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How Outdated Data Distorts Doctors' Pay 336

Hugh Pickens DOT Com writes "Peter Whoriskey and Dan Keating report at the Washington Post that Medicare annually pays $69.6 billion for physician services according to an arcane and little-known price list, known as the Relative Value Update over which doctors themselves exercise considerable and less-than-totally-transparent influence. A 31-member committee of the American Medical Association (AMA) recommends what Medicare should pay for some 10,000 procedures — with the fees based in part on how long it takes to complete each one. But this time-and-motion study often fails to take full account of changing technology and other factors affecting physician productivity, so anomalies result. For example, if the AMA time estimates are correct, then 41 percent of gastroenterologists were typically performing 12 hours or more of procedures in a day, which is longer than the typical outpatient surgery center is open and and one gastroenterologist in the Post story would have to work 26 hours, according to the committee time estimates, to accomplish what he gets done in a typical workday. Here's how it works: Medicare pays for a 15-minute colonoscopy as if it took 75 minutes resulting in a median salary for a gastroenterologist of $481,000. It is possible that in 1992, critics allow, when the price list was first developed, a colonoscopy actually took something close to 75 minute when doctors had to hunch over an eyepiece similar to that of a microscope for a look. But technology has advanced and now the images are processed and displayed on a large screen in high-definition video. Responding to criticism that the nation's method of valuing medical procedures misprices payments, a bipartisan group of legislators has drafted a bill that would reshape the way the nation pays doctors. The bill would require Medicare officials to collect data such as how much time doctors spend doing procedures and reducing the doctor payment for overvalued services. 'What started as an advisory group has taken on a life of its own,' says Tom Scully, who was Medicare chief during the George W. Bush Administration. '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.'"
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How Outdated Data Distorts Doctors' Pay

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  • by blahbooboo ( 839709 ) on Tuesday July 30, 2013 @08:25AM (#44421767)

    You know I am sick and tired of everyone blaming doctors for the cost of healthcare in the US. When in fact, doctors salaries are a miniscule portion of US healthcare, especially compared to drugs and device costs and hospital CEO pay! Doctors should be paid MORE. Yes I said it, more! What other profession do you study at least 12 years before you make a decent salary, take on at least $250k in school loans, and work 12 hour days for your entire career?

    Yes doctors make good money but it's far less than other folks in the US make who are far less deserving. How about addressing the seriously disgusting salaries on wall street? Should a computer nerd working in Morgan's computer risk group really be making $500k which is FAR more than the majority of doctors? What about the asshole investment bankers making millions at Goldman figuring out new ways to screw every US citizen out of a couple of pennies. Meanwhile the doctor is someone who makes you feel better and often will save your life.

    p.s. I am not a doctor. I just work with a lot of them and see how hard a life they have nowadays.

  • by MichaelDelving ( 546586 ) on Tuesday July 30, 2013 @09:05AM (#44422081)

    Get out the pitchforks and torches, antisocialists.

    What is interesting to me is that private hospitals negotiate rates with medicare and insurers, but basically set their own rates for the uninsured. My limited knowledge on the topic is merely based upon the few articles that have achieved my attention, but medicare rates are apparently the most reality-based, since the federal government gets to collect and analyze more of the pertinent data than anyone else. The private insurers have some strength in numbers/volume, and have their own data, and get to negotiate a bit. The uninsured are basically screwed, and are asked to pay many times what is charged to the insured or medicaid patients.

    Google chargemaster, if you are interested.

  • by ebno-10db ( 1459097 ) on Tuesday July 30, 2013 @09:20AM (#44422237)

    Doctors should be paid MORE. Yes I said it, more!

    Depends on the doctor. Primaries aren't getting rich, but some specialists are. That explains why we have too many specialists and not enough primaries. I don't buy that most specialties are all that much more difficult than being a primary. As per the article median gastroenterologist income is $481k. IIRC that's 2.5x what a primary makes. Moreover, income often has little to do with the difficulty of a specialty. Radiologists are amongst the highest paid, not because it's so difficult, but because you can flip through scans pretty quickly and charge for each one. The actual scans are done by techs.

    The ratio of specialist to primary pay is largely controlled by the AMA's "advisory" committee, so they are very much a part of this. The AMA has long had a pro-specialist bias.

    How about addressing the seriously disgusting salaries on wall street?

    Does getting ripped off by one group mean we shouldn't also worry about getting ripped off by another group?

    Should a computer nerd working in Morgan's computer risk group really be making $500k which is FAR more than the majority of doctors?

    It's not the computer nerds making $500k/yr.

  • by quantumghost ( 1052586 ) on Tuesday July 30, 2013 @09:58AM (#44422647) Journal
    The actual situation is very complex and is actually somewhat rooted in the free market system....

    Some of the factors involved:

    1. anti-trust laws and specific legislation prevent hospitals and doctors for sharing price information (aka Sherman Anti Trust Act [])

    2. The government demands a discount from hospitals for services.

    3. The insurance companies, not to be outdone by Uncle Sam, also demand discounts. (8th paragraph [])

    4. Different geographic locations have different pricing indexes.

    5. Local competition, despite #1 above, can influence prices

    6. Different patients have wildly varying medical histories and co-morbidities.

    7. Most complex cases (esp surgery and other procedural based care) fall into a class of billing called the DRG (diagnostic related group), which is kind of a set rate for a package of if I take out your gallbladder and you leave in 1 day or 3, the hospital gets paid the same (see side note below)

    Taken all together, the hospital is basically free to charge what ever they want....not that they ever get it.

    Most insurance companies pay a "regionally adjusted payment", and that's what gets paid....with a few exceptions. Those without insurance, usually get some kind of compassionate coverage from Medicaid (state funded, not Medicare). Those who do not are often eligible for charity care where part or all of the bill is reduced. So why not just bill the uninsured a lower upfront cost? Rule #2. Uncle Sammy wants his discount

    The interesting side story....patients who have an exceptionally difficult problem can fall into a group called the outliers (imaginative name, but better I suppose than the untouchables....). These are pts who fall outside of the such the hospital may submit a bill for outlier payment. This is typically $0.10 on the dollar of hospital billing. Well that sucks for the hospital....but a less-than-scrupulous Mega-Health-Care-Corp came up with the idea of inflating their outlier billing to be 10x what they had been billing.....the end result is $ for $ reimbursement. This was all well and good for them, for a couple of years....then Uncle Sammy caught on.....10 years later and they still haven't gotten rid of the shit smell after the government came down on them and beat the living shit out of them financially and punitively.

All science is either physics or stamp collecting. -- Ernest Rutherford