Now Politico Tries RUC Raking

It has been a year since we wrote about the RUC, the American Medical Association's Relative Value System Update Committee.  There is only one thing new since then.  Politico just made another attempt to shed some light on this obscure committee and its outsize effect on health care. 

To summarize the events so far, all I need to do is cut and paste from our last post on the topic, from July, 2013...

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, and congressional hearings in 2013.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)


Politico's Turn


Now an article by Katie Jennings in Politico brings up some of the issues about the RUC that we have dealt with again and again. These included six of seven major points discussed in the Washington Monthly article, and that have been discussed multiple times on Health Care Renewal.  I will list the seven points, with supporting quotes for the first six from the Politico article.  (Our post in 2013 on the Washington Monthly article had supporting quotes for the last point.) 


The RUC is Well Hidden

 And yet even many doctors are not aware of the hidden hand of the AMA-run committee in perpetuating this costly crisis. The panel, with very little transparency or public discussion, continues....

Also

RUC meetings were closed, invitations had to be approved by the AMA, the charter had not been made public and there were no minutes or public documentation of what was said at the meetings. (Last year, under pressure, the RUC announced it would post meeting minutes on the AMA website.)

The RUC Fixes Prices

a secretive committee run by the American Medical Association (AMA) ..., with the assent of the government, has enormous power to determine Medicare prices by assessing the relative value of the services that physicians perform.

The Government Enables the RUC to Fix Prices

the role of the AMA’s secret committee [dates] back to 1992, when the U.S. government sought to overhaul the entire Medicare fee system and decided it didn’t have the right personnel to conduct extensive surveys of physicians. So the federal agency tasked with overseeing the program, the Centers for Medicare and Medicaid Services, enlisted the AMA and the committee it had formed to determine what’s known as the relative value of physician work, meaning the amount of time, effort and skill that goes into performing a procedure. Each procedure had a corresponding code in the AMA’s Current Procedural Terminology coding system, which the government had already adopted nearly a decade before, in 1983, as the standard for physician billing and reimbursement for Medicare.

Also,

Above all, the RUC appeared to be dictating solutions to the government. Since 1992, the RUC has submitted more than 7,000 recommendations to the Centers for Medicare and Medicaid Services. The agency has accepted 87.4 percent of the recommendations, according to a study published in Health Affairs.

The Government Fixed Prices are Endorsed by the Private Sector

Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect,...

The Price Fixing Drives Up Costs and the Use of Services

For decades the committee has ... [set prices] done so in a way that has skewed Medicare fees in favor of expensive specialists over ordinary general practitioners like Fischer, who are the nation’s first line of defense against serious illness. Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect, contributing to a situation where primary care doctors are in general underpaid, underappreciated — and in critically short supply as medical students flock to where the money and opportunity are.

These Incentives Cripple Primary Care

And because the 31-member committee was – and still is — made up of a majority of specialists who typically sought to maximize their own share of the pie (26 of the 31 are appointed by the major national medical associations), it was no surprise who the losers turned out to be. 'The specialists know what the game is,' said Dr. Robert Berenson of the Urban Institute in DC, who was a member of the RUC in the early 1990s. 'The [RUC’s] basic method of relying on a specialty society to give a non-biased appraisal … is fundamentally a flawed concept.' Dr. Grant Rodkey, the first chair of the committee that came to be known as the RUC, described the scene of the inaugural meeting as 'reminiscent of a group of dogs on leash eyeing a platter with a not-too-generous bone,' in a 1997 interview in the Bulletin of the American College of Surgeons.

These Incentives Benefit Big Corporations, not just Medical Specialists


This was the only issue not directly addressed in the 2014 Politico article.  (But see our 2013 post.)


What to Do and What Will Happen?


The Politico article concluded on an optimistic note, suggesting that increased transparency about what Medicare pays physicians might help.

One key moment came in a court ruling this year: For 35 years until last April, all the Medicare billing practices of physicians had been kept private by a court injunction granted to the AMA. But after an appeals court ruled that such information must be made public, the 2012 billing data was released, showing that the top 1 percent of doctors, mostly specialists, accounted for an outsized portion —14 percent — of Medicare billing.

Or perhaps Congress might ride to the rescue,

Today ironically, the renegade primary care doctors see hope on Capitol Hill—and in the Obamacare law that so many on Capitol Hill have demonized. In April, seeking to avoid impending cuts to physician Medicare reimbursements, Congress passed the “Protecting Access to Medicare Act.” The new law expands on a provision already included in the Affordable Care Act that gives the secretary of Health and Human Services greater authority to identify and correct misvalued Current Procedural Terminology codes. Spurred by Congressman McDermott — who told me in an email that he still wants “major changes that make the RUC’s process more transparent” — Congress also commissioned a report from the Comptroller General to study the process by which the RUC provides recommendations to the government on Medicare fees.

And there is even one - one out of very many - health care insurance companies that might finally deviate from the Medicare fee schedule as influenced by the RUC,

Even some medical insurers, like CareFirst in the Washington, D.C. region, have begun to rebel against the old system and to push the savings that might come from paying primary care physicians more. As long as I can remember, family physicians and general internists have been financially at the low end of the totem pole,' even though they’re the ones who perform the critical if unglamorous work of preventing serious illnesses, former CareFirst Chairman Michael Merson told The Washington Post recently.

But there have been only tiny changes in the RUC since the Washington Monthly article last year, and actually since we first wrote about the RUC in 2007.

The AMA, of course, fails to see anything wrong with the RUC.  On the AMA Wire blog appeared an  anonymous but apparently official post that sought to refute most of the the points made in the Politico article.

Well Hidden

The title of the blog post included the phrase "and it's no secret," but as far as I can tell, the AMA post never directly addressed the secrecy issue, especially involving the secrecy of RUC proceedings, whose location on the AMA website is not obvious to me.  I must admit that the list of members of the RUC is no longer secret, but can be found here (with a log-in, but no subscription required, and minus any biographical information, or conflict of interest disclosures).

Price Fixing

The AMA blog post stated

the RUC does not control the Medicare payment system, nor does it set rates for medical services

That is true as far as it goes, but totally ignores how the RUC's determination of the relative values indirectly sets payment rates.

Government's Uncritical Acceptance of the RUC's Recommendations

The AMA blog post included,

The RUC's recommendations are thoroughly reviewed by government officials who have the final say.

That failed to acknowledge how rarely the government officials have altered the RUC's findings in the past.

Effects on Primary Care

The AMA blog post stated

The RUC values all physicians’ cognitive work and role tackling the growing number of Americans with long-term health problems that need continuous care. The committee’s work reflects the continued importance of services that all doctors—including primary care physicians—perform.

Again, this ignores the small representation of primary care physicians, and of physicians who perform only cognitive, as opposed to procedural services on the RUC, and the data, starting with the Annals of Internal Medicine article from 2007, that suggests the RUC's updates favor procedural services.

Presumably as long as the leadership of the AMA sees no problems with the RUC, not much is likely to change.    

Summary

So since 1992, the RUC has had an outsize role controlling what Medicare pays physicians, and hence physicians' pay in general.  Over this time, the playing field has become increasingly tilted in favor of procedural services and away from cognitive services, especially primary care.  The result is that the US has the most expensive health care system in the world, but hardly the best health care or health care results in the world. 

Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.

Since we started writing about the RUC in 2007,  there have been some small changes in the RUC.  It has slightly more primary care representation, and its membership is no longer secret.  That is, however, about it.

As I wrote last time, hopefully the Politico article, added to all the other attempts to shine light on the RUC, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.


ADDENDUM (28 August, 2014) - This post was re-posted on the Naked Capitalism blog, and on the NBCH Newsletter blog. 

APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

"Emotion, not Information" - the Lucrative Deceptive Marketing of Hospice, and its Potentially Fatal Consequences

One of the real recent advances in health care, in my humble opinion, was the organization of compassionate, palliative care for people at the end of life.  During my training and early career I saw too many patients with terminal illness getting aggressive, sometimes very painful treatments which at best only offered hope of briefly prolonging their lives.  Some patients chose such treatments with full knowledge of the implications, at times with the hope that they might survive until some significant event, for example, the birth of a grandchild.  Many patients, however, seemed to be suffering with no purpose.

The hospice and palliative care movement, however, offered true comfort to those with little hope of prolonged survival.  Good hospice care eased the final days of patients with advanced disease for whom no definitive treatments could be found.

Hospice seemed like a great alternative for such patients, but its reasonable use depended on physicians' abilities to identify patients who really were at the end of life, and for whom aggressive treatment would be futile.  The Achilles Heel of the hospice movement remained health care professionals' inability to reliably identify such patients.  The big problem is that putting a patient who actually potentially could survive for a long time in hospice will doom that patient were he or she to develop an acute illness for which treatment is available, like a bacterial pneumonia that might respond to antibiotics, because in hospice antibiotics are not given for acute infections.

So the development of hospice had a downside which could be fatal for some patients.  I think most physicians hoped, however, that we could minimize the number of such patients by trying hard to make accurate predictions, and that in the future, better technology would lead to better predictions.

The Rise of Corporate Hospices

Back in the 1980s, however, I did not anticipate that hospices might become parts of for-profit corporations, and that such corporations might be able to make more money by admitting more patients, even patients who really were not at the end of life.   Starting in 2011, however, we started to find cases in which that appeared to be what was going on (look here, then here, here, and here).

In 2013, more cases appeared, listed in chronologic order -

Hospice of Arizona LC and American Hospice Management LLC - Per a news release from the Department of Justice, these entities settled litigation that alleged, among other things, that they "submitted or caused the submission of false Medicare claims between Sept. 1, 2002, and Dec. 31, 2010, for Hospice of Arizona patients who did not need end of life care...."

 Hospice Care of Kansas, and parent company Voyager HospiceCare - Per a Topeka (Kansas) Capital-Journal article, these entities settled to resolve allegations that they "submitted inappropriate claims between January 2004 and December 2008 for patients without a terminal prognosis of six months or less."

Hernando-Pasco Hospice - Per the Tampa Bay Times, " Hernando-Pasco Hospice has agreed to pay $1 million to settle allegations that it billed the Medicare and Medicaid programs for patients who did not need end-of-life care, the U.S. Attorney's Office for the Middle District of Florida announced Monday.  The not-for-profit Hernando-Pasco Hospice, which goes by HPH Hospice, is accused of admitting ineligible patients in order to meet targets imposed by its management team, federal authorities said in a statement."

These were all small settlements, that is, less than $15 million, reported in relatively small media outlets.

This week the issue was in the media spotlight courtesy the Washington Post, in an article which provided yet more data and vivid examples suggesting that for-profit hospices were putting money ahead of vulnerable patients' well-being.   


The Post added to the background we provided above,

Medicare began paying for hospice care in 1983, following a resurgence of interest in end-of-life care, sparked in part by the publication of 'On Death and Dying' by Elisabeth Kubler-Ross.

'We can give families more help with home care and visiting nurses, giving the families and the patients the spiritual, emotional, and financial help in order to facilitate the final care at home,' Kubler-Ross testified to the Senate Special Committee on Aging in 1972.

After this well-intentioned beginning, there was a rapid increase in the use of hospice, and hence its costs,

The benefit was quickly embraced by Americans and continues to grow, with Medicare paying for hospice care for more than 1.2 million people annually. In 2000, Medicare spent $2.9 billion on the hospice benefit. By 2012, that figure has risen fivefold, to $15.1 billion.

But as more Americans have taken up hospice care, a profound change has been underway: Big businesses have moved in.

In parallel, the nature of hospices changed, going from being predominantly local non-profit organizations to predominantly corporate,

When Medicare paid its first hospice benefit, the vast majority of hospice-care providers were nonprofit groups. Over the past decade, however, the for-profits have come to dominate the industry.

In 2000, 70 percent of hospices were run by nonprofit organizations or government agencies. Today, nearly 60 percent are for-profit companies, and they may account for an even larger share of patients.

They really were for-profit,

The profit margins as measured by MedPAC, the Medicare watchdog, climbed to 8.7 percent in 2011.

The per-patient operating profit has risen from $353 in 2002 to $1,975 in 2012, according to the analysis of California data.

Big money lured aggressive players, in particular, private equity,

 The returns have attracted some prominent financial firms, whose analysts have run the numbers and decided to invest. Among the private investment companies that have put down bets on hospices in recent years are Kohlberg Kravis Roberts & Co., KRG Capital Partners and Summit Partners.

As we have discussed elsewhere, the private equity model involves not long term management, but trying to make big money in the short term, either by directly extracting it from the companies taken over, of by rapidly selling them, if necessary, piece by piece. 


Financial Incentives to Enroll the Wrong Patients

Keep in mind that the revenue fueling the uber capitalists involved in for-profit hospices came predominantly from the US government, and depended on the rules set by the government to pay for hospice,

The vast majority of those profits flow from the U.S. government and Medicare, which makes an estimated 85 to 90 percent of all payments to hospices.

The payments provide more profit from patients with the longest stay in hospice,

The reason that longer stays are more profitable is that hospice companies typically spend more on patients at the beginning of their care and then again at the end of their lives.

When a patient is first enrolled, the hospice often must diagnose the patient’s illness, set up home equipment and get them stabilized. Then, during the last week of life, a hospice typically must pay for more frequent home visits by the nurse, aides and others.

As a result, patients who live a longer time — and for whom there is a long, stable period in the middle — generate more profits.

There is evidence that for-profit hospice management has reacted to these incentives to enroll patients who would live a long time, despite the fact noted above that hospice was intended for patients who were at the end of life, and were obviously thus expected not to live for a long time,

Indeed, it has been an open secret in the industry that, because of the method of payment, the way to run a hospice profitably is to enroll patients who stay for a long time.

The annual report in 2004 for one large hospice provider, VistaCare, noted that its fortunes depended on its ability to manage costs and 'maintain a patient base with a sufficiently long length of stay.'

The company also warned that 'cost pressures resulting from shorter patient lengths of stay . . . could negatively impact our profitability.'

'It is common knowledge in the industry that a longer length of stay is going to be more lucrative,' said Rachel Mason, who worked in marketing at Delta Hospice in California, where one of the company’s branches had one of the highest discharge rates of living patients in the state last year — 63 percent. 'If they come in very sick and die right away, it’s difficult to run a business that way.'

So, in the aggregate, stays have gone up, costs have increased, partially because there are more hospice ''urvivors," that is, patients who actually were admitted to hospice not at the end of life, survived much more than the six months which was supposed to have been their expected lifespan, and thus ended up graduating from hospice, a service meant originally for the terminally ill,

over the past decade, the number of 'hospice survivors' in the United States has risen dramatically, in part because hospice companies earn more by recruiting patients who aren’t actually dying, a Washington Post investigation has found. Healthier patients are more profitable because they require fewer visits and stay enrolled longer.

The proportion of patients who were discharged alive from hospice care rose about 50 percent between 2002 and 2012, according to a Post analysis of more than 1 million hospice patients’ records over 11 years in California, a state that makes public detailed descriptions and that, by virtue of its size, offers a portrait of the industry.

The average length of a stay in hospice care also jumped substantially over that time, in California and nationally, according to the analysis. Profit per patient quintupled, to $1,975, California records show.

Yet, while Medicare administrators have been warned about these perverse incentives, they have done nothing to fix them,

For five years, Medicare’s watchdog group has been recommending that the payments to hospice companies be revised to eliminate the financial incentive for improper care, but Medicare has not yet done so. To ensure that patients are appropriately selected for hospice care, Medicare relies on strict medical documentation requirements, a spokesman said. 

Perhaps Medicare administrators are listening harder to for-profit hospice executives than to their own advisory committee,

 The hospice industry is opposed to fundamental changes to the payment system. Jonathan Keyserling, senior vice president of health policy at the National Hospice and Palliative Care Organization, an industry group, said that the current payment system is sound and that tampering with it could have unintended consequences. 

Furthermore,

because of the large sums of money at stake, MedPAC in June added a sense of urgency to its recommendation.

'Given the magnitude of hospice spending devoted to long-stay patients, who are more profitable under the current payment system than other patients, it is important that an initial step toward payment reform be taken as soon as possible,' MedPAC wrote.

Yet Medicare administrators still seemed to feel no sense of urgency, and are not eager to address the specifics of the MedPac recommendations,

A spokesman for Medicare said the agency is considering hospice payment reform but that no such changes will happen in fiscal 2014.

'While the Medicare hospice benefit provides a choice for beneficiaries to seek the care that best meets their care needs and desires, Medicare has and will continue to take actions to safeguard this benefit from inappropriate use,' said Jonathan Blum, principal deputy administrator of the Centers for Medicare and Medicaid Services, said in a statement.

So to recap so far, the hospice movement devolved from one involving non-profit organizations providing care to the terminally ill to ever larger corporations providing care to the less ill, paid largely by the US government under rules from a simpler era.  However, since hospice provides only palliative care, this transition meant that some patients who were not terminally ill may have died from illness that would have been treated in an environment other than hospice.

Vivid Anecdotes of the Deceptive Marketing of Hospice

The Washington Post article summarized allegations from multiple legal actions that provided a disturbing tapestry of deceptive marketing deployed to recruit patients unsuitable to hospice care,

While the lawsuits against the for-profit hospices vary in the details, as a whole they depict an industry in which companies compete for new patients and provide services to patients who are not eligible for them.

Hospice 'outreach specialists' and 'community education representatives' seek out patients in a variety of ways: They solicit doctors and hospitals who might regularly deal with the terminally ill; they make connections at nursing homes, assisted-living developments and Meals on Wheels groups. They show up at the 'health fairs' held at senior centers with, for example, machines that test blood pressure. For families struggling to take care of a loved one, they offer the promise of extra help.

At AseraCare, officials gave advice to their recruiters on how to close a deal with families who are 'not ready yet' for hospice, according to a company presentation for Alabama employees. It instructed recruiters to 'focus families' by stressing the urgency of a decision, and saying things like, 'We only have 10 minutes left.'

'Effective communication is the transfer of emotion, not information,' the presentation said.

At Odyssey Healthcare, one of the nation’s largest hospice companies, representatives earned bonuses if they met their goals for new patients, according to that complaint. The case led to a $25 million settlement with the company.

At Vitas, a division of Chemed, a company that also owns the Roto-Rooter plumbing service, the corporate culture encouraged staff members to admit as many patients as possible, regardless of whether they were eligible for hospice care, according to the lawsuit. The lawsuit said the company paid bonuses based on the number of patients enrolled. One former manager said that the company philosophy was 'sign everybody up' and that medical staffers felt pressured to admit patients regardless of whether they were appropriate.

And at Angels of Hope hospice in LaGrange, Ga., audio recordings cited in the complaint described how some salespeople found patients: by cruising neighborhoods, looking for elderly people with disabilities.

The article coned down on specific litigation about AnseraCare,

One of the primary lawsuits against AseraCare was initiated by Dawn Richardson, a clinical manager at the company, and Marsha Brown, the former executive director at the company’s Monroeville, Mobile and Foley, Ala., outlets.

There was steady pressure for AseraCare managers to find more patients, the lawsuit said.

An executive who did not meet a quota was penalized, according to the lawsuit, and the company offered a massage chair for the person who brought in the most hospice patients.

'In order to make our admission goal for the month, we are down to the wire, and need today to be a huge admit day for every region,' a regional vice president wrote in an e-mail, according to the lawsuit. 'Mobilize your teams, get them into the game this morning . . . when we call on them, they always respond with referrals and a push to convert those referrals into admits ASAP.'

'We had a director who would be like, ‘Get a patient, get a patient, get a patient,’ ' Michael Bonham, a Lutheran minister who worked as a chaplain at the company in Alabama, said in an interview. He is not a party to any of the lawsuits.

These demands for patients were sometimes met with people who were sickly but not dying, according to the federal lawsuit, which outlines five examples.

One patient was supposed to have had end-stage heart disease and thus would have had trouble breathing and walking, according to the lawsuit.

He left the nursing home for his granddaughter’s graduation and for Christmas, had a good time and ate a lot, according to notes from hospice workers cited in the lawsuit.

Another, diagnosed with end-stage 'debility,' was not losing weight as is typically the case, according to the legal filing, and instead went out for a trip to Wendy’s and another to go birdwatching.

Hospice firms' public relations departments provided the usual high minded statements that did not address specific allegations about the marketing of hospice, for example,

'AseraCare provides an important and valuable service to patients and their families facing difficult end-of-life decisions,' the company said in a statement. 'Our policies and programs comply with the Congressional intent of the hospice benefit to reduce the stress and anxiety of the end of life of a loved one,' the company said.

'Doctors for each patient in question determined that the patient needed hospice care, and expressed their clinical judgment by signing the required physician certifications. Other independent and well-qualified physicians reviewed the charts of these ­patients, and overwhelmingly agreed with the original conclusions that these patients were entitled to receive the hospice benefit.'

The company declined to identify the doctors who certified the patients in Alabama.

That seems about as relevant as the mission and values statements of Golden Living, AseraCare's parent corporation,

Our Mission

To share our passion for improving quality of life through innovative healthcare — one person, one family and one community at a time.

Our Values

Make integrity and accountability your pledge.
Share our passion for excellence.
Be uncompromising in delivering quality care.

Summary

Yet somehow our society must make it right and possible for old people not to fear the young or be deserted by them, for the test of a civilization is in the way that it cares for its helpless members. 

Pearl S Buck, My Several Worlds, 1954, p 377 (see Wikiquote)

I also was once taught that the true test of a doctor is his or her care of the sickest and most vulnerable patients.  By this token,  how the hospice movement in the US evolved into corporate health care delivery which generates tremendous revenues from the most vulnerable patients, and in some cases may condemn ill but not terminal patients to death from treatable disease marks how badly US health care has failed.

The story combines many of the themes we have sounded before -

Perverse Incentives - a reimbursement scheme that made sense when hospices were local community non-profit organizations now provides incentives for commercial hospices to enroll patients who are not terminally ill, putting them at risk of inadequate care should they develop a new serious but treatable problem.

Money Before Mission - For-profit hospices which market themselves as equivalent to their community non-profit forerunners, are run, as is suggested above, to maximize revenue no matter the effect on mission. Presumably this is justified by the fallacy of maximizing shareholder value, which really means maximizing apparent short-term revenue in order to maximize executive compensation, no matter what the collateral damage.

Impunity - Although hospice enrollment of unsuitable patients not only may defraud the government, but may put such patients at risk of their lives, the only regulatory or law enforcement actions against big corporate hospices so far involve corporate fines that are small in comparison with revenues, but not penalties imposed on any individuals who authorized, directed or implemented such patient enrollment, even when patients wrongly enrolled have died from lack of treatment of potentially treatable problems.

Corporatism - Government agencies which could seriously challenge corporate hospices' actions have been curiously inert, perhaps because agency leaders feel more sympathetic to their fellow managers within corporate hospices than to the citizens whose interests they are supposed to protect.

Because of their potentially severe adverse effects on our most vulnerable patients, reform of hospices should be at the forefront of true health care reform.  At the least, we need vastly tougher regulation of corporate hospices, removal of perverse incentives for them from the government payment system, and vigorous law enforcement when their leaders induce them to misbehave.  Leaders of corporate hospices need to be held accountable for their actions, and must be pushed towards putting their patients' health ahead of all other considerations, including the leaders' personal enrichment.

Furthermore, the story of corporate hospices shows that while turning direct health care over to poorly regulated for-profit corporations may have been increased efficiency, been "disruptive" and lead to innovations, the efficiency, disruption and innovation have mainly lined the pockets of corporate insiders, and not improved patients' or the public's health.  We ought to give strong consideration to banning corporate hospices, and banning all forms of the corporate practice of medicine and corporate health care "delivery."

Given how many insiders make so much money from the current version of laissez faire capitalism in health care, however, I would expect strong resistance should such apparently "radical," but actually conservative proposals actually get any mainstream attention.    

Another Attempt to Show the RUC Behind the Curtain

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject,.efforts by humble bloggers such as yours truly, a major journalistic expose, and recent congressional hearings.  The lack of discussion of this issue seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

The Washington Monthly Pulls Back the Curtain

Now another attempt to pull back the curtain that hides the RUC was just made by the Washington Monthly.  A long, detailed, well-written article by Haley Sweetland Edwards went through the major points, and included some new discoveries.  She asserted:

The RUC is Well Hidden

[The RUC is] probably one of the most powerful committees in America that you’ve never heard of.

The RUC Fixes Prices

when a roomful of professionals from the same trade meet behind closed doors to agree on how much their services should be worth. It’s called price-fixing. 

The Government Enables the RUC to Fix Prices

 this kind of 'price-fixing' is not only perfectly legal, it’s sanctioned by the U.S. government. At the end of each of these meetings, RUC members vote anonymously on a list of 'recommended values,' which are then sent to the Centers for Medicare and Medicaid Services (CMS), the federal agency that runs those programs. For the last twenty-two years, the CMS has accepted about 90 percent of the RUC’s recommended values—essentially transferring the committee’s decisions directly into law.

The Government Fixed Prices are Endorsed by the Private Sector

 private insurance companies also use Medicare’s fee schedule as a baseline for negotiating prices with hospitals and other providers. 

The Price Fixing Drives Up Costs and the Use of Services

 So if the RUC inflates the base price Medicare pays for a specific procedure, that inflationary effect ripples up through the health care industry as a whole.

These Incentives Cripple Primary Care

 These manipulated prices are also a major reason why specialists are in oversupply in many parts of the country, while a worsening shortage of primary care providers threatens the whole health care delivery system. 

These Incentives Benefit Big Corporations, not just Medical Specialists

 the incentives are perfectly aligned: ordering that extra test means more money for a doctor’s practice or hospital, more money for the labs, and often more money for the device makers and drug companies, too. (Oh, and, by the way, the device makers and drug companies are, not incidentally, major funders of the medical specialty societies whose members vote on the RUC.)

[Art by Monte Wolverton for the Washington Monthly article]

What to Do and What Will Happen?

We previously wrote,

 Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.

Ms Edwards ended her article with two specific suggestions:

take the process away from the control of the AMA and put it in the hands of a well-resourced group of experts under the auspices of the federal government. This might take the form of a panel of doctors employed by the government, or of an advisory committee of representatives of different medical societies but with greater representation of primary care doctors.

Or

 get Medicare out of the business of funding fee-for-service medicine. 

I can only hope that the latest Washington Monthly article, which was accompanied by an editorial and a short first-hand account of how difficult is the lot of the modern primary care physician, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.

APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

ADDENDUM (15 July, 2013) - see also comments by Dr Howard Brody on the Hooked: Ethics, Medicine and Pharma blog.  

ADDENDUM (18 July, 2013) - see also comments by Yves Smith on the Naked Capitalism blog.

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)