The Secret, Shadowy World Of AMA Price Fixing In The US

How the AMA secretly sets prices for health care in the US.

The Specialty Society Relative Value Scale Update Committee (or RUC, pronounced “ruck”) is a committee of the American Medical Association (AMA) that meets in secret to divvy up roughly $85 billion in U.S. taxpayer money every year. Of course that's just to get started. Because of the way the system is set up, the "values" the RUC comes up with wind up shaping the very structure of the U.S. health care sector, creating the perverse financial incentives that dictate how U.S. doctors behave, and affecting the annual expenditure of nearly one-fifth of the United State's GDP, $2.7 trillion dollars.

Is there anyone who really thinks that this is a good system?

From this article from Washington Monthly

While these doctors always discuss the “value” of each procedure in terms of the amount of time, work, and overhead required of them to perform it, the implication of that “value” is not lost on anyone in the room: they are, essentially, haggling over what their own salaries should be. “No one ever says the word ‘price,’ ” a doctor on the committee told me after the April meeting. “But yeah, everyone knows we’re talking about money.”

That doctor spoke to me on condition of anonymity in part because all the committee members, as well as more than a hundred or so of their advisers and consultants, are required before each meeting to sign what was described to me as a “draconian” nondisclosure agreement. They are not allowed to talk about the specifics of what is discussed, and they are not allowed to remove any of the literature handed out behind those double doors. Neither the minutes nor the surveys they use to arrive at their decisions are ever published, and the meetings, which last about five days each time, are always closed to both the public and the press. After that meeting in April, there was not so much as a single headline, not in any major newspaper, not even on the wonkiest of the TV shows, announcing that it had taken place at all.

In a free market society, there’s a name for this kind of thing—for 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. And in any other industry, it’s illegal—grounds for a federal investigation into antitrust abuse, at the least.

and this about why the AMA want's to control this:

The first boon is that, in order to be on the RUC, specialty societies must become dues-paying members. At a time when the AMA has struggled against being overshadowed by specialty societies, controlling the RUC prevents what might otherwise be a rapid exodus of membership. As one RUC member told me bluntly, “No one cares about AMA. They care about the RUC.” And that’s a lucky break for the AMA. In 2012, dues collection actually increased by 3 percent, topping out at $38.6 million for the year. Cha-ching.

The second boon for the AMA is that by controlling the RUC, it controls much of the source code that our health care system uses to operate. Every single one of those roughly 9,000 medical services and procedures has its own five-digit code, known as current procedural terminology (CPT), and the AMA owns them all. That means that anyone—physicians, labs, hospitals, you name it—who wants to bill Medicare, Medicaid, or a private insurance company has to purchase either AMA books and products, or products from other software companies that pay AMA royalties and licensing fees to use the CPT codes. According to its annual report, in 2012 the AMA made $83.1 million in “royalties and credentialing products,” a large chunk of which comes from licensing CPT. Again: cha-ching.

And that’s just the monetary stuff. The third boon—the real power curve—is the fact that the AMA’s control of the RUC makes it indispensible to everyone and everything in a $2.7 trillion health care industry. That includes specialty societies, primary care organizations, and medical device and pharmaceutical companies—all of whom have something big to gain or lose from the RUC’s decisions.

Snide and snarky comments welcome in moderation if you're in the US. Better ideas from outside of the US even more welcome.

Client Referral Rewards

Legitimate Marketing Or Unacceptable Practice?

Your client tells you they will send lots of friends your way, if only you will give them a discount for their goodwill. Or you decide that because your neighboring practice offers a $200 incentive for every referral, perhaps you should do this too in order to compete. You want to show your appreciation for the new business that might have otherwise incurred advertising costs, so why shouldn't you offer financial acknowledgement of the referral?

Hair salons and massage practices rely heavily on referral rewards programs. So why not Medical Spas or Cosmetic Centers? Well, if you are a physician and you offer consideration of any kind for referrals, you are in direct conflict with AMA Code of Ethics Opinion 6.021. You may also be violating your state Board of Medicine regulations, many of which simply defer to the AMA Code for ethical compliance. The opinion argues that the reward may incent the referring client to alter the information and expectations to others in an untruthful or unrealistic way. 

Early in my practice, prior to the AMA opinion, I succumbed for a short time to clients requesting rewards. The referred clients never seemed to have the same level of motivation to have a procedure as someone who came on their own accord. Now when a client asks me for a discount or a free service because they will send lots of friends, I simply tell them the following:

"A referral is the greatest compliment you could ever give me. And I appreciate the kind mention of your pleasant experience. I promise to always give you and those you send to me my very best work."

Plastic Surgery & Malpractice Lawsuits In The US & Canada

If you're a plastic surgeon in the US and you've been practicing for a while, the odds are good that you've been sued by a patient.

In the US there are about 95 medical liability claims filed for every 100 physicians—or almost one per doctor—and nearly 61% of physicians age 55 and older have been sued, according to a report released by the American Medical Association and based on a survey of 5,825 “non-federal patient care physicians” conducted in 2007 and 2008.  The survey, which included doctors practicing across 42 specialties, found that 42.2% of the respondents had a claim filed against them at some point, with more than 20% of physicians sued at least twice.

The most-sued specialties were obstetricians/gynecologists and general surgeons, with 69.2% of them being sued. (Psychiatrists were the least sued at 22.2%...  probably because they can use the Jedi mind tricks to mitigate their risk by keeping their patients happy.)

The study also found that 47.5% of male physicians had been sued, with 26.3% having been sued twice; and that 23.9% of female doctors had been sued and only 9.4% had been sued twice... andticdotal evidence that female physicians may be able to manage patient interactions better post treatment.

This brings up some of the interesting differences between practicing in the US and other countries. Certainly the US is letigious, perhaps the most country in the world. (If that's not the case, please comment.) I've posted before about how our Members outside the US can end up handling unhappy patients.

Read Learning From Physicians World Wide: Unhappy Patient? If You're In Mexico Just Call The Cops

In Canada under the single payer system, the numbers are dramatically different for a number of reasons, all of them economic. Between 2002 and 2006 the C.M.P.A. reports only 5246 lawsuits were filed against doctors in Canada: only about a 1000 claims per year.

Why?

First, In Canada, court awards are much lower than awards for similar injuries from courts in the United States. Cases that might be successful in the U.S. are simply not economically feasible to pursue in Canada.

Second, In Canada, most doctors are defended by a single organization, the Canadian Medical Protection Association (the C.M.P.A.) with a couple of billion of dollars in the bank that can be used to defend physicians. The C.M.P.A. reports it's success rate in defending claims brought against doctors. More than 3800 of the 5000 claims were dismissed or abandoned because the victim or their family quit or ran out of money, or died before trial.

The result? A couple of online articles on this subject express these stats: more than 5000 lawsuits filed against Canadian doctors, only two percent (2%) resulted in trial verdicts for the plantiff and for the few plantiffs who won at trial, the median damage award was only $95,500. Just try and get a US lawyer to go for that. (If you're a physician in Canada and you can clarify this, please leave a comment.)

There are advantages to being a physician in the US for sure, but there are also risks. The numbers are bigger on both ends.