Turn, Turn, Turn - from Columbia/ HCA Executive, to Virginia Secretary of Health and Human Resources, to Director of the Center for Medicare and Medicaid Services (CMS), to America's Healt Insurance Plans (AHIP)

Marilyn Tavenner's career continues to revolve, er, evolve.

Columbia/ HCA

Marilyn Tavenner worked for Columbia / HCA, now HCA, although details of her job there are sketchy.  Apparently she worked there for a long time, according to a 2015 article in the Nashville Business Journal,

Tavenner work [sic] in a variety of roles for Nashville-based HCA Holdings Inc for 25 years.

She worked long enough to earn a fairly generous pension.  As a 2012 a Washington Times article stated,

In a recent filing with the U.S. Office of Government Ethics, she reported that through a supplemental executive retirement plan at HCA, 'I will continue to receive $162,524 for life.'

There are only sketchy accounts available about what she did at HCA.  The same Washington Times article noted she left in 2006, and

'Ms. Tavenner was a senior executive at HCA who retired from the company over six years ago,' said HCA spokesman Ed Fishbough.

The only description I could find of her duties there was in a Forbes blog post by Bruce Jepsen in 2015,

Tavenner, ... had experience working for investor-owned hospitals and with insurers when she was at HCA....

What does seem certain is that her career at Columbia / HCA overlapped that of CEO Rick Scott, and included some of the time when the company performed actions that led to some serious charges.  In a 2011 Boston Globe blog post, Suzanne Gordon wrote,

While Tavenner worked for HCA, the company was busily enhancing its profit margin by defrauding the Medicare, Medicaid, and TRICARE systems. Terry Leap’s new book, '"Phantom Billing, Fake Prescriptions, and the High Cost of Medicine: Health Care Fraud and What To Do About It,' details HCA’s sorry history. In 2000, for example, HCA paid fines of $840 million for improperly billing the government and in 2003 HCA had to fork over another $631 million.

We discussed the billion dollar plus Columbia / HCA fraud case, which did involve corporate guilty pleas, but like most other legal settlements between the government and big health care organizations, no consequences for any individuals who authorized, planned, or implemented the bad behavior.  There were many allegations that then Columbia / HCA Rick Scott, who is now the Republican Governor of the great state of Florida, created a business culture that enabled the fraud, and even knew about it, but he was never charged with a crime.

Ms Tavenner's role in Columbia / HCA when this was happening was never clear.


Virginia Department of Health and Human Resources

After her work at Columbia / HCA, Ms Tavenner became Secretary of Health and Human Resources for the great state of Virginia.  I could find little news coverage of her time there, much less any suggestion that her previous role with Columbia / HCA might have been viewed as a problem. 

Center for Medicare and Medicaid Services (CMS)

In 2010, Ms Tavenner went to work for the US Department of Health and Human Services.  In 2011, Ms Tavenner became acting administrator of CMS.


The only concerns raised about Ms Tavenner's former work with Columbia / HCA at the time she was appointed to run CMS came from the Boston Globe blog post noted above.

Although Tavenner may not have been personally involved in these scandals, it hardly seems wise to put her in charge of the government system her company helped defraud.

Nonetheless she got the position.  In 2014, a Wall Street Journal article from 2014 suggested Ms Tavenner remained cozy with here former boss, former Columbia / HCA CEO,  and now Florida Governor Rick Scott.  It recounted that a CMS contractor had been investigating a Florida nursing home chain,

Medicare investigators began looking into Florida skilled-nursing facilities in 2011 and found what they considered suspicious billing patterns at 33 homes. CMS contractor SafeGuard Services LLC was concerned about how often Florida nursing facilities were charging for the costliest physical and occupational-therapy services, according to documents. About a quarter of the 33 facilities were paid at least 20% more a day than their local rivals, a Journal analysis of Medicare data found.

Three of the 33 are owned by Plaza Health Network. Plaza Chief Executive William Zubkoff previously ran a hospital that was barred in 2006 from billing Medicare and other federal health-care programs following fraud allegations.

But then,

Some of the nursing homes contacted the Florida Health Care Association, a trade group. It asked lawmakers and Florida Governor Rick Scott, a Republican, for assistance, according to the group’s director and emails.

Gov. Scott contacted Ms. Tavenner, according to a person familiar with the investigation. The two had once worked together at hospital operator HCA Holdings Inc., where both had been executives. The governor’s office connected CMS to the Florida Health Care Association. The trade group put an owner of two of the nursing homes, William Kelsey, on the phone with Ms. Tavenner.

Mr. Kelsey told her the prepayment reviews were 'creating a real hardship on the business, staff and residents,' he recalled recently.

On Aug. 22, 2012, Ms. Tavenner ordered the agency’s antifraud officials to release payments for the 33 homes, including the two operated by Mr. Kelsey, according to emails.

A CMS spokesman said Ms. Tavenner got involved to ensure the agency was 'preserving access and quality of care.' The spokesman said Ms. Tavenner 'often discusses issues and concerns with elected officials…including Gov. Scott.'

Of course, Ms Tavenner had a previous relationship with Governor Scott due to their shared time at Columbia / HCA which probably was not like her relationships with other elected officials.  In any case, I could find no real echoes from this story, but Ms Tavenner resigned from CMS in 2015, not completely covered in glory.  A Bloomberg account of her resignation included,

 Marilyn Tavenner, the U.S. official who directed the stumbling roll-out of Obamacare as well as its recovery in recent months, will resign as head of the Centers for Medicare and Medicaid Services.

Tavenner said in an e-mail to staff that she’ll step down at the end of next month. She didn’t give her reasons for leaving.

The article suggested that she had her troubles in her role as head of CMS,

 As head of the agency, Tavenner was arguably the person most responsible for construction of healthcare.gov, the federal health insurance website that collapsed when it opened for business in October 2013. A UnitedHealth Group unit -- then run by Slavitt -- was hired to lead repairs.

In November of last year, Tavenner also acknowledged that her agency had made a mistake in its calculation of the number of people enrolled under Obamacare for 2014. About 393,000 individuals with both health and dental coverage were 'inadvertently counted twice,' she said in a letter to Representative Darrell Issa, a California Republican whose committee discovered the error.

'Tavenner had to go,' Issa said in a statement today. 'She presided over HHS as it deceptively padded the Obamacare enrollment numbers.'

On the other hand, Forbes blogger Jepsen did suggest that some in industry thought better of her than did Representative Issa.

 Tavenner, who had experience working for investor-owned hospitals and with insurers when she was at HCA, was seen as friendly to the health insurance industry and medical care providers. She had respect among lobbies and among both Democrats and Republicans on Capitol Hill....

The for-profit health insurance industry seemed to particularly like here,

'Marilyn leaves behind a legacy of leadership at a time of unprecedented change in our health care system,' said Karen Ignagni, chief executive of America’s Health Insurance Plans, the health insurance lobby....  'She was a thoughtful strategist and balanced manager who time and time again rolled up her sleeves to work with all stakeholders on solutions to advance patient care.'

One wonders whether some stakeholders, like AHIP, thought that she was treating them particularly well.  What the average Medicare patient or health care professional thought of her was not explored.


America's Health Insurance Plans (AHIP) (and LifePoint)

This suspicion was bolstered when Ms Tavenner, despite the negative opinions of people, even Republican people like Representative Issa, was named to be Ms Ignangni's successor.   That was announced just yesterday, July 15, 2015.  In Modern Healthcare we saw,

Marilyn Tavenner, the former head of the CMS who stepped down just six months ago, will now lead the country's dominant health insurance lobbying group.

The board of America's Health Insurance Plans on Wednesday named Tavenner as the group's next president and CEO. She replaces Karen Ignagni, who served as AHIP's top lobbyist for 22 years....

This job transition was covered in media outlets, but so far, only Modern Healthcare raised any doubts,

Her decision to head to AHIP raises uncomfortable questions about the dynamics between Washington politics and business. Tavenner will now be representing and lobbying on behalf of some of the country's largest health insurers—the same companies who are regulated by the CMS and are devoting more of their business to Medicare and Medicaid in the form of privatized managed care.

For her role in these dynamics, she likely will be well paid,

Tavenner is primed for a big pay raise as the top leader of AHIP. Ignagni made more than $2 million as AHIP's CEO in 2013. Tavenner made $165,300 last year, according to government records. She is also expected to make more than $300,000 in cash and stock as a board member of LifePoint Health, a for-profit hospital chain based in Brentwood, Tenn. Tavenner joined LifePoint's board in April.

Conclusions

So now Marilyn Tavenner shows she is securely within that club of insiders that run health care in the US.  Some celebrate the US health care "free market," in which one might expect for-profit insurers will fight with provider organizations, like for-profit hospital chains, over payment policies, overseen by government's impartial regulators.  Yet it appears that many of these organizations' leaders come out of the same pool of insider managers, and that individuals can lead or govern organizations that are supposed to be negotiating at arm's length.  For example, note that now Ms Tavenner is leading a for-profit insurance lobbbying group while governing a for-profit hospital chain.

One might think that such arrangements might not be good for the organizations that are supposed to be at arm's length.  One might think such arrangements might be worse for patients, health care professionals and the public at large.  If the large organizations that are supposed to be competing and negotiating in the market are led out of a single cozy in group, maybe instead of competing and negotiating they will mainly be about benefiting their leaders.

As we wrote before,...

 the constant interchange of health care insiders among government, large health care corporations, and the lobbying and legal firms which represent them certainly suggests that health care, like many other sectors, seems to be run by an amorphous group of insiders who owe allegiance neither to government nor industry.

However, those who work in government are supposed to be working for the people, and those who work on health care within government are supposed to be working for patients' and the public health.  If they are constantly looking over their shoulders at potential private employers who might offer big checks, who indeed are they working for?

Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

But real reform might spoil the party for those who transit the revolving door, so don't expect such reform to come easily.... 

12:51 PM

The US' Multinational Trade Negotiations - Trading Away Its Own and Other Countries' Current and Future Restraints on Drug Prices?

Trade Agreements More about Deregulation than Trade

International trade negotiations, especially their more technical aspects, seem far removed from health care and health policy, and unrelated to health care dysfunction.  However, it seems that such trade negotiations have become a back door route to affect health policy, especially national efforts to regulate health care intended to improve patients' and the public's health.  

We recently discussed how current multinational trade negotiations seem to be more about changing regulation in favor of big corporations than broadly advancing trade.  Some of the effects of the proposed trade pacts could have bad effects on patients' and the public's health, particularly by allowing corporations to challenge particular countries' public health policies outside of these countries' judicial systems, in kangarooish courts seemingly designed to favor corporate interests.  Also, the trade pacts' focus on intellectual property could lead to longer patent protection on drugs, biologics, and devices, raising health care costs.  However, attempts to figure out how proposed trade agreements could affect health care and public health were hindered by the secrecy surrounding the negotiations.

"Procedural Fairness" for Pharmaceutical Companies, not You and Me

Earlier in June, 2015, a part of the current draft of the Trans-Pacific Partnership (TPP) appeared on  Wikileaks, revealing yet another set of concerns about how the agreement could affect health care.  It was entitled "Annex on Transparency and Procedural Fairness for Pharmaceutical Products and Medical Devices," and hence was specifically about health care.

The bulk of the annex seemed to be about improving the treatment of drug, device and biotechnology companies by national agencies that make decisions about payments for their products. The annex apparently proposed establishing the companies' rights to rapid reviews, access to applicable procedures and guidelines, access to written decisions, company appeals of the agencies' decisions, and protection of corporate confidential information. On the other hand, there was nothing I could see in the annex about the rights of, say, patients or health care professionals.

We have noted the concern that international trade agreements may make government regulation subject to corporate appeal in "investor-state dispute settlement" (ISDS) processes, essentially international quasi-courts that are not subject to national judicial systems, may not provide for any input by parties other than governments and corporations (that is, by, for example citizens, patients or health professionals), and may not allow appeal.  Thus, by specifically incorporating new protections for corporations seeking favorable payments for their new products from national agencies, the annex could make it possible for the corporations to appeal to ISDS, going around national court systems.  As reported in the Huffington Post,

According to an analysis of the leaked document by Jane Kelsey, a law professor at the University of Auckland in New Zealand, these rules are enough to expose national health authorities to legal challenges under TPP’s investor-state dispute settlement process, or ISDS. ISDS empowers companies to challenge countries’ domestic laws before a tribunal of international judges if they believe the laws unfairly limit investment. The tribunals have the power to impose significant fines on countries if their laws are found responsible for the investment hardship in question. While pharmaceutical companies could not challenge national health programs’ policies through ISDS, their grievances would be eligible for ISDS if the companies claimed the policies hindered investment.

In fact, the Huffington Post article noted suspicions that the US Trade Representative (USTR) has been negotiating on behalf of big US drug, device and biotechnology companies to target price regulations in Australia and New Zealand,

Among the United States’ TPP negotiating partners, pharmaceutical provisions have faced the greatest opposition from Australia and New Zealand, which have national health authorities that provide prescription drugs to their citizens at heavily discounted rates. The U.S. Trade Representative and U.S. pharmaceutical companies have targeted the cost containment measures in those countries’ prescription drug programs for years. Pharmaceutical companies also claim that New Zealand’s drug approval process is opaque and difficult to navigate.

Why Explicitly Include the US Center for Medicare and Medicaid Services (CMS)?

However, anyone in the US who thinks that all the burden from the trade pact is only on other countries, particularly those down under, should think again. The draft trade pact annex also seemed designed to prevent any future attempts by the US government to control drug and device costs, especially for the US Medicare program, even though the current US President has proposed such attempts. 

Note that when the US program was extended to cover drugs, the legislation specifically forbade the government from negotiating prices, a provision that seemed more about protecting corporate revenues than the federal budget.  So, as reported by the New York Times,

The newly leaked annex, dated Dec. 17, 2014, lists Medicare and the Centers for Medicare and Medicaid Services as falling under its strictures.

The USTR pooh poohed any concerns about that,

Officials at the United States trade representative’s office, while declining to comment on a leak they would not acknowledge, said rules in the Pacific accord would have no impact on the United States because Medicare already adhered to them. The trade representative’s office helped develop the proposals.

'Already, transparency and procedural fairness are integral parts of the U.S. legal system and as such are principles reflected in U.S. trade agreements,' the representative’s office said in a statement.

Maybe preventing any government negotiation about, much less control of drug and device prices may be part of what the USTR called "procedural fairness."  In any case, if the US, and specifically CMS are doing so well, why bother giving this trade pact jurisdiction over them, unless to prevent any uppity future US government from daring to negotiate with the pharmaceutical industry?

The Huffington Post noted that

In an earlier statement, [Director of Public Citizen's Global Access to Medicine Project Peter]  Maybarduk expressed concern that the rules would 'limit Congress’ ability to enact policy reforms that would reduce prescription drug costs for Americans –- and might even open to challenge aspects of our health care system today.'

He expanded on that in a commentary for The Hill,

Earlier this week, WikiLeaks published the draft TPP 'Annex' on healthcare technologies. In the five-page document, the U.S. government commits Medicare to rules and procedures that would make it difficult — if not impossible — to implement a national formulary that would provide leverage for proposed negotiations with drugmakers under Medicare Part D.

Medicare costs are expected to more than double from $77 billion in 2015 to about $174 billion in the next decade. In February, the president called for giving Medicare the power to negotiate prices with drug manufacturers to ameliorate this cost burden. Americans support giving Medicare negotiating power by wide margins and across party lines.

Negotiations are most effective if the U.S. government has leverage. Experts suggest that key leverage in Medicare negotiations should come from developing a national drug formulary — a list of drugs that Medicare would cover. A formulary would stimulate competition, reduce prices and lead to healthier outcomes for patients and the healthcare system.

But the leaked TPP 'Annex' shows that the pact would impose procedural requirements on formulary decisions, exact significant administrative costs and open up the drug review process to increased corporate influence. Medicare would have to live by these rules. The result could be a toothless negotiator, and a formulary filled with expensive drugs that have questionable public health benefits, if any.

Summary

So why did the US Trade Representative acquiesce to, if not actively promote, a trade pact that would limit the ability of the US government, specifically, CMS to try to put a damper on the ever rising health care prices that threaten to bankrupt individuals and maybe eventually the Medicare program itself? And why, incidentally did it do so when this appeared to contradict the current US President's own stated goal to have Medicare negotiate the prices it pays for drugs?  (And why, incidentally, did it promote a pact that would give international tribunals jurisdiction over US government actions when that may be unconstitutional according to an increasing number of experts?) 

The best speculation we offered before was that the USTR has been "captured" by industry, in part through the conflicts of interest generated by multiple passages through the revolving door by current and former USTR personnel. 

At the moment, the TPP has stalled again in the US Congress.  However, do not underestimate the ability of its proponents to get it moving again.  The now intermittent drip of secrets from the ongoing trade negotiations showing how little they have to do with trade, and how much they have to do with advancing corporate interests suggest the need for much more vigilance in defense of patients' and the public's health.

Meanwhile, I repeat again that we need to do a lot more to undo regulatory capture that affects health care, and stop the incessantly spinning revolving door.    Attempts to turn government toward private gain and away from being of the people, by the people, and for the people have no doubt been going on since the beginning of government (and since the Constitution was signed, in the case of the US).  However, true health care reform  would require curtailing the severe sorts of conflicts of interest created by the revolving door.

Real heath care reform would require  multiyear cooling off periods before someone who worked in the commercial world can get a job in a government whose work has direct effect on his or her previous employer or industry sector, and before someone who worked in government whose work had direct effect on a particular economic sector can accept a job for a company in that sector.

11:48 AM

Now Politico Tries RUC Raking

It has been a year since we wrote about the RUC, the American Medical Association's Relative Value System Update Committee.  There is only one thing new since then.  Politico just made another attempt to shed some light on this obscure committee and its outsize effect on health care. 

To summarize the events so far, all I need to do is cut and paste from our last post on the topic, from July, 2013...

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, and congressional hearings in 2013.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)


Politico's Turn


Now an article by Katie Jennings in Politico brings up some of the issues about the RUC that we have dealt with again and again. These included six of seven major points discussed in the Washington Monthly article, and that have been discussed multiple times on Health Care Renewal.  I will list the seven points, with supporting quotes for the first six from the Politico article.  (Our post in 2013 on the Washington Monthly article had supporting quotes for the last point.) 


The RUC is Well Hidden

 And yet even many doctors are not aware of the hidden hand of the AMA-run committee in perpetuating this costly crisis. The panel, with very little transparency or public discussion, continues....

Also

RUC meetings were closed, invitations had to be approved by the AMA, the charter had not been made public and there were no minutes or public documentation of what was said at the meetings. (Last year, under pressure, the RUC announced it would post meeting minutes on the AMA website.)

The RUC Fixes Prices

a secretive committee run by the American Medical Association (AMA) ..., with the assent of the government, has enormous power to determine Medicare prices by assessing the relative value of the services that physicians perform.

The Government Enables the RUC to Fix Prices

the role of the AMA’s secret committee [dates] back to 1992, when the U.S. government sought to overhaul the entire Medicare fee system and decided it didn’t have the right personnel to conduct extensive surveys of physicians. So the federal agency tasked with overseeing the program, the Centers for Medicare and Medicaid Services, enlisted the AMA and the committee it had formed to determine what’s known as the relative value of physician work, meaning the amount of time, effort and skill that goes into performing a procedure. Each procedure had a corresponding code in the AMA’s Current Procedural Terminology coding system, which the government had already adopted nearly a decade before, in 1983, as the standard for physician billing and reimbursement for Medicare.

Also,

Above all, the RUC appeared to be dictating solutions to the government. Since 1992, the RUC has submitted more than 7,000 recommendations to the Centers for Medicare and Medicaid Services. The agency has accepted 87.4 percent of the recommendations, according to a study published in Health Affairs.

The Government Fixed Prices are Endorsed by the Private Sector

Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect,...

The Price Fixing Drives Up Costs and the Use of Services

For decades the committee has ... [set prices] done so in a way that has skewed Medicare fees in favor of expensive specialists over ordinary general practitioners like Fischer, who are the nation’s first line of defense against serious illness. Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect, contributing to a situation where primary care doctors are in general underpaid, underappreciated — and in critically short supply as medical students flock to where the money and opportunity are.

These Incentives Cripple Primary Care

And because the 31-member committee was – and still is — made up of a majority of specialists who typically sought to maximize their own share of the pie (26 of the 31 are appointed by the major national medical associations), it was no surprise who the losers turned out to be. 'The specialists know what the game is,' said Dr. Robert Berenson of the Urban Institute in DC, who was a member of the RUC in the early 1990s. 'The [RUC’s] basic method of relying on a specialty society to give a non-biased appraisal … is fundamentally a flawed concept.' Dr. Grant Rodkey, the first chair of the committee that came to be known as the RUC, described the scene of the inaugural meeting as 'reminiscent of a group of dogs on leash eyeing a platter with a not-too-generous bone,' in a 1997 interview in the Bulletin of the American College of Surgeons.

These Incentives Benefit Big Corporations, not just Medical Specialists


This was the only issue not directly addressed in the 2014 Politico article.  (But see our 2013 post.)


What to Do and What Will Happen?


The Politico article concluded on an optimistic note, suggesting that increased transparency about what Medicare pays physicians might help.

One key moment came in a court ruling this year: For 35 years until last April, all the Medicare billing practices of physicians had been kept private by a court injunction granted to the AMA. But after an appeals court ruled that such information must be made public, the 2012 billing data was released, showing that the top 1 percent of doctors, mostly specialists, accounted for an outsized portion —14 percent — of Medicare billing.

Or perhaps Congress might ride to the rescue,

Today ironically, the renegade primary care doctors see hope on Capitol Hill—and in the Obamacare law that so many on Capitol Hill have demonized. In April, seeking to avoid impending cuts to physician Medicare reimbursements, Congress passed the “Protecting Access to Medicare Act.” The new law expands on a provision already included in the Affordable Care Act that gives the secretary of Health and Human Services greater authority to identify and correct misvalued Current Procedural Terminology codes. Spurred by Congressman McDermott — who told me in an email that he still wants “major changes that make the RUC’s process more transparent” — Congress also commissioned a report from the Comptroller General to study the process by which the RUC provides recommendations to the government on Medicare fees.

And there is even one - one out of very many - health care insurance companies that might finally deviate from the Medicare fee schedule as influenced by the RUC,

Even some medical insurers, like CareFirst in the Washington, D.C. region, have begun to rebel against the old system and to push the savings that might come from paying primary care physicians more. As long as I can remember, family physicians and general internists have been financially at the low end of the totem pole,' even though they’re the ones who perform the critical if unglamorous work of preventing serious illnesses, former CareFirst Chairman Michael Merson told The Washington Post recently.

But there have been only tiny changes in the RUC since the Washington Monthly article last year, and actually since we first wrote about the RUC in 2007.

The AMA, of course, fails to see anything wrong with the RUC.  On the AMA Wire blog appeared an  anonymous but apparently official post that sought to refute most of the the points made in the Politico article.

Well Hidden

The title of the blog post included the phrase "and it's no secret," but as far as I can tell, the AMA post never directly addressed the secrecy issue, especially involving the secrecy of RUC proceedings, whose location on the AMA website is not obvious to me.  I must admit that the list of members of the RUC is no longer secret, but can be found here (with a log-in, but no subscription required, and minus any biographical information, or conflict of interest disclosures).

Price Fixing

The AMA blog post stated

the RUC does not control the Medicare payment system, nor does it set rates for medical services

That is true as far as it goes, but totally ignores how the RUC's determination of the relative values indirectly sets payment rates.

Government's Uncritical Acceptance of the RUC's Recommendations

The AMA blog post included,

The RUC's recommendations are thoroughly reviewed by government officials who have the final say.

That failed to acknowledge how rarely the government officials have altered the RUC's findings in the past.

Effects on Primary Care

The AMA blog post stated

The RUC values all physicians’ cognitive work and role tackling the growing number of Americans with long-term health problems that need continuous care. The committee’s work reflects the continued importance of services that all doctors—including primary care physicians—perform.

Again, this ignores the small representation of primary care physicians, and of physicians who perform only cognitive, as opposed to procedural services on the RUC, and the data, starting with the Annals of Internal Medicine article from 2007, that suggests the RUC's updates favor procedural services.

Presumably as long as the leadership of the AMA sees no problems with the RUC, not much is likely to change.    

Summary

So since 1992, the RUC has had an outsize role controlling what Medicare pays physicians, and hence physicians' pay in general.  Over this time, the playing field has become increasingly tilted in favor of procedural services and away from cognitive services, especially primary care.  The result is that the US has the most expensive health care system in the world, but hardly the best health care or health care results in the world. 

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 perverse incentives 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.

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.

Since we started writing about the RUC in 2007,  there have been some small changes in the RUC.  It has slightly more primary care representation, and its membership is no longer secret.  That is, however, about it.

As I wrote last time, hopefully the Politico article, added to all the other attempts to shine light on the RUC, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.


ADDENDUM (28 August, 2014) - This post was re-posted on the Naked Capitalism blog, and on the NBCH Newsletter blog. 

APPENDIX - Background on the 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.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted 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.
 
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."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) 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.
 
That changed 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, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted 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.
 
In 2011, after the "Replace the RUC" 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 easy for me to determine 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).  
 
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 dismissed the lawsuit 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.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

11:17 AM

"...I was fully planning to quit in protest. I’d even started writing op-ed articles. I was going to resign pretty noisily, I’m afraid."

 Richard S. Foster is retiring this week after 18 years as the chief actuary for the Centers for Medicare and Medicaid Services. From an interview in KaiserHealthNews.org:

Q: How do we control health care costs in Medicare, Medicaid and the private sector?

A: Years ago, we thought that converting from cost-based reimbursement to prospective payment systems (a set payment that covers the entire cost of the admission) was the magic answer, and it helped a lot. Then, back in the early 1990s, everybody thought managed care was the magic answer. And that helped some, too, although most of their success was in negotiating lower payment rates, which you can only take so far.

We’ve had other instances -- pay-for-performance and consumer-driven health care -- that people had hoped would be the magic answer. Right now, there’s a great deal of hope that further integration of care, greater bundling of payments and other innovations like that will be the answer. I’m not optimistic that these things will, in fact, be any more successful than the best ideas of the past. I think they can all help.

All the insurers and payers tend to adopt and pay for just about any new technology that comes along -- even in instances where the value of the new technology is nowhere near its higher cost. So we could be a lot more prudent in how we adopt new technology. But that’s controversial. We saw in the Affordable Care Act the pushback on comparative effectiveness. If you do comparative effectiveness right, I think it could be very helpful.

Q: How would you adopt technology more prudently?

A: If you have something that is 10 times as expensive as the technology it would replace, and it really is not any more effective, why should we bother adopting that? And yet we do it all the time.

9:09 AM

Questions For A Sunday Morning

Weight loss:  Commercial weight-loss schemes outperform physician recommendations.  Does your heart follow where your pocketbook leads?  (Chicago Tribune)

Prostate surgery: Risks associated with prostate surgery are lower at academic medical centers.  Does practice make, if not ‘perfect,’ at least ‘better?’  (Chicago Tribune)

Quality measures:  Will your physician ‘fire’ you to meet standards for incentive-based compensation?  Are you a parent who refuses to vaccinate your kids?  “You’re fired!” (Advisory Board)

Disease management:  Programs for Medicare patients do not improve quality, reduce costs or decrease hospital and ED visits.  It’s only one study, but disappointing nevertheless. (NEJM)

 (Image from http://www.steinski.com/blog/a_question_for_you/ via a Creative Commons search)

12:07 PM

Hospital Marketers: TIme To Own the Growth Agenda

Hospitals' salad days are over, at least if you believe the breathless headlines.  Gone are the days when business models could be built simply by chasing Medicare's hot reimbursement du jour. 

Unfortunately, more than business models were built on such crabbed thinking. Where Medicare led, capital structures, facilities, strategic thinking, indeed the very definition of 'success' were sure to follow. 

And follow they did. Massive was the party. Crushing are the debt loads and mediocre the results. Naturally a pounding hangover ensues, though the remedy - perhaps a 'rescuing'  full-asset merger - is neither quick nor painless.

(Example: Elmhurst Memorial Healthcare's dalliance with Northwestern Memorial HealthCare.  “I think having that new facility is going to be a real challenge for (Elmhurst)  financially,” says my friend Brian Sanderson, a partner at Oak Brook-based accounting firm Crowe Horwath LLP) 

"We've nothing left to cut!" is the common refrain - common, predictable and mostly untrue. Still, organizations make their own reality and, if you believe you're out of ideas, you are. 

So might I suggest it's time to GROW? And by growth, I don't mean (say it quickly so it blurs together) "Let's grow Orth-onc-diac!" Like every other hospital on the planet. No, that party's long over.   Incremental value lies in completely new directions. 

New directions begging for someone to reframe, to call 'time-out' on the B.S. of "I don't have to outrun the bear, I just have to outrun you!"  Someone to innovate and incubate new generations of business models.  Someone to OWN THE GROWTH AGENDA.  Why not you? 

Time for idea-driven marketers to leave the past behind and take a big step forward.

(Connect with me on Linkedin.) 

10:52 AM

SGIM Urges "Chuck the RUC"

This week, Society of General Internal Medicine (SGIM) members received the 5 August, 2009, Update in Health Policy that urged we "chuck the RUC," (quoted in its entirety below, italics added for emphasis):

Who will assign the value of primary care services? Chuck the RUC!

How does Medicare determine physician payment rates? The answer to this question is a core element of the ongoing debate about health care reform. Changing how Medicare sets payment rates for physicians is especially critical since Medicare rates also guide the rates set by private insurers. Since 1992, Medicare has paid physicians according to the Resource Based Relative Value Scale (RBRVS), a fee schedule that multiplies relative values for physician services by a conversion factor to determine the amount of payment. The Centers for Medicare and Medicaid Services (CMS) has historically used the Relative Value Scale Update Committee, or RUC, as the sole source of recommendations. This committee within the AMA performs broad reviews of the RBRVS every five years. Twenty three of the RUC's twenty nine members are appointed by major national medical specialty societies, including those that account for high percentages of Medicare expenditures for procedures. All meetings are closed and discussions are confidential. The over-representation of procedure-driven subspecialties and under-representation of generalist physicians in the RUC has contributed to the current undervalued cognitive services (especially for primary care) and over-valued reimbursement for procedures. In March 2007, the Medicare Payment Advisory Commission (MedPAC) identified the RUC process as a major reason for undervalued primary care services and a significant contributor to the crisis in primary care. MedPAC has recommended that an independent expert panel of economists, technology experts, physicians and private citizens be created to supplement the RUC's recommendations to CMS regarding fee schedules. Health reform discussions have included moving MedPAC into the executive branch and giving it authority to review and recommend Medicare payment policy, thus reducing the RUC's influence. Not surprisingly, both the AMA and the American College of Surgeons have opposed this proposal. Groups representing primary care physicians, including SGIM, are in favor of this proposal which could ensure fair and unbiased assignment of work RVUs to all the service codes used by physicians. We believe that this will correct the payment inequalities of the current fee scale and ultimately renew trainees' interest in primary care. In the coming weeks, SGIM may ask you to act on this issue and contact your legislators to urge them to support these transformative proposals for primary care. Please monitor your e-mail for action alerts and be prepared to act.

We have previously posted (most recently here in considerable detail) about the perverse incentives given US physicians by the payment schedule dictated by the US Medicare system. These incentives have been largely responsible for the increasingly dire status of primary care/ generalist care in the US. Revisions to the Resource-Based Relative Value System (RBRVS) disproportionately reward physicians for performing procedures and diagnostic tests instead of talking with, examining, thinking about, diagnosing, recommending decisions for, and counseling patients. The US Center for Medicare and Medicaid Services (CMS) uses the RBRVS Update Committee (RUC) de facto as its sole source for advice on revising the system. The RUC is dominated by representatives of medical societies whose members predominantly perform procedures and do diagnostic tests. The RUC is secretive. The identities of its individual members are difficult to ascertain. Its proceedings are secret.

Thus, the RBRVS updating process run by the RUC is opaque, unaccountable, and not representative of patients and "cognitive" physicians. The result of this process has been perverse incentives that have driven up health care costs without obvious improvements in quality or outcomes.

I applaud SGIM for being the first medical society to challenge how the RUC controls payments to physicians, and the perverse incentives the RUC process has generated.

As the Update above says, meaningful health care reform in the US will not occur unless we address the perverse incentives that drive up costs without improving care.

8:30 AM

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 here, here, here, here, here, here, and here and important articles by Bodenheimer et al,[1] and Goodson.[2])

An Interview with a former Medicare administrator

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.

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. 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?

Weems: I think there is a general consensus that the RUC has contributed to the poor state of primary care in the United States. In many ways the supposition behind the RUC process, behind the whole relative value scale, is incredibly flawed. 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. So because it's highly procedure based, it's prejudiced against just standard primary care evaluation and management [E&M] visits, 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.

So the process itself is flawed. I don't think that we can make a change without a statutory change 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 an E&M visit, which has been highly undervalued by the RUC.

Iglehart: 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?

Weems: There were a number of discussions, but it's a hard nut to crack. Those discussions never ripened to the point where we could say we've got something better.

Iglehart: But you'd anticipate under the Obama administration that those discussions will continue?

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.

There are a number of important points here.

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.

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.

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?

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.

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?

A response by the Chair of the Board of the AMA

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 blog post on the Health Affairs Blog.)

First, she implied that a former CMS administrator did not know what he was talking about when it came to the RUC.

In the interview, inaccurate statements were made about the role of the AMA/Specialty Society RVS Update Committee (RUC), which advises CMS regarding the relative levels of reimbursement for different medical procedures performed by physicians.

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 here).

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.

Next, Dr Patchin wrote:

Every time the RUC has been asked to review payments for E&M (evaluation and management) codes, the RUC has sent CMS recommendations that would lead to higher payments.

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.

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?

Then, Dr Patchin reiterated:

To clarify: The RUC makes recommendations to CMS, and then CMS makes its payment decisions.

and again,

Bottom line: the RUC makes recommendations, CMS makes payment decisions.

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?"

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?

References

1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. Link here.
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. Link here.
3. Iglehart JK. Doing more with less: a conversation with Kerry Weems. Health Aff 2009; http://content.healthaffairs.org/cgi/content/full/hlthaff.28.4.w688/DC1

7:06 AM