EP437: The Most Powerful Committee No One Ever Heard of and Their Role in Primary Care and Mental Health Struggles, With Brian Klepper, PhD

[00:00:00] Episode 437, the most powerful committee no one ever heard of and their role in primary

[00:00:08] care and mental health struggles. Plus a sidebar on the in air quotes free market. Today I

[00:00:15] speak with Brian Klepper.

[00:00:26] American healthcare entrepreneurs and executives you want to know. Relentlessly seeking value.

[00:00:34] Anyone who isn't confused really doesn't understand the situation. That's a quote

[00:00:39] by Edward R. Murrow and very apropos. I started thinking about this conversation that I had

[00:00:45] had with Brian Klepper because so much going on right now, so many discussions and dissections

[00:00:51] taking place about primary care financial struggles, about what is value in health care

[00:00:57] and the rock is at a minimum an underlying factor, but yet it doesn't come up almost

[00:01:03] ever. Merrill Guzner called the rock the AMA's in air quotes dark secret, and I can

[00:01:09] see why. Just one procedural note before I roll tape with Brian Klepper. We're going

[00:01:14] to go a little rogue today because you kind of got to understand what the rock is before

[00:01:20] I can get into the two points I really want to make about it. So here's my outrageous

[00:01:24] plan which will shake up our standard Relentless Health Value format. Today I'm going to make

[00:01:29] the points I want to make after the interview, not before like usual. I will however just

[00:01:34] mention the two points so you can keep them in mind as I talk with Brian. Here's the first

[00:01:39] point and it's about the doomed financials of primary care. Why is it that primary care

[00:01:44] has no business model unless part of the business model includes driving profitable

[00:01:49] downstream utilization? And when I say utilization, do I mean services with bigger RVUs? Why yes,

[00:01:55] I think I do. We'll dig into this later. Here's my second point and it's my view on

[00:02:00] the nature of any postulations that the in air quotes value of health care services is

[00:02:05] equivalent to the prices that we pay for said services. Again, more on that later. But here

[00:02:11] is my original conversation with Brian Klepper. Brian Klepper is a longtime health care analyst

[00:02:17] and former CEO of the National Business Coalition on Health. My name is Stacey Rector. This podcast

[00:02:22] is sponsored by Aventria Health Group. Brian Klepper, welcome back to Relentless Health

[00:02:27] Value.

[00:02:28] I'm delighted. Let's talk about health care.

[00:02:30] Let's start out here talking about the RUC. So before we get any further, what is the

[00:02:36] RUC? What does it stand for? Who are they a part of, etc.?

[00:02:40] The RUC, which rhymes with some of our favorite words. The RUC is a committee of the American

[00:02:47] Medical Association that in the late 80s got a sole source contract with at that time

[00:02:54] HCFA, now CMS, to identify relative value of every medical procedure. And it's a committee

[00:03:03] made up of 31 physicians, 25 of them are specialists and six of them are primary care.

[00:03:10] So the RUC, which stands for again?

[00:03:13] RBRVS Update Committee.

[00:03:15] Okay, so that's a mouthful. And are they part of the AMA?

[00:03:18] Yes. So the AMA made this argument that they'll take this hassle of a job off the hands of

[00:03:24] CMS. And what has ended up happening is that it becomes a horse trading exercise.

[00:03:31] Okay, so I'm just picturing the scene here. So we have the RUC committee, which as you

[00:03:35] said, consists of 25 specialists and five PCPs or six.

[00:03:40] Six.

[00:03:41] And the PCPs, you're right, that adds up to 31. As you said, they all sit in a room and

[00:03:45] their job is to calculate the relative value units, as you said, the RVUs for given procedures

[00:03:54] and things.

[00:03:56] While everyone is campaigning to optimize the value of their own of the procedures within

[00:04:03] their own specialty.

[00:04:04] So if I'm the, you know, radiologist in the committee, then I want my radiology, things

[00:04:09] I do in radiology to be the highest RVUs possible. If I'm a cardiologist, I want my

[00:04:15] cardiology stuff. As you said, it's horse trading and everybody's job really. You know,

[00:04:21] the reason why you get nominated to that committee is because you're good at that kind of thing.

[00:04:26] Right. And in the process, you want to neutralize primary care, because the more primary care

[00:04:34] is allowed to do the things that they have been taught to do, then the fewer referrals

[00:04:38] are made. The object of the mission is to get patients around primary care and directly

[00:04:45] to the specialists, which is where things are more lucrative.

[00:04:48] Okay. So that's actually really interesting what you said there, because I had always

[00:04:53] been under the impression that the goal of the specialists in the RUC was to drive up

[00:05:02] basically the prices. But from what I'm understanding, you know, relative to primary care, that basically

[00:05:08] primary care just kind of got left out in the cold while you have 25 specialists on

[00:05:12] this committee, which four to one outnumbers the number of primary care people on the committee

[00:05:17] so that they just could get their way and get the higher prices. But what you're saying

[00:05:22] and I'm just recalling the total revenue formula here, which is total revenue equals

[00:05:28] price times volume. It sounds like it's not only a matter of driving up prices, but it's

[00:05:33] also a matter of driving up volume. Because the more that you handicap primary care,

[00:05:38] you know, limit the number, the amount of time that can be spent, etc., the more visits

[00:05:43] there are, which equals volume, right? So they're kind of handling both sides of the

[00:05:48] equation there it sounds like.

[00:05:50] It is not at all unusual to go into an independent primary care doctor's office and find out

[00:05:57] that he's making 120 grand and then go and talk to the primary care doc who is working

[00:06:04] for the hospital and he's making 240 or 260. I mean, the incentives that have been at play

[00:06:11] have been very formidable. This is one of the key areas of the current health care regime

[00:06:17] that's been so painful for the country. If you don't understand this piece, you really

[00:06:22] don't get anything about how health care really works, in my opinion.

[00:06:26] So if you were just going to summarize that piece, how would you summarize it?

[00:06:30] I would summarize it by saying that primary care has developed a reputation for being

[00:06:35] the easy specialty, maybe inhabited by the docs who are the least bright of everybody

[00:06:42] who goes to med school. And it's just not so. The complexity of what a primary care

[00:06:48] doc has to do when faced with a new patient. I mean, a patient walks in, it can be anything.

[00:06:54] It can be hormonal, it can be neurological, it could be viral. And in 10 or 15 minutes,

[00:07:00] that person has to go through a cognitive process where they figure out what it can't

[00:07:05] be and is left with what it might be and go from there and either decide that they can

[00:07:10] manage the problem on their own or they need to send the patient further downstream to

[00:07:15] a specialist who can look into it as well. It's a critical function and it has been neutralized

[00:07:22] by the specialty community to get the patients directly there and by the health plan community

[00:07:27] to make sure that the total spend is as much as possible because they're making money on

[00:07:32] it and by the health systems who are trying to drive up every, who see every patient as

[00:07:38] a mine of potential financial opportunity.

[00:07:42] Thanks so much, Brian. So quick recap, the RUC stands for the RVU Update Committee. It

[00:07:49] is run by the AMA and has the sole source contract to determine how many RVUs per healthcare

[00:07:56] service. And let's not forget, RVUs are a proxy for money. In 2024, each RVU is worth

[00:08:05] something like $33. So if the RUC figures out how many RVUs any given CPT code is worth,

[00:08:13] they are in fact determining how much money will get paid by CMS to perform any given

[00:08:19] CPT code. The RUC determines how much money physicians get paid for what they do is the

[00:08:25] bottom line. Again, who is on the RUC? You heard Brian give the rundown. I think this

[00:08:30] changes slightly year over year, but 22 to 25 of its 31 members are appointed by major

[00:08:37] national medical specialty societies. So 22 or more specialists, only five or six

[00:08:43] are in primary care. One thing to be clear about no shade to the individuals on the

[00:08:47] RUC, their volunteers. Also no shade on any surgeon or physician who has dedicated their

[00:08:53] life to flawlessly performing a surgery or ridiculously difficult procedure or diagnosis

[00:08:58] that could change a patient's life. My deepest thanks and gratitude for you and your service.

[00:09:03] My commentary here is on the entire construct of this RUC endeavor and even why the AMA

[00:09:09] is in charge of this to begin with. If I had whiskers, they would be twitching. Just

[00:09:14] the whole rubric or whatever it's called feels like it would get us into exactly the

[00:09:19] pickle that we are in right now actually, where the USA has the highest healthcare costs

[00:09:24] and patient outcomes that are somewhere on the embarrassing scale. Someone should have

[00:09:29] asked chat GPT what the likely outcome might be of getting a board comprised of mostly

[00:09:34] specialists to fight over the relative value of services based on how hard they think their

[00:09:39] own specialty is compared to other specialties. Honestly, now continuing my chat GPT streak,

[00:09:45] I asked the bot for three very low value things as per the RUC. Here's what chat GPT replied

[00:09:52] chronic disease prevention and management, low value, behavioral health integration,

[00:09:58] and doing care coordination. Relatively, it seems on the value scale, these three things are not

[00:10:03] worth much, which makes sense actually because as per the RUC, RVU allocations are based on but

[00:10:09] three components. Those three components are physician work, practice expenses, and professional

[00:10:15] liability. Call me Captain Obvious, but right there's no mention in there about value to the

[00:10:20] patient. Holy crap, zero points awarded for patient value or even clinical value, at least

[00:10:25] from what I can glean from the very not transparent available information. Now, relating all of this

[00:10:30] back to current events, here's my first point. Consider the conversation with Elizabeth Mitchell

[00:10:35] from PBGH last week. She said the jumbo employers in PBGH actually want to pay more to PCPs and

[00:10:44] mental health professionals and for integrated behavioral health, but they keep finding

[00:10:49] themselves hamstrung by health plans because health plans pay FFS rates, fee for service rates,

[00:10:55] which are based on Medicare rates a lot of times. And those Medicare rates are based on RVUs

[00:11:01] determined by the RUC. We have a root cause in the building is my point. Consider also now the

[00:11:08] latest wave of retail primary care destruction. Lots to unpack with that one for sure that has

[00:11:14] nothing to do with underlying FFS rates, but it is still a factor of some consequence here.

[00:11:19] So CMS's use of the RUC and the subsequent destruction of primary care is my first point,

[00:11:25] which was also Brian Klepper's main point. As Charlie Munger, Warren Buffett's partner said,

[00:11:30] show me an incentive and I will show you an outcome. I mean, does CMS really have to take 90%

[00:11:36] of the RUC's recommendations, which is the percentage that they are currently taking?

[00:11:40] I know we're all hell bent on paying for value and not FFS, but if jumbo employers and pretty

[00:11:45] much anyone you ask knows that PCPs and others with clear patient value and clear clinical value

[00:11:51] are getting screwed, and we know that the majority of payer contracts are in fact still FFS or have

[00:11:57] at a minimum an FFS chassis, I'm rooting for CMS to do their own math for primary care CPT code

[00:12:03] RVU values. Here's my point too, but for sure the primary care impact is the most important.

[00:12:09] This second point I'm making is mainly to underscore that if you don't understand how

[00:12:13] our industry actually for real works, you can't hope to fix it. So many great ideas have fallen

[00:12:20] prey to the real world of American healthcare. And look, I'm saying this to offer some hope here

[00:12:25] that there is a measure of control to be had, an ability to plan or to think really crisply

[00:12:31] about strategy, but it does take an effort to dig deeper than what you read in the marketing spin.

[00:12:37] And it may also take a couple of tries because the real world right now contains textbook

[00:12:43] conflicts of interest, and those are not frequently mentioned on anybody's website.

[00:12:48] Anyway, let's get back to point two here. I read the following on LinkedIn and literally

[00:12:53] cringed so hard I think I sprained something internally. You'll see why. Here's what I read.

[00:12:58] It was written by a private equity leader in a fairly august actually private equity outfit,

[00:13:03] and he wrote, value in a capitalist system is the same as money. The only way we actually express

[00:13:13] value is by allocating money. So if the frontline deliverers of care aren't getting their fair share

[00:13:21] of money, then society is saying that is the amount of value they provide. It is as simple

[00:13:29] as that. The concept of value-based care is moronic. If you value it, you spend money on it.

[00:13:38] So he wrote, society is saying that is the amount of value they provide. Except that's actually

[00:13:46] wrong because it's often the ruck that's saying that is the value they provide or relative value

[00:13:52] as it were. Looking for the wisdom of the crowd now. Is this a capitalist system?

[00:13:58] In air quotes, having a committee determine the price of a service? I don't know. To me,

[00:14:03] it sounds more like a Soviet Union ghost plan circa 1930. And look, I have an undergrad in

[00:14:09] economics so I am highly qualified to tell you that the Soviets did not maintain a capitalist

[00:14:14] system. Also, their ghost plan was a complete failure and led to a genocide level famine.

[00:14:20] So there's that. But this point of view is maybe more widespread than I would have thought. So who

[00:14:26] knows? Maybe I'm the ill-informed one. But I hear fairly often a story about how a physician

[00:14:31] practice was trying to get paid fairly to coordinate care or do some high value, value-based

[00:14:37] as per evidence-based clinical medicine thing. And that physician practice is told by the payer

[00:14:42] network relationship manager or somebody, something like all FFS is high value care.

[00:14:48] So why would I pay more for you to do stuff you get paid fee for service to do? I'm going to link

[00:14:55] in the show notes to that article about The Rock by Merrill Guzner. It has lots of references if

[00:15:00] you want to read more about this or for sure go directly to the source, the AMA website link in

[00:15:05] the show notes. Just please read between the lines is my only advice. So let's talk about going over

[00:15:10] to our website and typing your email address in the box to get the weekly email about the show

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[00:15:28] show transcribed. There's also show notes with timestamps. Thanks so much for listening.