Insights & Advice


Resuscitating Primary Care

In my last column, I outlined the plight of primary care doctors in the region and the country overall, yet pointing out a problem without offering a solution seems pointless. So how do we incentivize graduating American medical students to opt for entering primary care practice instead of a far more lucrative specialty like radiology, ophthalmology, anesthesiology or dermatology?

“The key is the way the medical community assigns payments for each service a doctor performs,” explained Doctor Andrew Schamess of Lenox Internal Medicine.

Dr. Schamess points to what’s called the relative value unit (RVU). Its roots go back to 1952 when the California Medical Association (CMA) assigned a service code for hundreds of medical services and a unit of value for each. The RVU reflected the fees for different services existing at that time. The CMA’s RVU system ultimately became the U.S. model for reimbursement of doctor’s services, including Medicare and most commercial insurance.

Because patients tended to have insurance for many procedural services provided by surgeons and other specialists at that time, fees for these services were already much higher per time spent then fees for primary care visits, which were rarely covered by insurance. As a result a wide discrepancy between primary care payments and specialty payments was wired into the system from the beginning. For example, a brief follow-up visit in a primary care doctor’s office might have an RVU of 1, while a comprehensive hospital visit might have an RVU of 7. Payments would be based on these RVUs multiplied by a conversion factor (determined by the insurance company).

So let’s say you broke your arm and your insurance company gives that injury a conversion factor of five. You go to your GP’s office for the follow-up visit. Your GP would receive $5 (1RVU X $5) but if instead you decided to go back to the hospital for the same follow-up treatment the attending physician would receive $35 (7 RVU X $5).

Over the years specialist’s fees have continued to gain both from a rise in the conversion factors and from the creation of new services with higher and higher RVU. So why not just change the rules, you say?

Easier said than done, the rule-making body called the Relative Value Scale Update Committee, a body of the American Medical Association,as well as professional specialty societies that Medicare charged with updating the RVU system, is dominated by specialists and has defended the status quo at every turn.

Congress tried to change the game back in 1989 when it enacted Medicare payment reform. The bill included a new resource-based RVU system that focused on input costs of services rather than historical norms, but it failed to make a dent in the imbalances. Another issue with this RVU system is that it bills on procedure or visits rather than on time spent with the patient.

We talked to Doctor Michael D’Agostino, a primary care physician in Pittsfield, who hosts a radio talk show on WBRK radio on Thursdays between 10-11A.M., about this issue.

He uses a patient with frequent headaches as an example and explains it this way:

“Doctor A spends 1 hour with the patient. He bills a level 4 and gets $80-120 before overhead. Doctor B down the street sees a similar patient. He spends 10-15 minutes; bills a level 3 for $60-90 dollars and moves on to the next patient. He doesn’t bother trying to get to the bottom of it; too much work. To cover himself, he simply shoots from the hip: neurologist visit, MRI of the brain and a full battery of blood work. Up goes the cost, but not to him. The patient hasn’t received any assurances and now has to undergo all of the tests/visits. But from a purely economic point of view, he comes out ahead. He sees four people in an hour, whereas Dr. A burned up his entire hour with one patient.

“Who do you think the bean counters see as the more efficient doctor?”

“Changing this system, given the longevity of the present resource-based RVU system will not be easy,” warns Dr. Schamess.

The number of institutions that depend on its continued existence for their well-being and success—medical insurers, hospitals, specialists groups and medical educational organizations—is a formidable opposition.

“But if we did, we could drastically change our health system,” contends Dr. Schamess.

During this year’s healthcare debate, there has been a conspicuous absence of discussion on this issue which I, for one, see as central to our out-of-control health care system costs. Sure it’s complicated, but that’s no excuse to avoid it. If we want to see our primary care physicians survive (or even flourish), health care reimbursement must be rebalanced and in a major way, which means tackling RVU. Yet, if even by some miracle that should occur, we still have too few doctors for too many patients. Recruiting and training a new crop of primary care physicians will take time. In the meantime, another idea would be to open up primary care to nurse practitioners and physician assistants in a big way.

“You are already seeing that,” says Dr. D’Agostino, who believes that trend will continue at an increasing rate.

But whatever we do, we better get started. Without some massive change, I predict in ten years the primary care physician will be a thing of the past.

Posted in Macroeconomics, The Retired Advisor