Respected economist Uwe Reinhardt has been penning a series of NY Times blog entries explaining why American health care is so expensive.
In his latest entry, he takes on the physician payment system, writing that “studies have shown that physicians are not impervious to the financial incentives inherent in fee-for-service payments,” and that “physicians who have a direct financial interest in the use of imaging services, like CAT scans or M.R.I. scans, recommend far more such services for their patients than do physicians without such financial interest.”
No argument from me. The physician payment system needs to be fundamentally reformed if we hope to control health spending.
What Mr. Reinhardt fails to mention is the Resource Based Relative Value System Update Committee (RUC), who are responsible for the heavy skew towards expensive procedure-based care. Medicare bases its prices on the recommendations from the RUC, a group that is dominated by specialists. It is no wonder they are loathe to appropriately pay primary care medicine at the expense of specialist payments.
Internist Roy Poses wonders whether Mr. Reinhardt’s unpublicized associations with health insurer Amerigroup and medical device maker Boston Scientific, both companies that benefit from the status quo in the physician payment system, led to this glaring omission.