Posted 1/31/13 on Health Care Renewal
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.
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.
Background – the Resource Based Relative Value System Update Committee (RUC)
We have frequently posted, first here in 2007, and more recently here, here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.
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.