Why aren’t therapists paid fairly?

One reason why therapists are not paid fairly is because of the actions of a secretive committee of doctors run by the AMA which advises the Centers for Medicare and Medicaid Services (CMS) on reimbursement for medical procedures. The committee’s full name is the Specialty Society Relative Value Scale Update Committee or RUC for short. RUC members vote by secret ballot on reimbursement for over 10,000 procedure codes. CMS accepts most RUC recommendations and most insurance companies follow the guidelines closely. Consequently, the rates for most medical services in the private sector are fixed by RUC.

The role of this secret committee dates back to 1992 when the US government—specifically the CMS— turned over this function to the AMA (which represents a minority of American physicians) which in turn turned it over to the committee it had formed, RUC. RUC has 29 members, 23 of whom are appointed by major national medical societies. There is currently one non-MD on the committee, a Chiropractor.

Medicare fees are based on the Resource-Based Relative Value Scale (RBRVS). The RBRVS formula includes physician work (52%), practice expense (44%), and malpractice expense (4%). The RUC committee reviews medical procedures every year and decides the value of each component. Physician work is valued more highly if it is more complex, requires more training or involves more time. For example, RUC has determined that brain surgery involves 50 times the work units than a routine office exam that a PCP might provide.

A major problem with RUC is that the majority of doctors that make up RUC have conflicts of interest. One is that most RUC members are specialists who provide procedures such as surgery or diagnostic interventions. Specialists value their work more highly than they do the work of clinicians such as PCPs or psychotherapists who provide non-procedural services or cognitive services such as diagnosis based on history and presenting symptoms or psychotherapy. Not surprisingly, RUC has endorsed a reimbursement system that pays specialists much more generously than it does PCPs or other providers of non-specialty services. (A quick look at the super high specialist fees in the US compared to other industrialized countries bears this out). As Dr. Robert Berenson of the Urban Institute in DC, who was a member of the RUC in the early 1990s, said, “RUC’s basic method of relying on a specialty society to give a non-biased appraisal … is fundamentally a flawed concept.” The RUC committee represents “regulatory capture” –political corruption that comes about when a regulatory agency, in this instance CMS–which was created in the public interest– becomes controlled by an interest group–medical specialists– who then fix prices that benefit the insiders, themselves.

Another conflict of interest that RUC members have is that about half of them work full or part-time for drug, biotechnology, device and health insurance companies. Several are executives of health care corporations and large hospital systems. It is reasonable to infer that these physicians, loyal to their employers, value corporate interests more highly than ordinary physicians who do not work for corporations, with the result that patients’ and the public’s health takes a backseat to corporate concerns.

A third conflict of interest is that the AMA has a vested interest in maintaining RUC’s secretive, proprietary and non-transparent methods. RUC meetings are closed to the public and records of the meetings are not published. The product of RUC (the AMA effectively owns the CPT data) earns the AMA about 70 million dollars a year. Were the AMA to open the meetings up to public scrutiny, it is very likely that there would be a debate about the value of healthcare services. RUC might even be scrapped and a fairer system put in its place.

Since 1992, when RUC gained a disproportionately large role controlling what Medicare pays physicians and other clinicians. Specialists who provide procedural services have made out at the expense of PCPS and others who provide mainly cognitive services. Psychotherapists are well aware of the consequences. Between 1990 and 2010, inflation as measured by the CPI increased from $116 to $189 (63% increase), yet the average amount that managed behavioral health care companies (MBHOs) reimbursed for psychotherapy decreased from $81 to $54 (a 33% decrease). Thus, therapists who rely on MBHOs saw their gross income (after inflation and before overhead expenses) fall 59%. Net income, after overhead, has fallen even more.

The hidden hand behind the decline in psychotherapists income has been the RUC committee. RUC misserves the public and it misserves clinicians who provide cognitive services. Fortunately, there is growing recognition that this committee is part of America’s healthcare cost problem–not its solution. A spate of recent articles have shed light on the workings of this committee, including a major story in Politico http://www.politico.com/magazine/story/2014/08/health-care-costs-110184.html#.VAQq_vldXhE. The best outcome would be an end to RUC and the establishment of a public, open, and transparent committee that represents all stakeholders in healthcare, not just the interests of the elite few.