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Another Attempt to Show the RUC Behind the Curtain

Prices are High Because They are Fixed That Way

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, and recent congressional hearings.  The lack of discussion of this issue 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.)

The Washington Monthly Pulls Back the Curtain

Now another attempt to pull back the curtain that hides the RUC was just made by the Washington Monthly.  A long, detailed, well-written article by Haley Sweetland Edwards went through the major points, and included some new discoveries.  She asserted:

The RUC is Well Hidden

[The RUC is] probably one of the most powerful committees in America that you’ve never heard of.

The RUC Fixes Prices

when a roomful of professionals from the same trade meet behind closed doors to agree on how much their services should be worth. It’s called price-fixing.

The Government Enables the RUC to Fix Prices

this kind of 'price-fixing' is not only perfectly legal, it’s sanctioned by the U.S. government. At the end of each of these meetings, RUC members vote anonymously on a list of 'recommended values,' which are then sent to the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs those programs. For the last twenty-two years, the CMS has accepted about 90 percent of the RUC’s recommended values—essentially transferring the committee’s decisions directly into law.

The Government Fixed Prices are Endorsed by the Private Sector

private insurance companies also use Medicare’s fee schedule as a baseline for negotiating prices with hospitals and other providers.

The Price Fixing Drives Up Costs and the Use of Services

So if the RUC inflates the base price Medicare pays for a specific procedure, that inflationary effect ripples up through the health care industry as a whole.

These Incentives Cripple Primary Care

These manipulated prices are also a major reason why specialists are in oversupply in many parts of the country, while a worsening shortage of primary care providers threatens the whole health care delivery system.

These Incentives Benefit Big Corporations, not just Medical Specialists

the incentives are perfectly aligned: ordering that extra test means more money for a doctor’s practice or hospital, more money for the labs, and often more money for the device makers and drug companies, too. (Oh, and, by the way, the device makers and drug companies are, not incidentally, major funders of the medical specialty societies whose members vote on the RUC.) [Art by Monte Wolverton for the Washington Monthly article]

What to Do and What Will Happen?

We previously wrote,

Ms Edwards ended her article with two specific suggestions:

take the process away from the control of the AMA and put it in the hands of a well-resourced group of experts under the auspices of the federal government. This might take the form of a panel of doctors employed by the government, or of an advisory committee of representatives of different medical societies but with greater representation of primary care doctors.


get Medicare out of the business of funding fee-for-service medicine.

I can only hope that the latest Washington Monthly article, which was accompanied by an editorial and a short first-hand account of how difficult is the lot of the modern primary care physician, 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.

APPENDIX - Background on the RUC

ADDENDUM (15 July, 2013) - see also comments by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog.

ADDENDUM (18 July, 2013) - see also comments by Yves Smith on the Naked Capitalism blog. Labels: anechoic effect, Medicare, perverse incentives, regulatory capture, reimbursement, RUC
 Simone, Project Manager, National Physicians Alliance said...

To promote this discussion of RUC reform, the National Physicians Alliance wrote a RUC reform blog entry (http://npalliance.org/blog/2013/07/10/a-call-to-reform-or-replace-medicares-relative-values-scale-update-committee-ruc/) linking to this discussion and the Washington Monthly article.

Let's move our health care delivery and compensation system from valuing inputs to valuing outputs of care!

July 11, 2013 at 9:41:00 AM EDT