By Peter Whoriskey and Dan Keating, Published: July 20
When Harinath Sheela was busiest at his gastroenterology clinic, it seemed he could bend the limits of time.
Twelve colonoscopies and four other procedures was a typical day for him, according to Florida records for 2012. If the American Medical Association’s assumptions about procedure times are correct, that much work would take about 26 hours. Sheela’s typical day was nine or 10.
“I have experience,” the Yale-trained, Orlando-based doctor said. “I’m not that slow; I’m not fast. I’m thorough.”
This seemingly miraculous proficiency, which yields good pay for doctors who perform colonoscopies, reveals one of the fundamental flaws in the pricing of U.S. health care, a Washington Post investigation has found.
Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs.
Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors.
But the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent, according to an analysis of doctors’ time, as well as interviews and reviews of medical journals.
If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting. This volume of work does not mean these doctors are doing anything wrong. They are just getting paid at the rates set by the government, under the guidance of the AMA.
In fact, in comparison with some doctors, Sheela’s pace is moderate.
Take, for example, those colonoscopies.
In justifying the value it assigns to a colonoscopy, the AMA estimates that the basic procedure takes 75 minutes of a physician’s time, including work performed before, during and after the scoping.
But in reality, the total time the physician spends with each patient is about half the AMA’s estimate — roughly 30 minutes, according to medical journals, interviews and doctors’ records.
Indeed, the standard appointment slot is half an hour.
To more broadly examine the validity of the AMA valuations, The Post conducted interviews, reviewed academic research and conducted two numerical analyses: one that tracked how the AMA valuations changed over 10 years and another that counted how many procedures physicians were conducting on a typical day.
It turns out that the nation’s system for estimating the value of a doctor’s services, a critical piece of U.S. health-care economics, is fraught with inaccuracies that appear to be inflating the value of many procedures:
●To determine how long a procedure takes, the AMA relies on surveys of doctors conducted by the associations representing specialists and primary care physicians. The doctors who fill out the surveys are informed that the reason for the survey is to set pay. Increasingly, the survey estimates have been found so improbable that the AMA has had to significantly lower them, according to federal documents.
The AMA committee, in conjunction with Medicare, has been seven times as likely to raise estimates of work value than to lower them, according to a Post analysis of federal records for 5,700 procedures. This happened despite productivity and technology advances that should have cut the time required.
●If AMA estimates of time are correct, hundreds of doctors are working improbable hours, according to an analysis of records from surgery centers in Florida and Pennsylvania. In some specialties, more than one in five doctors would have to have been working more than 12 hours on average on a single day — much longer than the 10 hours or so a typical surgery center is open.
Florida records show 78 doctors — gastroenterologists, ophthalmologists, orthopedic surgeons and others — who performed at least 24 hours worth of procedures on an average workday.
Some former Medicare chiefs say the problem arises from giving the AMA and specialty societies too much influence over physician pay. Hospital fees are determined separately.
“What started as an advisory group has taken on a life of its own,” said Tom Scully, who was Medicare chief during the George W. Bush administration and is now a partner in a private equity firm that invests in health care. “The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild.”
He said that, every now and again, former Medicare chiefs — Republicans and Democrats — gather for a lunch and that, when they do, they agree that the process is, at best, unseemly.
“The concept of having the AMA run the process of fixing prices for Medicare was crazy from the beginning,” Scully said. “It was a fundamental mistake.”
In response, the chair of the AMA committee that sets the values, Barbara Levy, a physician, acknowledged that “all of the times are inflated by some factor” — though not by the same amount.
But she defended the accuracy of the values assigned to procedures, saying that the committee is careful to make sure that the relative values of the procedures are accurate — that is, procedures involving more work are assigned larger values than those that involve less. It is up to Congress and private insurers then to assign prices based on those values.
“None of us believe the numbers are fine-tuned,” Levy said. “We do believe we get them right with respect to each other.”
Moreover, the committee has reduced the valuations of more than 400 procedures in recent years to address such concerns, AMA officials said.
Over that time, Medicare officials have increasingly looked askance at the AMA estimates.
But even though the AMA figures shape billions in federal Medicare spending and billions more in spending from private insurers, the government is ill-positioned to judge their accuracy.
For one thing, the government doesn’t appear to have the manpower. The government has about six to eight people reviewing the estimates provided by the AMA, government officials said, but none of them do it full time.
By contrast, hundreds of people from the AMA and specialty societies contribute to the AMA effort. The association “conservatively” has estimated the costs of developing the values at about $7 million in time and expense annually. The AMA and the medical societies, not the government, develop the raw data upon which the analysis is based.
Over the past decade, Medicare’s payments to doctors have risen quickly. Medicare spending on physician fees per patient grew 58 percent between 2001 and 2011, mostly because doctors increased the number of procedures performed but also because the price of those procedures rose, according to MedPAC, an independent federal agency that advises Congress about Medicare.
Yet public oversight of the AMA process is difficult.
Members of the public may attend committee meetings if they get the approval of the chairman, but even when they’re invited, attendees must sign a confidentiality agreement. That is meant to prevent interim decisions from spurring inappropriate market speculation and industry confusion, AMA officials said.
Other groups that make recommendations to the government are governed by the Federal Advisory Committee Act, which requires that meetings be public and that documents be publicly available. But those requirements do not apply to the AMA committee, officials said, because the AMA is not formally considered an advisory committee.
Even so, the committee’s influence on federal spending over time has been expansive: In some years, Medicare officials have accepted the AMA numbers at rates as high as 95 percent.
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The fundamental question is difficult, even philosophically: What should a doctor make?
The forces that normally determine prices — haggling between buyers and sellers — often don’t apply in health care. Prices are hard to come by; insurers do most of the buying; sick patients are unlikely to shop around much.
At its inception, the Medicare system paid doctors what was described as “usual, customary and reasonable” charges. But that vague standard was soon blamed for a rapid escalation in physician fees.
In the late 1980s and early ’90s, the United States called on a group at Harvard University to develop a more deliberate system for paying doctors.
What they came up with, basically, is the current point system. Every procedure is assigned a number of points — called “relative value units” — based on the work involved, the staff and supplies, and a smaller portion for malpractice insurance.
Every year, Congress decides how much to pay for each point — this year, for example, the government initially assigned $34.02 per point, though prices vary somewhat with location and other factors.
This point system is critical in U.S. health-care economics because it doesn’t just rule Medicare payments. Roughly four out of five insurance companies use the point system for the basis of their own physician fees, according to the AMA. The private insurers typically pay somewhat more per point than does Medicare.
Once the system developed by the Harvard researchers was initiated, however, the Medicare system faced a critical problem: As medicine evolved, the point system had to be updated. Who could do that?
The AMA offered to do the work for free.
Today, the 31-member AMA committee that makes the update recommendations to Medicare — it is known as the Relative Value Update Committee, or RUC — consists of 25 members appointed by medical societies and six others. The chair is appointed by the AMA.
To inform its decisions, the committee relies on surveys submitted by the relevant professional societies. For example, in setting the value for a colonoscopy, the committee has turned to the American Gastroenterological Association and a similar group for information.
Typically, the surveys ask doctors about the time and intensity of the procedure under study.
The survey “is important to you and other physicians,” the standard form tells doctors, “because these values determine the rate at which Medicare and other payers reimburse.”
Sometimes the doctors within a specialty will overestimate the value of their work, Levy said. When that happens, the committee has increasingly decided to significantly lower their estimates of the work involved.
“Suppose I am a cardiologist, and I think I am the most important thing on Earth,” Levy said.
The RUC, she said, may have to say, “We know you’re really important but” you’ve overestimated the work involved on the survey.
“The 31 voting people around that table can be really harsh,” Levy said. “Someone can come to us with data that looks skewed, and we tell them, ‘It doesn’t pass the smell test.’ ”
But critics of the AMA process, including former Medicare chiefs and the Harvard researchers who created the system, say that biased surveys and other conflicts of interest make the results unreliable.
In developing the point system, the Harvard researchers and the government made available their raw data and statistical methods and held public meetings; they also limited the role of the AMA and specialist societies, participants in that process said.
The AMA process is not so open.
The current set of values “seems to be distorted,” said William Hsiao, an economist at the Harvard School of Public Health who helped develop the point system. “The AMA fought very hard to take over this updating process. I said this had to be done by an impartial group of people. This is highly political.”
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Federal law makes the importance of time explicit: The work points assigned to a procedure will reflect the “physician time and intensity in furnishing the service” and includes the physician’s time before, during and after a procedure. Every year, the Medicare system publishes its time estimates for every service, which are based on AMA surveys.
“Improving the accuracy of procedure time assumptions used in physician fee schedule ratesetting continues to be a high priority,” agency officials wrote last year. “Procedure time is a critical measure.”
To examine the plausibility of the estimated times, The Post analyzed the records for doctors who work in outpatient surgery clinics in Florida.
The doctors included ophthalmologists, hand surgeons, orthopedic surgeons and gastroenterologists.
http://www.washingtonpost.com/business/economy/how-a-secretive-panel-uses-data-that-distorts-doctors-pay/2013/07/20/ee134e3a-eda8-11e2-9008-61e94a7ea20d_story.html
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