Archive for January 2011

Is it time to declare independence from the RUC?

In a recent opinion column published in Kaiser Health news, two prominent voices in health care policy gave primary care physicians a piece of revolutionary advice: Quit the RUC.

If you don’t know what the RUC is, you aren’t alone.

RUC stands for the Relative Value Scale Update Committee, a group of 29 physicians from various medical specialties that meets three times a year to advise the Centers for Medicare and Medicaid Services on Medicare physician fee reimbursement and how certain procedures should be valued. Created by the American Medical Association in 1991, the committee has no official government standing, yet it yields great power.

CMS approves 90-94 percent of the committee’s suggestions, and because many government and commercial health plans follow Medicare’s lead to set their own fee schedules, its influence bleeds into other markets as well.

So what’s the problem? The committee is overwhelmingly dominated by specialists, outnumbering primary care physicians by a ratio of 6:1 or 13:1 depending on whether you count internal medicine, osteopathy, and pediatrics. As such, Brian Keppler, Ph.D., and David Kibbe, M.D., M.B.A., write that its payment recommendations have “consistently favored specialists at the expense of primary care physicians.” They point out that, on average, specialists out-earn primary care physicians by $135,000 a year and $3.5 million over the course of their careers.

In the $500-billion Medicare program, physician fees make up just one piece of the pie and the RUC cannot be blamed solely for the spiraling costs of health care. However, the authors assert that “the perverse incentives embedded in fee-for-service physician payments influence care decisions and are a principle driver of the health system’s immense excesses.” Further, “the system pays more for invasive approaches, so conservative treatment choices that are lower cost and lower risk to the patient may be passed over, especially near the end of life.”

They recommend that TAFP, along with other primary care medical specialty societies in the country, “loudly and visibly leave, while presenting evidence that the process has been unfair to their physicians and, worse, to American patients and purchasers.”

The AAFP Congress of Delegates has debated the question of leaving the RUC in recent years, and AAFP has been active on several fronts trying to get more primary care representation on the RUC and to get CMS to reconsider its decisions when accepting recommendations from the RUC.

There are also other ideas floating around to curb the RUC’s influence. One comes from physician-politician Jim McDermott, a U.S. representative from Washington. He wrote in an opinion column for the New England Journal of Medicine, “Congress should consider enlarging or realigning the composition of the RUC, if not demoting it to an advisory function and requiring greater transparency of its deliberations.”

Additionally, a provision in the health care reform law creates the Independent Payment Advisory Board that is tasked with capping Medicare spending beginning in 2015. Much of the momentum for creating such an entity was aimed directly at counteracting the inflationary bent of the RUC’s recommendations.

Interesting to point out is recent action from the AMA, American Hospital Association, and other specialty groups to weaken or quash the IPAB.

AAFP supported the concept, though has not been entirely happy with all aspects of the IPAB in the final legislation and continues to push for changes, such as including a primary care representative and a consumer representative to the board, including a public comment period before Congress acts on the IPAB recommendations, and including all segments of the health care industry (i.e., hospitals, nursing homes, pharmaceutical manufacturers, etc.) in the scope of the IPAB review.

Whatever happens, it certainly sounds like the RUC is in for some changes.

Read the Keppler/Kibbe article here:

Read more about the IPAB here:


Bookmark another great member blog – Practice Transformation with Dr. Gerdes

Real Life Practice Transformation,” a blog by TAFP President Melissa Gerdes, M.D., for AAFP’s Family Practice Management journal, gives physicians advice on implementing aspects of the medical home. Gerdes’ practice emerged as a star of the initial TransforMED National Demonstration Project, making her the perfect physician to share her experiences—good and bad—with the larger AAFP community.

The TransforMED model builds on the physician-patient relationship already cultivated in primary care, while adding new technology and approaches to help practices better serve the needs of patients and practices. The basics of the model focus on increasing patients’ access to care and information, becoming more efficient in practice management, enhancing practice-based services, expanding the use of health information technology, providing better care management, improving quality and safety, coordinating care in a more effective way, and supporting practice-based team care.

If it sounds like a lot, it is, and the NDP proved that practices need support from the entire staff and their patients to start implementing some of the recommendations. Reading Gerdes’ posts is a good first step to evaluating what the TransforMED recommendations can do for your practice.

Go to


Blog rec: “Health Scare” online

Part of the mission of the TXFamilyDocs blog is to highlight the work of our members. I’d like to direct you to an insightful blog by TAFP member Richard Young, M.D., titled, “American Health Scare: How you are scared into buying health care you, your employer, and your country can’t afford.” On the blog and website, Young gives a family physician’s non-partisan perspective on the health care reform law and other big issues facing the specialty, challenging readers to consider the “appropriate role” of health care in our society and asserting that “the primary solution to expensive health care is that the relationship between doctors and patients must change.”

Check it out at


Bleak House: Family medicine and the great budget debate, day one

Texas lawmakers got their first chance to comment on the first draft of the House budget for 2012-2013 today, when Appropriations Chair Jim Pitts took questions on the floor. The draft budget is $31.1 billion slimmer than the state’s current budget, coming in at $156.5 billion in all funds. That means general revenue plus federal matching funds.

The capitol press corps was in fine form, tweeting and texting a constant stream of budget-related news, and filing stories at a fevered pace. Check out the Texas Tribune’s coverage for a healthy dose.

Several lawmakers were upset over the proposed closure of four community colleges, and massive cuts to public education got a lot of play as well. Lost amid the critiques and complaints was the proposed fate of a set of programs designed to strengthen primary care.

The House budget would eliminate $26.8 million that support family medicine residency programs through the Texas Higher Education Coordinating Board. A year ago, we published a story in Texas Family Physician about the closure of the Kelsey Seybold Family Medicine Residency Program in Houston that detailed the budgetary difficulty afflicting such programs. These funds, while not a great amount, go directly to the programs, unlike federal GME funding, which the programs must cajole out of their affiliated teaching hospitals. And these funds advocated by TAFP and protected by the coordinating board specifically support the residency training of primary care physicians.

GME formula funding took a hit, too. That money goes to the state’s medical schools, which in turn use it to support their residency programs. Total state spending on GME in 2010-2011 was $118.4 million, but in the draft for 2012-2013, it was cut down to $66.3 million.

Another victim: the Statewide Primary Care Preceptorship Program, which places medical students in primary care clinics so they can experience the joy and excitement of frontline medicine. The draft budget defunded the program.

And then there’s TAFP’s crowning achievement of the 81st Legislature, the Physician Education Loan Repayment Program, which provides up to $160,000 for physicians who serve in health professional shortage areas for four years. The program was zeroed out in the draft budget.

For years now, we’ve been engaged in a debate about improving the quality of care patients receive while controlling the cost of that care through system reforms intended to increase access to primary medical care. These programs are some of our great achievements in pursuit of that goal. In their place, the Legislative Budget Board recommended that the state grant nurse practitioners the authority to diagnose and prescribe without any physician collaboration or supervision.

“Allowing APRNs to diagnose and prescribe up to the limits of their education and certification would allow them to provide lower-cost primary care for patients within their professional scope,” the LBB advised in a report released with the draft budget.

As Chairman Pitts reminded lawmakers on the floor this morning, this budget is only a draft, and there’s a long way to go before this thing’s a done deal, but it’s a stark beginning to what is certain to be a tough session.


It’s a budget session

The biggest and toughest challenge legislators will face in the 82nd Texas Legislature will be balancing the budget. Comptroller Susan Combs announced that general revenue for the 2012-2013 biennium will likely be $72.2 billion, $14.8 billion less than the general revenue budget for the current biennium, and the shortfall in the current biennium would be $4.3 billion. She did not quantify the size shortfall expected in the next biennium, but the state would be about $27 billion short if lawmakers decided to continue current service levels in all programs.

Understanding the budget means looking at the two largest spending areas, articles II and III, otherwise known as education and health and human services, respectively. In his acceptance speech as president pro tempore of the Texas Senate, Sen. Steve Ogden, R-Bryan, told those in attendance to that it is “impossible to balance the budget” without making cuts to Medicaid and education.

At more than 1,000 words, the excerpt of the speech is lengthy, but it’s a must-read if you want to understand the next 140 days of the session.

An excerpt from Sen. Odgen’s speech on the opening day of the 82nd Texas Legislature – Jan. 11, 2011

I’d like to share with you a couple of numbers that haven’t been widely discussed because there’s a blizzard of numbers, a blizzard of opinions, and a blizzard of this and that. The comptroller said that the total state revenue in the next biennium is $177.8 billion. That’s everything—general revenue, federal funds, other funds, the whole thing—$177.8 billion. Two years ago, her revenue estimate was $167.7 billion, $10 billion less than that.

My point is this, that a lot can happen in the next 140 days, and that our job in the Texas Senate is to manage the problem and not let the problem manage us. I know, with $177.8 billion and $9.2 billion in the Rainy Day Fund, we can get the job done. It will not be easy, it will not be painless, but we can do it.

One of the areas we have got to address is Medicaid. How we deal with Medicaid will determine how the rest of the budget goes. In the current biennium, we appropriated $44 billion of all funds to Medicaid, and as a result of the federal stimulus that was enacted two years ago, the federal government reimbursed Texas out of that $44 billion, 70 percent was paid for with federal tax receipts and 30 percent was paid for with our tax receipts. We believe that there will no longer be such a stimulus. We believe that the federal government cannot do it and be fiscally responsible. So we are anticipating a federal match that’s more like 58/42.

The difference between a 60/40 match and a 70/30 match—just to round off the numbers—is $4.5 billion, 10 percent of $44 billion. That $4.5 billion is not coming from the federal government; it has got to be replaced with something. Some of it has to be reform. Medicaid cries out for reform. Every hospital in this state and every procedure in every hospital in this state has a different formula for reimbursement. It makes no sense. It has been estimated by our lieutenant governor and others that if we converted Medicaid to a managed care program, we could save $4 billion.

Over 30 governors and the state of Texas have petitioned the federal government for relief. A system that only sends you 60 percent of the money but ties you up with 100 percent of the regulations will not work. So our first job, senators, is to figure out how to save Medicaid. We have got to reform it and we have got to work together to fill the $4.5-billion hole because we are not going to receive any more federal stimulus money.

If you look at our budget with respect to education and health and human services—article II and article III—81 percent of all the general revenue that we appropriate is appropriated in article II and article III. It is impossible to balance this budget without making cuts in article II and article III.

In article III, which is the entire education budget, we appropriate approximately $50 billion. If you look at the Foundation School Program, we appropriate about $35 billion of that $50 billion. The Foundation School Program has serious structural problems and in order to balance this budget, we’re going to have to fix public school finance. And the biggest problem with public school finance is a term called target revenue. If you go back and you remember what we did in 2006 and 2007, we basically held all of our school districts harmless.

What we said in 2006 was, ‘look, school districts, we know that by cutting school property taxes, some of you guys are not going get as much money as you used to, so we promise you’ll get the same amount of money forever.’ School districts get to pick between how much money they got in 2005 or how much money they got in 2006, and we promised to give them the same amount of money no matter what. Per student. So the money keeps going up because the population is going up. We have got to fix target revenue in order to balance this budget.

Target revenue is a form of ‘hold harmless.’ I asked the LBB [Legislative Budget Board] how much hold harmless is costing us and the Foundation School Program and the answer is $5.5 billion. So there’s where your hole is, $4.5 in Medicaid and $5.5 in the Foundation School Program. We have got to fix that. We can.

The last thing I want to talk to you about with respect to the budget is the state business tax, called the gross margins receipts tax. We enacted that back in 2006 as part of the largest property tax cut in the history of this state. And we did. We cut school property taxes by $14 billion. We were going to pay for that in part with a new business tax, the margins tax. The problem is that the margins tax has underperformed what we predicted ever since we enacted it. In fact, it’s underperformed it by a huge amount. On average, year after year after year starting in 2006, the margins tax has underperformed what we predicted when we enacted all these property tax cuts, by about $2 billion a year.

Part of the deficit that the comptroller was talking about in the current biennium of $4.3 billion, $1.2 billion of that is as a result of the margins tax underperforming what we predicted. Here’s the reality: None of us were elected to go out and raise taxes on anybody, but the margins tax is different because if we don’t fix the margins tax, at least change the trajectory of the margins tax, then school property taxes will go up for sure. So when we’re balancing this budget in the areas of public education, we have got to work on that issue of target revenue and fix it, and we have got to work with our colleagues in the House to fix the margins tax if we want to keep property taxes as low as they currently are.


Watch a video of the speech on YouTube or listen to a recording. The excerpt comes in around minute 10.


The rise of the ACO and lessons learned from the Medicare Physician Group Practice demonstration

As envisioned in the health reform law, the latest evolution of health delivery system reform involves consolidating the fragmented system of health care providers into efficient groups that take responsibility for a population of patients. Called accountable care organizations, this model boils down to three concepts: providing coordinated care by using all members of the health care team, measuring performance against evidence-based benchmarks, and reforming a payment system that currently rewards quantity over quality and reactive medicine over preventive medicine. The hope is that coordination, performance measurement, and payment reform will allow physicians to improve the quality of care for patients and reduce the cost.

Coordinating care to reduce cost isn’t a new concept. Some liken it to health maintenance organizations of the ’80s and ’90s, others to the patient-centered medical home. There is plenty of literature on both, and we won’t delve into them here.

If you’re looking for guidance on ACOs, one of the most useful sources is the five-year CMS pilot project that began in April 2005 and concluded in March 2010. (When lawmakers were crafting the health reform law, they had access to years 1 and 2. Now we also have 3 and 4, and are waiting for 5.)

In the Medicare Physician Group Practice demonstration, CMS contracted with 10 large multispecialty groups with varied organizational structures to see whether care management initiatives could produce cost savings for the system and improve quality. [Spoiler alert: All of the groups improved quality, and about half produced cost savings. More on this below.]

On top of individual physicians’ fee-for-service claims, groups were eligible for an 80 percent share of Medicare’s savings if they collectively achieved quality and cost targets for the patients loosely assigned to their group. There were no penalties for missing the targets. To qualify for these performance payments, groups had to generate savings for Medicare parts A and B of more than 2 percent of their target expenditures. CMS established the spending targets by creating a comparison group of Medicare beneficiaries in the same geographic area and comparing the organization’s per capita expenditures in its base year with those for the comparison group.

As hinted above, results revealed that all 10 entities achieved significant improvements in patient quality of care and patient satisfaction, with half receiving performance payments of $31.7 million in the fourth year of the program. The groups that earned bonuses attributed the savings to changes in their organizational structure, investments in care management programs and health information technology, and continuing education and feedback for providers.

Interestingly, the four groups that earned performance payments by the second year were affiliated with an academic medical center or were unaffiliated physician groups, and the majority of the savings at all sites occurred in outpatient services. The big winner was the Marshfield Clinic in Marshfield, Wis., which received the most over the first four years—a total of more than $40 million.

The five groups that received no performance payments in the second year were part of integrated delivery systems with hospitals or physician networks sponsored by hospitals. Some were able to turn this around in years 3 and 4, most notably the Geisinger Clinic in Danville, Penn., and St. John’s Clinic in Springfield, Mo.

All of this is to say that implementing ACOs probably won’t produce immediate savings, but they will almost certainly improve the patient experience. And because of that, it’s likely this concept will continue to gain in popularity.

That means that both hospitals and physicians must learn how to function in a new system, which will likely require figuring out how they can align their goals and incentives to drive the highest-quality care in the most cost-effective way. It’s about better managing utilization of services, to provide exactly enough care for patients and cut down on waste and duplication. If that is achieved, we’ll be on the right path.

Watch for more on ACOs in the next issue of TEXAS FAMILY PHYSICIAN magazine. AAFP is currently working on a ACO special section of their website,, that should be available soon. We’ll  post it when it is. For now, check out the Joint Principles for Accountable Care Organizations released by AAFP in November 2010.


Welcome to the Texas Family Docs blog

Welcome to the next experiment in TAFP member interaction, the Texas Family Docs blog. In a post-health-reform era of rapid changes to the practice of medicine, your Academy hopes to use this space to delve into the topics most important to the family physicians of Texas.

This means explaining measures of health reform as they are implemented and tweaked, but also providing an insider’s look into Texas health policy, sharing practice management tips for all settings, highlighting tools and resources to improve your practice experience, sharing media links from the most influential medical journals, and more.

This is where you come in. The entire project began because you asked us to bridge these tough topics in a highly active forum. We want this to be a space where members contribute to the discussion. Comment on our posts or ask us how to submit your own. Share the most pressing issues facing your practice, a story from your medical training, or a “best practice” pearl that has helped you along the way. The possibilities are endless.

As the specialty of family medicine moves forward, we hope you’ll join us. Questions? Want to become a contributing author? E-mail

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