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You are here: Home / Politics / An Unexamined Scandal / Good things cost money

Good things cost money

by David Anderson|  May 22, 20157:19 am| 12 Comments

This post is in: An Unexamined Scandal, Anderson On Health Insurance, C.R.E.A.M., All we want is life beyond the thunderdome, Blatant Liars and the Lies They Tell, Bring On The Meteor

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Or what Nick Bagley said:

The American Medical Association/Specialty Society Relative Value Scale Update Committee (RUC) has a process in place to regularly review Medicare physicians’ services’ work relative values (which reflect the time and intensity needed to perform a service). Its recommendations to [CMS], though, may not be accurate due to process and data-related weaknesses. First, the RUC’s process for developing relative value recommendations relies on the input of physicians who may have potential conflicts of interest with respect to the outcomes of CMS’s process. . . . . Second, GAO found weaknesses with the RUC’s survey data, including that some of the RUC’s survey data had low response rates, low total number of responses, and large ranges in responses, all of which may undermine the accuracy of the RUC’s recommendations. For example, while GAO found that the median number of responses to surveys for payment year 2015 was 52, the median response rate was only 2.2 percent, and 23 of the 231 surveys had under 30 respondents….

the RUC is a specialist-dominated committee that “donates” more than $8 million of its own services each year to Medicare, presumably out of the goodness of its heart.

The RUC’s job is to tell CMS how much time and effort it takes to provide medical services in the hopes of influencing how Medicare pays physicians. Since CMS has been starved of the resources necessary to independently review physician services, the agency has little choice but to rubber-stamp most of the RUC’s recommendations.

In recent years, Congress has taken modest steps to fix the problem. The Protecting Access to Medicare Act of 2014, for example, appropriates $2 million each year to enable CMS to collect information directly from physicians about the relative value of their services. But CMS doesn’t have a plan about how it will spend that money, and in any event $2 million won’t go far when it comes to reviewing thousands of physician services.

Good data is expensive. It is expensive to collect, it is expensive to curate, and it can be expensive to analyze properly. However good data is extraordinarily valuable if it allows us to avoid amazingly expensive, counterproductive and wasteful mistakes in the best case scenarios or self-interested rent capture. Cheaping out on data collection for a program that drives $70 billion dollars a year in payments should be criminal. Spending $70 million dollars a year to study how 1,000 times that amount of money is to be spent (or a dime per $100 spent) would have huge positive impacts.

But we can’t have that, as it would be government spending requiring taxes when there is a nice, respectable professional organization that is willing to tell us how to pay them.

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12Comments

  1. 1.

    brantl

    May 22, 2015 at 7:36 am

    Good data is expensive. It is expensive to collect, it is expensive to curate, and it can be expensive to analyze properly.

    Good data becomes inexpensive when you have sufficient safeguards on its input. Once you do that, it becomes cheaper as time goes on. When you don’t it turns into an ongoing continuously rising expense. The only time to get it thoroughly right, is at its incidence.

  2. 2.

    Villago Delenda Est

    May 22, 2015 at 7:39 am

    But we can’t have that, as it would be government spending requiring taxes when there is a nice, respectable professional organization that is willing to tell us how to pay them.

    What could possibly go wrong in this case? I’m at a loss to figure it out, but then again, I’m like your typical Chicago School economist who is utterly impervious to any sort of financial incentive to game my analysis of any other group’s financial incentives.

    /sarcasm tags needed fer sure

  3. 3.

    Richard Mayhew

    May 22, 2015 at 7:42 am

    Good data (ie, scientifically validated polling or claims dives with the CMS database with an analytics team ) that is replicated year over year is more expensive than flying 40 people to Chicago for a long weekend of self-fellation which is what the current process consists of.

    I agree with you, that once the structures are set up to analyze the data, it gets reasonably cheap to replicate, but there should still be a team of several highly skilled statisticians, actuaries, clinical advisors and then a bunch of mid-level analysts constantly tweaking, testing and stretching the established model. Right now the RUC system has no on-budget costs to CMS, doing it right would move some of the price setting costs to the CMS on-budget while probably reducing total Medicare spending as some perverse incentives are removed.

  4. 4.

    WereBear

    May 22, 2015 at 7:47 am

    The profit motive, while a reliable stick or carrot, depending on the person, is NOT the only thing in the world.

    Except to the cohort which has collected itself under the name of Republican.

  5. 5.

    Wag

    May 22, 2015 at 8:52 am

    @Richard Mayhew:

    As a primary care physician, this. A thousand times, this.

    Our world is run by MBA’ who suckle at the teat of instant profits, and for whom a profit horizon beyond the next quarter is heretical socialistic blabber.

    We need to take our country back from the MBA’s. So many of our problems would be solved.

  6. 6.

    Slugger

    May 22, 2015 at 10:58 am

    Our money should replace that weird pyramid and eye thing with a fox guarding a hen house.

  7. 7.

    Shakezula

    May 22, 2015 at 11:49 am

    …the agency has little choice but to rubber-stamp most of the RUC’s recommendations.

    As someone who is fortunate enough to get to read RUC/CMS wrangling at least twice a year (sarcasm), this simply isn’t true. Also, to judge by the high (and consistent) level of unhappiness with RUC determinations, if any provider or group of providers is making money off RUC-driven policies, they’re keeping vewy quiet about it.

  8. 8.

    brantl

    May 22, 2015 at 1:29 pm

    @Richard Mayhew: I’m really talking about all forms of data validation, like where is says condition, you can’t fill in “aspirin”. My brother worked with people who were getting second source data, where the input filters had not been set to reject the field parsing indicator characters, allowing one field to be parsed as one, and then part of the next…..

  9. 9.

    jl

    May 22, 2015 at 1:39 pm

    US specialist docs are by far the highest paid in the world by most measures of equivalent incomes, with possible exception of the Netherlands. And US has a very high proportion of specialists compared to most other high income industrialized countries; much larger than in Netherlands which is why the high salaries there do not have the same impact on costs generated by professional services that they do here.

    In the meantime, primary care docs in the US are not particularly highly paid, at least anymore, and their working conditions have gotten more, let us say, ‘intense’.

    To be fair to AMA, they have noticed the issue and have tried to make primary care residencies more attractive. But medical students are not taking the bait, as they have huge loans to repay, and don’t see how they can do that on a primary care docs typical income. I have read several very, very, disappointed and worried AMA reports on the failure of their initiative to get more primary care docs in the pipeline. But specialist docs continue to dominate committees the issue guidelines, formulate the proprietary AMA CPT codes that influence reimbursements for procedures, and the dominate the RUC process.

    In the meantime, the AMA continues to try to limit the supply of MDs. The most recent move I read about was an attempt to limit the number of foreign trained docs entering into residencies. Programs would have to choose to take either only US educated docs into their program, or they had to take only foreign educated docs. They couldn’t take, say 20 US educated and 5 foreign educated into their residencies. I do not know the fate of the attempt, I will have to look for news on it. But it shows you what is going on.

    In some other countries, the scientific medical association is kept separate (at least officially) from the doctors trade union. I’m not familiar enough with how these operate to know how successful that separation is. However,it is refreshing to read an article about a medical dispute in another country with interview with a doctor who says “Well, I am in charge of the doctors union, my interest is that the doctors get paid enough”. Very refreshing honesty. In the US we use another system, where the most prestigious medical association fulfills both roles.

  10. 10.

    jl

    May 22, 2015 at 1:42 pm

    @Shakezula:

    ” if any provider or group of providers is making money off RUC-driven policies, they’re keeping vewy quiet about it. ”

    I think it is a problem that involves conflict of interest. I am not sure it is conscious. As I indicated in comment above, AMA is officially concerned that too many are going into specialties, and have backed minor efforts to solve the problem. I think the specialist influence on reimbursement policies is working at cross purposes with other stated AMA goals.

  11. 11.

    Shakezula

    May 22, 2015 at 2:08 pm

    @jl: I don’t understand this. The specialists who are on the RUC panels regularly do things that result in cuts to their payments. Another thing that’s not touched on here (and frankly, it is too boring) is the way the AMA controls utilization by changing the definition of services.

    In addition, if CMS doesn’t like their suggestions or changes – It rejects them. (With the ripple effect that private payers may follow CMS’ lead.)

  12. 12.

    jl

    May 22, 2015 at 2:10 pm

    @Shakezula: If you have examples or links, please give them, I would be interested.

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