by Jeffrey A. Singer
I am a general surgeon with more than three decades in private
clinical practice. And I am fed up. Since the late 1970s, I have
witnessed remarkable technological revolutions in medicine, from CT
scans to robot-assisted surgery. But I have also watched as
medicine slowly evolved into the domain of technicians,
bookkeepers, and clerks.
Government interventions over the past four decades have yielded
a cascade of perverse incentives, bureaucratic diktats, and
economic pressures that together are forcing doctors to sacrifice
their independent professional medical judgment, and their
integrity. The consequence is clear: Many doctors from my
generation are exiting the field. Others are seeing their private
practices threatened with bankruptcy, or are giving up their
autonomy for the life of a shift-working hospital employee.
Governments and hospital administrators hold all the power, while
doctors—and worse still, patients—hold none.
The Coding Revolution
At first, the decay was subtle. In the 1980s, Medicare imposed
price controls upon physicians who treated anyone over 65. Any
provider wishing to get compensated was required to use
International Statistical Classification of Diseases (ICD) and
Current Procedural Terminology (CPT) codes to describe the service
when submitting a bill. The designers of these systems believed
that standardized classifications would lead to more accurate
adjudication of Medicare claims.
What it actually did was force doctors to wedge their patients
and their services into predetermined, ill-fitting categories. This
approach resembled the command-and-control models used in the
Soviet bloc and the People’s Republic of China, models that were
already failing spectacularly by the end of the 1980s.
Before long, these codes were attached to a fee schedule based
upon the amount of time a medical professional had to devote to
each patient, a concept perilously close to another Marxist relic:
the labor theory of value. Named the Resource-Based Relative Value
System (RBRVS), each procedure code was assigned a specific value,
by a panel of experts, based supposedly upon the amount of time and
labor it required. It didn’t matter if an operation was being
performed by a renowned surgical expert—perhaps the inventor of the
procedure—or by a doctor just out of residency doing the operation
for the first time. They both got paid the same.
Hospitals’ reimbursements for their Medicare-patient treatments
were based on another coding system: the Diagnosis Related Group
(DRG). Each diagnostic code is assigned a specific monetary value,
and the hospital is paid based on one or a combination of
diagnostic codes used to describe the reason for a patient’s
hospitalization. If, say, the diagnosis is pneumonia, then the
hospital is given a flat amount for that diagnosis, regardless of
the amount of equipment, staffing, and days used to treat a
particular patient.
As a result, the hospital is incentivized to attach as many
adjunct diagnostic codes as possible to try to increase the
Medicare payday. It is common for hospital coders to contact the
attending physicians and try to coax them into adding a few more
diagnoses into the hospital record.
Medicare has used these two price-setting systems (RBRVS for
doctors, DRG for hospitals) to maintain its price control system
for more than 20 years. Doctors and their advocacy associations
cooperated, trading their professional latitude for the lure of
maintaining monopoly control of the ICD and CPT codes that
determine their payday. The goal of setting their own prices has
proved elusive, though—every year the industry’s biggest trade
group, the American Medical Association, squabbles with various
medical specialty associations and the Centers for Medicare and
Medicaid Services (CMS) over fees.
As goes Medicare, so goes the private insurance industry.
Insurers, starting in the late 1980s, began the practice of using
the Medicare fee schedule to serve as the basis for negotiation of
compensation with the doctors and hospitals on their preferred
provider lists.
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