in Medicare, Medicaid and commercial health plans.

Mr. Scully echoed this sentiment recently.

“The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild. … Having the AMA run the process of fixing prices for Medicare was crazy from the beginning.”

Gail Wilensky, HCFA Administrator under Bush I, was wistful. “It happened innocently enough.”

It is remarkable and compelling to hear these federal health program ex-stewards express regret about a fiasco they had a hand in. Their “mea culpas” are almost palpable. Mr. Scully, in a recent Washington Post video interview, gave a quick aside, “It’s partially my fault.”

Continue reading “The RUC Is Bad Medicine: It Has To Go”

Will Anyone Listen When Former CMS Chiefs Call For More Objective Physician Payment?

Brian Klepper

Posted 7/7/12 on Medscape Connect’s Care & Cost

On May 10th, the US Senate Finance Committee, co-chaired by Senators Max Baucus (D-Mont) and Orrin Hatch (R-Utah), convened a remarkable panel of four former Administrators of the Health Care Finance Administration (HCFA) and the Centers for Medicare and Medicaid Services (CMS): Gail Wilensky, Bruce Vladeck, Thomas Scully and Mark McClellen. (See the video here.) Against a backdrop of intensifying budgetary pressures, the roundtable was to provide perspectives on Medicare physician payment, including several controversial issues: the Sustainable Growth Rate (SGR) formula, the Resource-Based Relative Value Scale (RBRVS), and the RVS Update Committee (RUC).

Ironically, the day before, a Maryland Federal District judge dismissed a suit brought against HHS and CMS by six Augusta, GA primary care doctors over CMS’ longstanding relationship with the RUC, based on a procedural technicality and without weighing the substance of the complaint. The physicians challenged CMS’ refusal to require the RUC to adhere to the public interest rules of the Federal Advisory Committee Act (FACA) that typically apply to federal advisory bodies. The suit described the harm that has accrued to primary care physicians, patients and purchasers as a result of the RUC’s highly politicized process. To a large extent, the plaintiffs’ concerns closely reflected those of the former CMS Chiefs.

This was a deeply experienced and dedicated group, all with long government-involved careers. Surprisingly, independent of their divergent political perspectives, there was broad agreement on the direction that physician payment should go. All believe we need to move away from fee-for-service (FFS) reimbursement and toward alternative reimbursement paradigms, like capitation or bundled payments. All agreed that FFS would likely remain present in various forms for many years. There was a general sense that the RBRVS system was built on a series of errors, and that CMS’ relationship with the RUC started off, to use Dr. Wilensky’s term, “innocently enough,” but has become increasingly problematic over time.

Here is Dr. Wilensky’s description of how the CMS-RUC relationship came about.

It [the RUC’s formation and relationship with HCFA] happened innocently enough. Once you had the Relative Value Scale in place you needed to have a way to update relative values and to allow for a change. The AMA, as best we can tell…- sometime after I left to go to the White House, after he -[Bruce Vladeck] was sworn in, there was a lot going on, it was relatively new, in its first year – the AMA approached the Agency about whether it would allow it or like to have the AMA be the convener that would include all physician groups and make some recommendations which initially were very minor adjustments that hardly affected the RBRVS at all. The Agency accepted the offer.

Tom Scully, CMS’ Administrator under George W. Bush, took responsibility for helping facilitate the AMA’s involvement and was perhaps the most passionate that it had been an error.

One of the biggest mistakes we made … is that we took the RUC…back in 1992 and gave it to the AMA. …It’s very, very politicized. I think that was a big mistake…When you go back to restructuring this, you should try to make it less political and more independent.

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. So when you look at the history of it, CMS is starting to push back more, which is a good thing, I think it would be much better to have an arms-length transaction where the physician groups have a little more of an objective approach to it. And, look, that is the infrastructure of $80 billion of spending. It’s not a small matter. It’s huge.

But perhaps the most striking statement was made by Bruce Vladeck, HCFA Administrator during the Clinton Administration. In speaking about the problems generated by RBRVS (and by inference, the broader issues of SGR and the RUC as well) in the face of severe economic stresses, he called for the leadership and will required to simply do the necessary course correction.

I’m hopeful that some combination of the need to address overall deficit reduction strategies more generally and a different kind of political climate in the relatively near future will create the opportunity for people to say, “We made a mistake in 1997. We created a formula that produces irrational and counterintuitive results, and we’re just going to abolish it and start all over again in terms of some kind of cap on Part B payments. It’s the only way we’re going to get out of this morass.”

In a policy environment less susceptible to influence and more responsive to real world problems, the gravity of consensus on display at this roundtable would justify a call to action. As it was, it validated what many know: that we are rushing headlong down a catastrophic path, steered by forces other than reason and responsibility. The best we can hope for is that someone with authority and courage is listening.

Another Skeptical ACO Paper

Jaan Sidorov

First posted 9/19/11 on Disease Management Care Blog

Adding to a continuing drumbeat of skepticism about Accountable Care Organizations (ACOs), Gail Wilenksy offers a “sobering” Perspective in the New England Journal about their underlying business model.  She draws on the lessons of the Physician Group Practice Demonstration, where – despite “glowing” press releases – the financial savings were decidedly elusive.  Summarizing things nicely, Ms. Wilensky points out that only 2 out of the 10 Demo participants were able to achieve savings in the first year of operation and that only half of the group had savings after three years.

Why did this happen?  She agrees with many of the criticisms noted by your Disease Management Care Blog: there were some important “design” issues involving the comparator groups (the use of “rural” settings may have set the baseline too low), CMS struggled with providing timely claims data and the risk adjustment methodologies may have fallen short (for example, the Demo participants had high-cost specialty services which may have inflated their cost).

While Ms. Wilensky previously served in a Republican administration, the Disease Management Care Blog has always found her to be a reasonable pundit.  That’s why it’s telling that she concludes her paper with a damning observation candy-wrapped in bureaucrat-speak: as currently envisioned, she says, the proposals “seem inconsistent with the hopes that have been pinned to ACOs as a viable alternative to both traditional Medicare and traditional managed care.”

Jaan Sidorov MD writes at Disease Management Care Blog.