How One Small Group Sets Doctors' Pay: The RUC Explained

How One Small Group Sets Doctors' Pay: The RUC Explained

By PAULINE W. CHEN, M.D.

Despite decades of warnings of a primary care crisis and the fact that some 60 million patients are without primary care doctors, the medical profession has continued to produce legions of specialists.

When asked, most of my colleagues will point to the system that determines how medical charges are reimbursed by insurance, and how doctors in different areas of medicine are paid.

Put simply, our payment system pays more for procedures performed by specialists. Specialists, therefore, have greater earning power, so more doctors choose to train to be specialists. Careers in specialties like radiology, dermatology and neurosurgery offer lifetime earnings several million dollars higher than those in primary care. It is no surprise that medical students emerging from the educational mole hole saddled with hundreds of thousands of dollars of debt choose more lucrative fields.

But simply blaming the reimbursement system and accepting the perverse payments as immutable is inadequate. It's like believing that the current situation can only be repaired by the magical intervention of some Wizard of Oz.

Well, maybe it's about time then that all of us, doctors and patients, take a hard look at the man -- actually, the 29 men and women - behind the reimbursement curtain. I'm talking about the Specialty Society Relative Value Scale Update Committee, commonly called the RUC.

RUC (rhymes with "truck") advises the Centers for Medicare and Medicaid Services, or C.M.S., the government agency that is responsible for administering the most important health care payer in the United States. Medicare reimburses doctors according to a set schedule of fees for more than 10,000 physician services, ranging from removing a gallbladder to performing a colonoscopy to evaluating a new patient in the office. This fee schedule is crucial. It determines how taxpayers' Medicare dollars are spent, and it sets the relative worth of one physician service versus another. Moreover, because many private insurers and Medicaid programs model their own payments on Medicare's, its fee schedule ends up largely determining physician incomes.

The fees are roughly based on a formula developed in the mid-1980s to quantify the value of doctors' work. When C.M.S. adopted the formula, it added a few adjustments and agreed to rely on a consensus process for updating the schedule of fees. Specifically, C.M.S. said it would turn to an expert committee organized by the American Medical Association for advice.

That expert committee is the RUC.

Critics have charged that the process has been riddled with conflicts of interest and stacked against primary care. It's not hard to see their point. First, C.M.S. historically has approved 90 percent or more of the recommendations from the RUC. Second, while the RUC makes its recommendations based on an anonymous two-thirds majority vote, about 80 percent of those voting to begin with -- accounting for 23 of the 29 seats -- are physicians representing professional societies. Third, almost all of those physicians are specialists (currently only five RUC members are doctors from primary care fields).

Tom Scully, a former C.M.S. administrator, once described RUC meetings in this way: "Essentially, we sit down with [RUC] every year and say, 'Here's $43 billion and growing, how do you want to [divide it]? What's the relative value of weights between anesthesiologists, gastroenterologists, surgeons?' And set the relative values at what the physician community thinks the relative payment should be."

It's obvious why doctors might care about the RUC's decisions. But why should patients?

One answer is that the dollars at the heart of these discussions -- what is now the over $60 billion allotted for Medicare physician payment -- come from the pockets of taxpaying patients. But it is a group of individuals representing those who stand to benefit the most, not the taxpayers themselves, that holds extraordinary sway in determining how those dollars are spent.

Another answer is that by allowing the continued devaluation of primary care services relative to work performed by specialists, the RUC perpetuates a health care system that not only fails to respond to patient demand but also, bizarrely, actually offers disincentives to attend to patient needs. "Surely there is something absurd," writes the Princeton University economist Uwe Reinhardt, "when a nation pays a primary care physician poorly relative to other specialists and then wrings its hands over a shortage of primary care physicians."

For the last few months, the American Academy of Family Physicians has been waging a battle to increase the number of primary care physician seats on the RUC. The academy has also suggested that to increase transparency and accountability, RUC members should no longer be allowed to cast anonymous votes. And it has proposed that the RUC diversify its membership and for the first time add seats for private insurers, employer health plan purchasers and patients.