So that's how the rates are set

The Wall Street Journal published a very important article this week. Written by Anna Wilde Mathews and Tom McGinty, it is entitled, "Secrets of the System: Physician Panel Prescribes the Fees Paid by Medicare.

Here's the lede:

Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars.

The group, convened by the American Medical Association, has no official government standing. Members are mostly selected by medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Yet the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous. The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules.

By coincidence, one of our doctors had just explained this to me a few days earlier. After reading the article, he jokingly and then seriously commented:

The only thing missing from the description is the cigars. Actually they make it sound more shady than truly exists. The recommendations from this committee are made to Pro-PAC (Prospective Payment Assessment Committee), who then set the Medicare fee structure.

Procedures have always won out over E&M time.

Another doctor friend put it this way: I think that it is the core of much evil.

Why the harsh reaction? Well, it is inherent in this statement: "Procedures have always won out over E&M time." Evaluation and management (E&M) services refer to visits and consultations furnished by physicians. You might want to think about this as "old-fashioned doctoring." The MD talks, listens, probes, and uses his or her cognitive skills to figure out what's wrong with you and what might be done about.

It contrast, procedures are things that are done to you mechanically, like surgery or other invasive techniques.

Both are important to medical care. But which is more important? One can certainly make a case that a primary care doctor's, nephrologist's, or neurologist's E&M can make a significant difference in the course of treatment of a patient. Indeed, those doctors' diagnostic skills can often obviate the risk, cost, and disruption of interventional procedures. This is not to say that people who perform procedures are not also important: Indeed their abilities are essential and determinative in many cases. However, the process described in the article results in greater values being ascribed to the procedures than to the cognitive services. And greater value translates into higher payment rates.

It may be that the committee's skewed membership leads to this result. It might be, too, that there is some historical basis for a payment system of this sort. Whatever the reason, it is clearly time to undo the bias.

The future for health care in the United States will be based in great measure on employing cognitive skills to bring about prevention, chronic disease management, and overuse of the medical system. The payment system should reflect that high value.

Unfortunately, this is viewed as a zero sum game. Under Washington rules, if cognitive specialists are paid more, proceduralists must be paid less so that the presumed overall level of appropriations will be held constant. But that is the static case, one that assumes the same number of procedures will be carried out. In the dynamic case, paying cognitive specialists better so they can spend more time with patients will reduce the need for procedures and thereby reduce overall health care expenditures, even if the proceduralists are not taken down a notch.