PCPs and RBRVS
An essential defense of single-payer healthcare proffered by Michael Moore and Minions is that wait times for primary care physician are longer in the US than in Canada. While this is true (and irrelevant), Cato at Liberty notes a few caveats on why there is such a “market failure” in this country: Essentially, we don’t really have a free market.
A fascinating article [$] in today’s Wall Street Journal reveals that Massachusetts residents wait an average of seven weeks for an appointment with a primary-care physician. The queues apparently have nothing to do with the new Massachusetts health plan — aside from illustrating that a paper guarantee of “health coverage” does not necessarily translate into health care:
What?! You mean universal coverage is not universal coverage? Never! Next you’ll be telling me people in single-payer system have to wait for cancer surgery!
Anyway, he then goes into the reasons we have long primary care waits, something a little too sophisticated for Michael Moore. He talks about licensing - a subtle swipe at the AMA’s government-assisted efforts to stop nurses practitioners from becoming primary care providers. But there’s also this, quoted from the WSJ:
The limited number of endocrine specialists is a not a consequence of limited demand — everyone is aware of the epidemic of diabetes we are facing. There are also shortages of generalists and other specialists, and the reason is the absence of market signals — i.e., market-based prices — for influencing the supply of physicians in various specialties…
The essential problem is this. The pricing of medical care in this country is either directly or indirectly dictated by Medicare; and Medicare uses an administrative formula which calculates “appropriate” prices based upon imperfect estimates and fudge factors. Rather than independently calculate prices, private insurers in this country almost universally use Medicare prices as a framework to negotiate payments, generally setting payments for services as a percentage of the Medicare fee structure.
Many if not most administratively determined prices fail to take into consideration supply and demand. Unlike prices set on the market, errors are not self-correcting. That is why, despite an expanding cohort of patients with diabetes, thyroid disease and other endocrine disorders, the number of people entering this field is actually dropping. Young physicians are accurately reading inappropriate price signals.
What they’re talking about is RBRVS - the Resource-Based Relative Value Scale. This is a scheme concocted at Hah-vuhd University in the 1980’s that Medicare, Medicaid and most HMOs now use. It essentially assigns a value to every medical procedure, supposedly taking into account how much it costs to run a practice, and then reimburses based on the region. The pay scale is then calculated for every doctor individually to the nearest penny. Such efficiency is why Medicare has to siphon off 1-3% of the budget to administer the administration.
RBRVS has been a problem from the second Medicare embraced it and I know a number of doctors who dropped out of the AMA because they went along with nonsense. I can get into specifics—how primary care physicians are impoverished because checkups don’t use many “resources”; while heart surgeons do well because their procedures do. But you don’t need to know that. All you need to know is that the market is being dictated by a small panel of “experts” and has had the same happy effects that price-fixing always has.
People forget what a price is: it’s not really a factor of how much it costs to provide a good or service; it’s a way of communicating to the entire nation the supply and demand for a good or service. If demand goes up, prices go up so that more people are drawn to provide the service. By setting prices based on complex (and incorrect) formulae for how many resources are used, RBRVS takes that information out of the system. The price no longer reflects demand and so physicians are not drawn to specialties that are in high demand - they’re drawn to ones that use lots of resources.
Right now, I’m reading The Wisdom of Crowds, a fascinating economics text that talks about how experts can go badly wrong while large groups can find good answers. This is especially true on extremely complicated problems.
Medical care pricing is a perfect illustration of the Wisdom of Crowds—or more accurately, the Doltishness of Experts. In a true free market, primary care physicians could charge more—or nurse practitioners could serve as less expensive alternatives. Either way, wait times would eventually plunge. But in our government-controlled system, the prices are dictated by 29 “experts” and are badly distorting the market.
RBRVS is just one of many many examples of how Medicare directly interferes with the sound practice of medicine. And if Moore and his ilk get their way, there will be no corrective mechanism, none at all. We’ll all be trapped and still waiting seven weeks for an appointment.
The solution to our healthcare crisis is to get the government less involved, not more.
Comments
I am a physician, and you have summarized this flawed system pretty well. The other thing you need to know is that Medicare’s solution to rising medical costs is to cut reimbursements to physicians and hospitals. Every year we have to fight this battle of price cutting, and it’s all based on a flawed Congressional formula. This next year we are looking at a 9% cut in Medicare reimbursement, which is a function of some “delayed” reductions we were able to avoid over the past few years. Private insurance companies then adopt the reductions into their formulas, so you can see that this next year is going to be really bad for docs, unless we can get Congress to change the formula.
If this continues what will happen is that physicians will refuse to take Medicare and go to a strictly fee for service plan. You are already seeing this, with many internists and general practitioners going over to the so called “boutique” practices. Patients pay an annual fee of around $1200 to $1500 and they are guaranteed same day access and more time spent for each clinic visit. Medicare is the bottom of the reimbursement food chain for physicians, so as the demand for physicians goes up and the reimbursements go down, expect many to give up and simply go to a more economic solution. What would you rather do? See 20 patients a day in the boutique system or 60 patients a day with Medicare for the same amount of reimbursement? It’s happening now and if they continue to cut payments there is going to be a serious access issue for Medicare patients.
What other business do you know of where you operate on 20-30% margins, and can be guaranteed that you will be paid less the next year for providing the same service? And yet, our costs to provide care continue to rise, and we have to deal with intrusive orders such as HIPPA, which increases our cost of providing care.
Now add on the medical-legal aspects, malpractice insurance and the fact that I now have to see 60 patients a day just to keep up with last year, and you can see why physicians are giving up. Opening pet shops, becoming real estate salesman, etc. I can tell you that if my kids want to become physicians I would strongly discourage it.
You can say, oh, but what about helping people, and saving lives, and doing all the good that a medical practice provides for people. This is true, it is a calling, but addressing all the hassles of practice, difficult patients, aggressive legal community, constant battle with insurance company’s over payments, etc. and you now have a professional that questions if it is worth it.
Oh, there is an article in the July 23/30 edition of AMA News about Moore’s film. The title of the article is “SiCKO”: Detractors decry lack of balance, Will film’s single-payer buzz last? Interesting statistic...over 91% of media reviews on web sites that track the film industry were positive. Link: http://www.ama-assn.org/amednews/2007/07/23/gvsa0723.htm
Some other quotes:
Robert Blendon, a professor of health policy and political analysis at the Harvard School of Public Health: “With many Americans cynical about their government, “SiCKO” still won’t create a tidal wave of support for a government-run single payer health system.”
Peter Clarke, PhD, professor of preventive medicine and communication, University of Southern California: “The film won’t change the health reform debate in a lasting way, partly because Moore is stereotyped easily by detractors.”
Post a Comment:
Commenting is not available in this weblog entry.The trackback URL for this entry is:
Trackbacks:
- title
excerptTracked on: blog name (213.6.15.41) at 2007 08 24 08:13:18 - diabetes insipidus
Diabetes mellitus, great post,excellent thanksTracked on: Beat Diabetes (68.9.114.88) at 2007 08 08 23:52:53
RSS (Subscribe)
The ultimate goal of single-payer systems is to endlessly try to figure out why regulating prices leads to creating shortages and rationing services . . . as if it were some unknown and unexpected phenomena.
How many plans of this magnitude really work in the real world? Do the citizens of this country really want politicians running their health care system?