Predictions & Public Policy

Several years ago, a nephrologist shared with me a brief history of hemodialysis in the U.S. Early technology iterations were flawed and morbidity for patients with end-stage renal disease (ESRD) was high.

In the early 1970s, lawmakers passed legislation that mandated Medicare to assume most of the financial burden for caring for eligible patients with late-stage kidney disease who required dialysis, regardless of their age. Then dialysis equipment improved, positively impacting the mortality and morbidity outlook for these patients. The U.S. Renal Data System, which collects, analyzes and reports on ESRD incidence for the Centers for Medicare & Medicaid Services (CMS) and others, estimates in its 2011 Atlas that the ESRD patient population totaled 571,414 in 2009 at a cost of $29 billion for Medicare.  

ESRD is a debilitating condition and Medicare should be commended for shouldering the financial burden for this vulnerable patient population. But the nephrologist’s tale about the unintended consequences of public policy decisions came to mind as I gathered background information for our cover story on physician compensation. To equitably determine compensation for physicians serving Medicare patients, the federal government sought an objective methodology for determining the value of a service and appropriate fees for calculating compensation.

Thus, the relative value unit and the Relative Value Update Committee (RUC) were born. It was public policy decisions that created the fee-for-service model, which—as our article details—rewards volume and partly has contributed to overutilization. The RUC, an expert advisory body of physicians that is not funded by CMS, works within the restrictions of its defined service to CMS. Although members must remain mute in discussions about their respective specialties, some critics argue that physicians have a vested interest in decisions that affect physician pay. But many critics also say physicians must be involved, otherwise decisions that affect patient care are made in a vacuum.

There are no easy answers, especially when resources are limited and needs are immense. I doubt policymakers anticipated that the fee-for-service model would strain federal coffers. Do you foresee drawbacks in the alternatives? I would love to hear.