It's Time To Screw Granny

The back bone of our nation's health care system is in shambles.  Primary care, or better named, comprehensive care, is being hunted to extinction by the very system that needs it most.   The Medicare National Bank and all its failed policies has destroyed the great value that comprehensive care brings to the table.  The world is full of bumbling uneducated morons who make comments like, "screw the rich doctors", or "they're only in it for the money".  I am here to present to you the economics of the current situation, so you can understand that the backbone is being destroyed. 

Prior to 1992, physicians were paid based on Medicare's customary, prevailing, and reasonable methodology.  But due to rapidly rising costs of health care and concerns that physician payments were rising too quickly, Congress passed the Omnibus Budget Reconciliation Act of 1989 which included an overhaul in physician payment beginning in January 1, 1992.  Specifically, the resource based relative value scale (RBRVS) was instituted.   The RBRVS has three components.  Each component is given a relative value unit (RVU)

1. Physician work component  (work RVU)
2. Practice expense component  (pe RVU)
3. Malpractice component  (mal RVU)

Because it costs more to live in NYC than in KC, a geographical modifier is applied to adjust for these cost of living differences.  Now you add up the RVUs and that is how every single encounter you have is given a relative value (an RVU value).  But how do you assign a dollar value?  Well,  Medicare has an established conversion factor that assigns a dollar value to the RVU.  In 2008, that conversion factor is about $38/RVU.   

Every possible encounter is given a current procedural terminology code (CPT code).  If you have your gallbladder taken out as a laparoscopic cholecystectomy you are given CPT code 47562.  If you have it done as an open procedure you are given CPT code 47600.  If you have a CT of your abdomen without contrast you are given CPT code 74150.  If you have it done with contrast you are given  CPT code 74160.  The American Medical Association (AMA) owns the CPT code terminology and charges doctors about $100 for the book of codes.  If you are a member of the AMA, they will only charge you about $70.  

For surgery, procedures and imaging the CPT code is much easier to quantify.  The encounter is very definable.  A colonoscopy.  A biopsy.  An MRI.  These are things that can be defined.  But how do you define a cognitive encounter.  A visit for a cold.  A visit for multiorgan failure.  How do you define an office visit with your comprehensive care doc or your specialist?  An in-patient consultation or admission evaluation.   Enter the horribly complex, archaic, and unforgiving rules called Evaluation and Management guidelines (E&M guidelines), first in 1995, and again in 1997.  These are the rules that I blog about continuously.  They are the impossible guidelines that payers have been instructed to use when determining whether a doc has over billed a cognitive visit.  These are the rules that constantly accuse doctors of fraud in  billing and threaten to shut down offices and send docs to jail.  These are the codes that comprehensive care docs use as their major source of billing (office visits, hospital visits).

Let's  summarize thus far.  We have every encounter you can imagine assigned a CPT code.  Your encounter is either a procedural CPT (imaging, procedure, surgery) or an E&M code (office visits, hospital visits).  Your CPT encounter has an established relative worth established through the RBRVS system by way of established RVUs and adjusted for geographical location.  And every year each RVU is established a dollar amount by Congress, the conversion factor.  From Jan 1st, 2008 through June 30th 2008, that conversion factor is about $38 per RVU.

So now you ask, who establishes the value of RVU and who establishes the conversion factor?  These are two entirely different issues, but both are responsible for the decimation of comprehensive care physicians.

The value of the RVU is determined by the super secretive AMA/Specialty Society Relative Value Scale Update Committee (RUC).  The committee recommends to the Center For Medicare & Medicaid Services (CMS) changes in RVU value on existing CPT codes and recommends establishment of RVU values on new CPT codes that are always being added.  This committee has 29 members:

Chair

American Medical Association Representative

CPT Editorial Panel 

American Osteopathic Association Representative

Health Care Professionals Advisory Committee Representative

Practice Expense Review Committee Representative

Anesthesiology

Cardiology

Dermatology

Emergency medicine

Family Medicine

Gastroenterology

General Surgery

Geriatric medicine

Internal Medicine

Neurology 

Neurosurgery

Obstetrics/Gynecology

Ophthalmology

Orthopaedic Surgery

Otolaryngology

Pathology

Pediatric Surgery

Pediatrics

Plastic Surgery

Psychiatry

Radiology

Thoracic Surgery

Urology

This is your committee.  Four votes of twenty-nine are given a voice in determining the survivability of the backbone of our national health care foundation:  Primary Care Comprehensive Care.   It is this committee of specialists that determine the value of every possible encounter Joe Public has with any all third party payers that use the RVU system to determine payments.  This super secretive society makes its recommendations behind closed doors without any interest in the public good.  It is composed of back door politics, back scratching and protectionism to the highest degree.  Specialists protecting their own RVU in a game of I'll do this for you if you do this for me.  And the comprehensive care docs,  who make a living predominantly on the cognitive care codes of E&M have no bargaining power at the tables of a procedurally oriented and operated committee. They have just 4 votes in a sea of procedurally oriented specialists.   In 2007, E&M got a boost in payment, however, it was woefully inadequate on the relative value scale.  

The front door to health care in this country has its entire survivability being determined by neurosurgeons, thoracic surgeons, and plastic surgeons, some of the smallest societies by numbers, but each carrying exactly the same weight as primary care.  Imagine it like the Senate without a House of Representatives.  This is your health care.  This is your Medicare.  This is the destruction of comprehensive care.  This is one core of the problem.    When you look at the destruction of comprehensive care, one only needs to wonder if the specialty societies see that as a road to increased compensation and referrals for themselves.   Without prevention comes illness which comes procedures and surgeries.  

Let me sum up what we have so far.  When you have any billable encounter, that encounter is given a CPT code.  The value of that CPT code is determined, first, by its RVU value.  The RVU value is determined by a super secret society of specialty societies that play back room back scratching politics, each protecting the value of their own RVUs in the pool.  The RVU for your encounter is given a hard cash dollar value by the government through a conversion factor.  This year (up to June 30th) that conversion factor was about $38/RVU  

But how is that dollar value determined? Medicare Part B (the  Supplemental Insurance program ) covers physician services, outpatient hospital services, durable goods, physical therapy, and other services.  Unlike the rest of the Medicare system,  this program has been hogtied by the unsustainable sustainable growth rate formula.  Established in 1997 as part of the Balanced Budget Act of 1997, it stated goal is to control the growth in physician expenditures.  It makes no separation between procedural heavy and cognitive heavy physician services.  It is an all or nothing phenomenon.

After calculating expected outlays for physician services, as determined by law in the 1997 Balanced Budget Act, the sustainable growth rate spits out a total value of expenditures for physicians for that year.  This flawed system is responsible for the 10.6% cut starting July 1st 2008.  It will be responsible for another 5% cut every year for the foreseeable future.  Clearly an unsustainable and completely irrational approach to cost control.  The sustainable growth rate is implemented by changing the conversion factor.  In this case, starting July 1st, 2008 the conversion factor, which was about $38/RVU was decreased to a mandated approximate value of $34/RVU.  Interestingly, the initial conversion factor in 1992 was $31/RVU.  Here is a table of the last 15 years of conversion factor adjustments.  

Between 1992 and July 1st 2008, the conversion factor has gone up all of $3/RVU.  A 9.7% rise in value over 16 years.  Just to match the consumer price index (CPI) a $31/RVU in 1992 should be worth $46.64 in 1997.  Instead, in 16 long worthless price control years, it is worth just $34/RVU on July 1st, 2008 and $38/RVU on June 30th, 2008.  Now add to that the 50.8% cumulative rise in physician practice expenses, as calculated by the Physician Medicare Economic Index. 

This is the double whammy that has killed comprehensive care.  Inflation that is far outstripping payment in the setting of business expenses that are far outstripping payment.  Add  educational expenses that are far outstripping inflation and it is no wonder why comprehensive care has become the red headed step child of options for our up and coming doctors.  Medicare has killed its most effective cost control tool,  comprehensive care docs.

This is your government that is killing comprehensive care  with its failed policies.  This is your 100% Medicare for system.   A single payer government run example happening now.   An organization that has categorically decimated comprehensive care by the numbers.  A very organized, systematic betrayal of the backbone of cheap affordable health care intervention and prevention.

Then you sit back and you wonder why you have to wait an hour in the waiting room.  You wonder why nobody will return your phone calls.  You wonder why you get proceduralized at every opportunity.  You wonder why you always seem to see the nurse or PA instead of the doctor at your visit.  You wonder why we do so much.  You wonder why we spend so much and get so little back.  It's not a mystery folks.  It's right here. 

These are your reasons as I outlined above.

Why has cost control failed from a price approach?  The answer is in the volume of services being performed.  More technology.  More procedures.  More CPT codes being given high RVUs by the back scratching back door specialists of the RUC.  The major driver is volume.  People living longer, living sicker.  We are doing more to patients because we can.  Because we have to in the face of decreasing payments.   Increasing volume is the only way to maintain revenue in a declining payment environment.  So we do more to sustain the business model.  It is an undeniable necessity to survive and thrive.

For comprehensive care physicians,  their only option is to increase volume of office visits.  That means shorter visits, use of less educated extenders,  more referrals,  more imaging,  less history and less physical.  The other options include more ancillary office charges such as lab and xray as well as botox, facial peels and mud baths.  It also means not taking phone calls.  It also means two hour waits in the front office. 

For specialists, in the setting of decreasing payment for their procedures, they do more.  More echo.  More cath.  More bronchs.  More colonoscopy.  More cataract surgery.  More total knees.  It also means hiring extenders to do all your E&M cognitive work so you can spend more time in the procedural world where there is still money to be made, lots of it.  On a relative basis,  the RVU for procedural codes are biased heavily in favor of procedures when compared with an equivalent time based  effort for E&M, as established by the super secretive specialty heavy RUC. 

The result of the failed economics of sustainable growth rate is a volume of services spiraling out of control  The vast increases in volume of imaging and procedural codes has created a world of unsustainable payment rates for cognitive medicine known as comprehensive care.  In the current system of Medicare,  all docs are created equal.  The sad truth is less than 15% of medical students are choosing to enter one of the comprehensive care fields at a time when the baby boomers are just now getting sick.  The reasons are entirely financial.  The failure of our nation to value the cost effective relatively cheap services of comprehensive care has lead to the skewed expensive specialization of our system.  A Medicare system that cannot sustain itself with over 30 trillion dollars of unfunded mandates in the next several generations.  

Here is an graphic of the cost of doing business compared with payment adjustments since the SGR went into affect in 1997.  Using the numbers obtained at the bottom of this article here, which gives the yearly rise in physician expenses and the yearly rise in  payment,  I will show you how the current system has decimated primary care. Let's start with a practice 100% Medicare.  With gross revenue in 1997 of $300,000 and an overhead expense of 50%.  That leaves the physician with $150,000 take home in 1997, some generous assumptions indeed:

Year Revenue($) Overhead($) Take Home($)

1998 306,900 153,300 153,600

1999 313,958 156,826 157,132

2000 331,226 160,903 170,323

2001 347,787 164,281 183,506

2002 331,094 168,552 162,542

2003 336,722 173,608 163,114

2004 341,772 178,642 163,130

2005 346,898 184,179 162,719

2006 347,591 189,336 158,255

2007 347,591 193,312 154,279

2008 312,485 196,791 115,694 Estimate

2009 296,861 (-5%) 201,710(+2.5%) 95,151 Estimate

2010 282,108 (-5%) 206,753 (+2.5%) 75,429 Estimate

2011 268,003 (-5%) 211,921 (+2.5%) 56,082 Estimate

2012 254,603 (-5%) 217,219 (+2.5%) 37,394 Estimate

2013 241,873 (-5%) 222,649 (+2.5%) 19,224 Estimate

2014 229,780 (-5%) 228,215 (+2.5%) 1,565 Estimate

Several statistics are worth noting.  

• In a practice expected to be fully supported by Medicare, which for all the single payer, government run fanatics out there is the equivalent scenario,  you see that under the current government mandated payment system a comprehensive care physician making $150,000 a year in 1997 would be making $154, 279 a year, with out increasing the volume of services being performed.  In other words,  without increasing volume, a physician would be making no more now than they did 10 years ago.  When you factor in the cost of living increases by the consumer price index (CPI), that physician would have to make $196,382 a year in 2007, just to maintain their lifestyle of 1997.  It is no wonder why volume rules in a system that uses top line cost control measures.  For comprehensive care physicians, that means double and triple booking clinics and hiring less qualified extenders.  For specialists that means hiring extenders for all their low paying cognitive encounters and spending more time in the procedure lab making the much higher relative profit.  And adding exponential cost to Medicare without an increase in quality.
  
• If the 2008 July 1st cuts are allowed to stand, a comprehensive care physician would earn 23% less now than they did in 1997, on an absolute basis.  Adjusted for inflation,  that is a 59% paycut from 1997.  
• The current SGR mandated by Congress is set to make comprehensive care physician income on par with the average take home pay for all Americans in 4 short years.  That means a college educated nurse will be making more than the average comprehensive care physician.  The unionized laboror with a high school education will be making more than your comprehensive care physician.
• Based on current SGR economics mandated by your Congress, in five short years, your comprehensive care physician will be collecting welfare,  earning the approximate equivalent of minimum wage.

This is not an alarm,  this is a category 5 hurricane that has already swept through our health care system.  Medical students with their $200,000 in debt are speaking with their wallets.  According to the uneducated masses with the mentality that doctors make too much money,  I should be collecting food stamps.  In five short years,  your government mandated health care system is set up to do just that.  

The current cuts will decimate comprehensive care physicians.  The specialists have a huge economic buffer factor.  They get paid much more on a time basis to do procedures.  They have plenty of wiggle room in the volume game.  But eventually they will exit as Medicare as well.  The volume game has been maxed out in comprehensive care physicians.  You can only book so many people in one slot.  The options now are quit, retire, specialize, sell cash only goods and services or exit Medicare entirely.  These are the only viable options.  If you aren't ready to quit or retire,  your only option really is to exit Medicare.  My next blog entry will argue why the Medicare cuts NEED to stand in order to revolutionize the delivery of comprehensive care in this country.  Medicare is decimating that back bone as I showed you above. 

I walked you through the entire system of payment for docs in this country.  And I explained to you how comprehensive care docs are being destroyed.  I walked you through the reality of the economics for a comprehensive care doc and what the near future has in store.  Not decades,  but years.  In five short years,  the current government mandated payment rules have your comprehensive doctor collecting food stamps.  To all the moronic lay folks who claim doctors make to much,  first learn, then speak.  You know nothing of what you speak and it sounds like it.  When you have no doctor to go to,  you will be crying in your own shallow pool of hate.

 For this defining moment in time, our comprehensive care physicians need to royally screw granny  (in order to save her) by exiting the Medicare program.  And they need to do it en mass, for the good of the Medicare generation.  It's time for comprehensive care to take back their profession. It certainly can't get any worse than it is now.  I offered a solution many eons ago, with a fully funded independent government financed (but not run) program in my $125 billion dollar experiment.  Unless the clowns known as Congress are willing to step up to the plate and specifically fund comprehensive care docs independent of all other docs, to save their money saving contribution to the system,  then the only alternative in the current payment system is a unilateral exit by the backbone of the system and let the market decide who gets care and who doesn't. 

Hopefully the AARP won't be too mad.