The RUC Is Bad Medicine; It Has to Go

Brian Klepper, PhD


August 12, 2013

In This Article

What's Overvalued, What's Undervalued

Over time, the RUC's overvaluing of specialty services and undervaluing of primary care has had serious real-world impact. Excessive valuations of certain procedures -- cardiac stenting, colonoscopies, back surgeries -- have created lucrative incentives for specialists to overtreat. For example, 2008 international health system comparison data[10] showed that we do revascularization procedures at twice the rate of other developed nations. Other data show a clinically inexplicable 15-fold increase in complex spinal fusions between 2002 and 2007, with adjusted mean hospital charges of $81,000. Paul Fischer, MD, the lead plaintiff in the failed lawsuit against CMS, has argued that "practicing to the codes" has narrowed specialists' care palette, compromising outcomes and medical professionalism.[11]

Lower primary care reimbursements have resulted in shorter visits and a doubling of the specialty referral rate over the past decade. Rushed schedules have also inhibited primary care's ability to moderate inappropriate specialty care. And the growing pay gap between primary care and specialist physicians has driven all but the most idealistic medical students away from primary care into the more lucrative specialties. This has fueled a national primary care labor shortage that will plague the United States for decades.

But the RUC's payment distortions have damaged far more than primary care physicians' work lives. Patients receiving unnecessary services are needlessly exposed to physical risk. Purchasers -- taxpayers, businesses, and individuals -- shoulder relentlessly excessive and rapidly growing healthcare costs.

A 2010 RAND study showed that 79% of the past decade's growth in household income has been siphoned off by healthcare, leaving few resources for other important societal needs, like infrastructure replacement and education. Healthcare has become the most significant threat to our national economic security, and the RUC, while not the only healthcare problem, remains a key driver of unnecessary health cost.

Can We Fix the RUC?

Two questions come to mind:

By what logic should overt financial conflict be a default methodology for any American program?

In a policy environment that has been captured by special interests like the healthcare lobby, is it even possible to fix a national problem like the RUC?

Toward the end of the Senate Finance Committee roundtable discussion, Bruce Vladeck, President Clinton's HCFA Administrator, summed up our dilemma. "I'm hopeful that some combination of the need to address overall deficit reduction strategies more generally and a different kind of political climate in the relatively near future will create the opportunity for people to say, 'We made a mistake. We created a formula that produces irrational and counterintuitive results, and we're just going to abolish it and start all over again. It's the only way we're going to get out of this morass.'"[1]


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