Latest / Cut & Tell / How Do Doctors ACTUALLY Get Paid? What Doctors and Residents Need to Know

Transcript

How Do Doctors ACTUALLY Get Paid? What Doctors and Residents Need to Know · Cut & Tell

• 0:00
  Hi there, and welcome to Cut and Tell.
• 0:02
  I'm Liz Malfras.
• 0:03
  I'm a newly minted plastic surgeon in Philadelphia.
• 0:05
  And this season of this podcast is all about arming you with the health policy knowledge that you need to be an advocate for your patients and just as importantly, for yourself in this crazy healthcare system.
• 0:31
  Did you ever watch that Schoolhouse Rock episode or a little segment about how a bill becomes a law?
• 0:36
  I've always kind of wished that there was something like that for how a doctor's visit becomes a payment, because it is probably even more complicated, honestly, than how a bill becomes a law.
• 0:47
  And I think, just as, you know, children don't understand how bill becomes a law, I would say doctors don't understand necessarily, especially coming out of residency, how their doctor's visit or their procedure or whatever they do, how that
• 1:00
  turns into money.
• 1:01
  There is a shit ton of, like, complexity and jargon in here, okay?
• 1:04
  But I know that if you're a medical person, you can handle it.
• 1:08
  You know, like, we.
• 1:09
  We're all about the jargon.
• 1:10
  You've done it before.
• 1:11
  This is.
• 1:11
  It's not that complicated.
• 1:12
  It's basically just a couple of acronyms.
• 1:14
  And after this episode, you're going to own them, okay?
• 1:17
  You're gonna know exactly what you're talking about.
• 1:18
  You're gonna sound so smart, especially when you're attending, like, starts going off about how they really don't like the RVU system, blah, blah, blah.
• 1:25
  This is, like, the whole point of this is for you to have a lot of context to actually understand those conversations.
• 1:30
  And potentially, if you don't understand this, this kind of stuff, kind of like we talked about in the last episode, it decreases your power in the system.
• 1:39
  Like, the reason that I want people to know about this stuff and the reason I think it helped me to understand it, is that if you're more informed about how the system works, you can be more effective in
• 1:48
  shaping it, both for you personally and just, like, to make things better for everybody.
• 1:52
  Okay, so let's get into it.
• 1:57
  So in the last episode, we talked a lot about the kind of history and origins of the culture of medicine and how we have this sense of professional sovereign, which in part means a strong sense of, like, that
• 2:07
  the culture that we have as doctors and the kind of social authority is our main power.
• 2:12
  Like, our power does not coming from having the most money or the most, like, technical, even ability to contribute.
• 2:19
  This profession is built on this idea that we are acting in people's best interest and that we expect to be treated that way.
• 2:27
  The problem is that that idea has come up against the harsh reality of capitalist America and a lot of craziness has come in response to that.
• 2:35
  And this is just like one kind of piece of that.
• 2:37
  So this, honestly, this is an episode that it might even be worth like saving and listening to again, because it's gonna be a lot of jargon, but I really think that this is the good stuff.
• 2:45
  So CPTs, RVUs, R U C S.
• 2:48
  We're gonna talk about ICD10s.
• 2:49
  We're talking about all of those acronyms that get thrown around and what they actually mean, and a little bit too about how we came to have this like truly insane system.
• 2:56
  So first up, you may have heard this idea that we in medicine operate in a claims based system, but do you know what a claim actually is?
• 3:06
  So I think I've asked people this and my impression is that a lot of people just have no idea.
• 3:10
  And if they do have an idea, they usually say something like, claim is how a doctor gets paid.
• 3:14
  So like, you claim that you did something and then the insurance company pays for it.
• 3:17
  And that's like, that's like kind of it.
• 3:19
  But there's a lot more detail that you need to know.
• 3:21
  So let's get down to it.
• 3:23
  A claim is made up of five codes, five pieces of data, five numbers that determine every single thing about what you get paid for.
• 3:34
  So the first thing to recognize is like, we all sit in our clinics and, you know, we even start this as med students.
• 3:39
  You write your great note with all of its detail and all of its interesting context and all of its complexity.
• 3:44
  None of that matters for getting paid.
• 3:46
  Okay?
• 3:46
  Like, just like, forget that.
• 3:48
  The payment system doesn't care about any of that.
• 3:50
  All the payment system cares about is five things.
• 3:52
  The diagnosis, which is an ICD10 code.
• 3:54
  The service, which is a CPT code.
• 3:57
  The place of service, which is an office, hospital, asc, et cetera, the type of provider that would be coded by your MPI and then the payer.
• 4:06
  So like, who's actually on the hook to pay for this?
• 4:08
  That's it.
• 4:09
  That's the only information from the documentation of a clinic visit that is ever going to be seen in any monetary way.
• 4:16
  A claim is five pieces of data, five codes that determine everything about how a doctor does or does not get paid for the work that they do.
• 4:23
  So I know I like breezed over a lot of vocabulary here, but just to quickly go through them.
• 4:28
  Most of these are things you will run into, especially in residency.
• 4:30
  I think most people have Some idea of the rest of these.
• 4:33
  So, like ICD10, that's the international Classification of Diseases.
• 4:37
  This is a database that's insane.
• 4:39
  It's actually kind of fun to look at.
• 4:40
  There's things like, you know, you got bit by a turtle on the finger or like on the toe.
• 4:45
  There's like some sort of code for every single thing that could happen.
• 4:50
  It is an incredible database.
• 4:52
  It's maintained by the World Health Organization.
• 4:54
  And for the purpose of the claim, this is the only thing that describes what's wrong with the patient.
• 5:00
  What did you treat the patient for?
• 5:02
  That is the ICD10 code.
• 5:03
  What's the problem?
• 5:04
  Now, the CPT code.
• 5:05
  CPT stands for Current Procedural Terminology.
• 5:09
  CPT is a database that's actually owned by the American Medical Association.
• 5:13
  The AMA created this thing in 1966.
• 5:16
  And basically it is similar to the ICD 10 code system.
• 5:20
  It's just that.
• 5:21
  But it's for procedures and like, activities.
• 5:24
  So it's like the patient had this problem.
• 5:26
  That's ICD10 code.
• 5:27
  The CPT code is what did you do about it?
• 5:29
  And for people whose livelihoods are based on these CPT codes, some people really get to know them.
• 5:34
  Well, this person will remain unnamed.
• 5:36
  But there is a plastic surgeon whose car I've seen who has the Breast Augmentation CPT code as their license plate.
• 5:42
  So it's 19325.
• 5:43
  And if you're in the know, you know who bought that car.
• 5:46
  So we're going to come back to the CPT code system in the ama, because I got some things to say about it, but just to table it for now.
• 5:51
  That's what the CBT code means for a claim place of service.
• 5:54
  Now, this one may not be like formally a code, but effectively it's just identifying what kind and what specifically the facility is that you did this work in.
• 6:02
  So as you may know, if you work in a procedural field or a surgical field, there's different payment.
• 6:07
  Like the, the level of payment that you get is different based on where this thing is happening.
• 6:12
  So, like, as you might imagine, stuff in a hospital more expensive than in a surgeon center, and there even are a lot of incentives that are kind of that target this as a way to make healthcare more efficient.
• 6:21
  Of like, if you do it in the office, you get paid more because that's more efficient.
• 6:24
  Or maybe ultimately we decide to pay you less because we know that it costs less anyway.
• 6:28
  An interesting area, but that's why place of service is part of this type of provider.
• 6:32
  So for you, doctor, you have an mpi.
• 6:35
  It's like public record.
• 6:36
  You just look it up on the Internet.
• 6:37
  I just as your identifier of who you are and what you did.
• 6:39
  And then the payer, that's just who's on the hook.
• 6:41
  So that's almost just like the address envelope that your claim goes in of, like, this is all going to this person.
• 6:46
  And again, that is it.
• 6:48
  Okay.
• 6:49
  There is nothing else in the claim.
• 6:50
  There is nothing.
• 6:51
  And like, like, yes, it's kind of crazy that everything you do can be boiled down into just this couple of numbers.
• 6:57
  But the other thing I want to point out is that if there's only five numbers, like, why is this so complicated?
• 7:03
  You know, like, if the only information that they have to go on is these five numbers, like, how are we fighting so much over who's getting paid for what?
• 7:10
  Because arguably it should be kind of simple, you know, like, you got those five data points, you plug it in, should just spit out what you're owed.
• 7:17
  But as we will see, there's a lot of people who are very invested in the fact that the system is complicated and they're profiting off of it, and so they're not motivated to change it.
• 7:26
  But we could be.
• 7:27
  Okay, so now that we kind of know what a claim is, let's talk about.
• 7:30
  Let's do, like, how a bill becomes a law.
• 7:32
  Like, how does that claim, how does it get made and how many people are involved?
• 7:36
  And how does it eventually come back to you in the form of maybe a couple dollars?
• 7:40
  So encounter happens, you do your doctoring thing.
• 7:43
  That's what you're trained for.
• 7:43
  It's amazing.
• 7:44
  Blah, blah, blah.
• 7:44
  Okay, so you write your note again, nobody cares about that in this.
• 7:48
  In this context.
• 7:49
  And then potentially, either you do your own coding.
• 7:52
  So a lot of us will.
• 7:53
  Like, in Epic, there's that little spot, and you pick your codes and you pick all.
• 7:57
  And you put the ICD10 code, and you associate the ICD10 code with the CPT code for what you actually did.
• 8:03
  This is as if you, if you're familiar with that process, like, you kind of understand a little bit about how this works already.
• 8:09
  So either you code it and.
• 8:11
  Or somebody else who's employed by your hospital or employed by you and your clinic also does another pass of trying to optimize your coding.
• 8:18
  So often this is things like, you know, like, I've had someone reach out before and be like, hey, you said in your note that this person is.
• 8:25
  Has like, malnutrition.
• 8:26
  But, like, this isn't documented and they're blah, blah, blah.
• 8:28
  And so there's some extra steps along the way often to make sure that you're capturing all the data from your note and actually getting it turned into CPT codes.
• 8:35
  But remember, that's all additional people that you're paying to do that.
• 8:38
  And a lot of that is also ends up being an additional burden on the time for the physician.
• 8:43
  But anyway, maybe you have a coder.
• 8:46
  However it happens, your clinical work gets turned into codes.
• 8:51
  So now I got the codes, but now it's not.
• 8:53
  We can't just send the codes.
• 8:54
  We need to make this into a claim.
• 8:56
  And that just involves bringing together all that other information, making sure you know the patient's payer and all that stuff.
• 9:02
  And so there's typically at least one other administrative step within your organization in which they create the claim and do the like, scrubbing process where they like make sure it's free of errors, like try to optimize it as
• 9:13
  best you can and then prepare it to actually be sent on to the next step.
• 9:17
  Because as you may know, if you work in this field, one little like tiny misplaced period or like a number that's not quite right, just, that's an immediate kickback.
• 9:25
  And so there's actually, that's why there's so much involved in making sure this is all exactly packaged the way that the payers want, because we really want them to pay us.
• 9:38
  So now that you've got your claim all packaged up, I really, I like to think about this as like this system was developed in the 50s and 60s.
• 9:44
  So I like to picture Mad Men Like a Madman type office environment.
• 9:48
  So like the secretary takes all the information, types it all up, puts it all in a nice little envelope and addresses that envelope to the payer.
• 9:56
  And that's great.
• 9:57
  So the next step is basically the mail room.
• 10:00
  So again, if you think about this as office space, that's like where this came from.
• 10:04
  The clearinghouse is purely a middleman.
• 10:06
  So the clearinghouse is just like you.
• 10:07
  You're.
• 10:08
  You package up all your claims, you give them to the clearinghouse, and the clearinghouse just sends them off to each individual payer.
• 10:16
  So like that's all they do.
• 10:19
  This is, this is one of those areas that I think is worth pausing on just to be like, just to be clear, the clearinghouse, all they do is they take in all of the claims and they send them
• 10:29
  to the payers.
• 10:30
  And I'm not really sure why that needs to be a separate job at this point, honestly, like, surely that is Digitized, like surely that is basically just a glorified button pusher.
• 10:40
  But if you look into the data about how much the clearinghouse gets paid, clearinghouses, a lot of them charge a dollar per claim.
• 10:49
  A dollar per claim.
• 10:50
  Now, like, that's like, that's really insane.
• 10:52
  That is like so much money for literally pressing a button in a system where we have so much waste.
• 10:58
  And so that's.
• 11:00
  It's always part of the process.
• 11:01
  The clearinghouse is a real thing.
• 11:02
  You can look it up.
• 11:03
  But I just want to be clear that that is adding no value and doing something that maybe made sense in the 60s when we had actual paper envelopes.
• 11:09
  Does not make sense anymore.
• 11:11
  Okay, but through the clearinghouse, your little claim, it finally gets to the payer.
• 11:18
  So it's finally delivered.
• 11:19
  Sort of like a bill, I guess.
• 11:21
  It's sort of like arrived and be ready to be evaluated by your payer.
• 11:26
  So again, if we think back, you know that like this form really only has these five piece, five pieces of information.
• 11:31
  So like, I don't know why there's so much complexity to this, but your insurer certainly adds complexity to it.
• 11:38
  So they're not just looking at those five things and being like, check, check, check, pay you.
• 11:43
  As we all know, they look for lots and lots of ways to not pay you.
• 11:47
  So there's many, many, many, many, many, many, many, many checks that are involved to see if you are 1000% in compliance with exactly what they're willing.
• 11:57
  Everything.
• 11:58
  You dotted every T.
• 11:59
  You sorry, you dotted every I, you crossed every T.
• 12:02
  That would definitely get me kicked out.
• 12:04
  And that it's everything is exactly perfect.
• 12:06
  One thing wrong, straight to jail, you know, like just that's it, you're back.
• 12:10
  And this process can take months sometimes too, is the other crazy thing about it.
• 12:14
  So.
• 12:14
  But once they do their whole analysis, they get to decide from a number of options they could pay you in full.
• 12:20
  Like that's how the system is supposed to work basically, is that they get that and then they pay you and that's it.
• 12:25
  They can also choose to pay you in part if they feel like it wasn't something wasn't exactly right with the claim.
• 12:30
  They could just be like, well, we're only going to pay you this.
• 12:32
  And then you have to do a lot of work to get them to reconsider that.
• 12:36
  If you think it's worth it to you, they can also just pend it.
• 12:39
  They can just like, they can wait forever.
• 12:40
  They can just be like, we're not ready to pay for this.
• 12:42
  Like we're just going to wait.
• 12:43
  And as you can imagine, that's fine for them.
• 12:45
  It's not so fine for the doctor who might be waiting for that payment.
• 12:49
  They can also just deny it.
• 12:50
  And what's crazy, because again, consider five pieces of data.
• 12:54
  Approximately 10 to 20% of claims are initial, are initially denied.
• 13:00
  10 to 15, that's like, like, that's crazy numbers, okay?
• 13:03
  Like 10 to 20% of claims, when it's just these like five pieces of data are the only pieces of data being transmitted, they're denied and require some kind of resubmission or appeal to restart the whole process.
• 13:13
  If I sound crazy right now, it's because this stuff does make me crazy.
• 13:16
  But anyway, so that's what happens.
• 13:18
  The final kind of step of this is remittance.
• 13:20
  So basically you get an explanation of benefits.
• 13:23
  Like the patient gets an explanation of benefits, explaining what was paid for and why.
• 13:27
  And if they didn't pay for it or decided to only pay half of it, then you can start an elaborate appeal process involving many fax, fax machines and many phone calls and maybe get a chance to get paid
• 13:38
  again.
• 13:38
  So just to recap, by the time any money comes back to you, your claim have passed through a coder, a clearinghouse, a payer's elaborate adjudication system designed to try to deny you from getting paid and potentially like any
• 13:52
  number of additional layers, especially if you had appeals, especially if you have additional staffing layers internal to your big organization that are trying to extract more money from this.
• 13:59
  And this process, again, can take months.
• 14:01
  It's so complicated.
• 14:03
  And it really doesn't need to be.
• 14:05
  The complexity is kind of the point.
• 14:06
  The complexity is how all of these third parties, all the people who are not just the patient and not you, all the other people, the complexity is how they get more out of the system.
• 14:16
  And it's not about making the system better or more efficient or anything.
• 14:19
  It's actually the opposite.
• 14:22
  But let's take a step back here, okay?
• 14:24
  Like, I'm getting a little worked up.
• 14:25
  And I do think that the history, like understanding the history of why it is this way is important.
• 14:30
  Because remember, no other profession, no other profession gets paid this way.
• 14:34
  If any other profession gets paid like this, it's basically other professions that operate in an insurance scheme.
• 14:39
  But you gotta remember, so think about like, you got car insurance.
• 14:42
  Car insurance operates totally differently.
• 14:44
  First and foremost, car insurance is for when you have an emergency.
• 14:48
  Like, car insurance is not for your everyday healthcare.
• 14:52
  It's not for, like, it's not something you Use every day.
• 14:54
  And that's a big part of the difference.
• 14:56
  So, like, for, like, you get in a car accident, it kind of makes sense then that that's a really complicated situation.
• 15:02
  It requires you need a mechanic to assess your car, like, decide how much damage was done, blah, blah, blah.
• 15:07
  You got to look at the, like, police reports.
• 15:08
  Like, it kind of makes sense in that context that there's this big process to get this done.
• 15:13
  But applying that same set of ideas, like, applying that idea that, like, we can't just pay what.
• 15:19
  What this costs.
• 15:20
  We have to, like, do this big analysis and run this big machine to decide whether or not we're going to pay for your aspirin this month or not.
• 15:27
  Like, it's just.
• 15:28
  It's completely insane.
• 15:31
  So how do we get here?
• 15:32
  Like, so many things in America, it goes back to Texas.
• 15:35
  So we're going to do a little just like a brief overview here, basically of why we have health insurance as a system.
• 15:40
  Like, how this system came around where instead of doctors getting paid for services, doctors get paid via this weird insurance apparatus.
• 15:49
  Okay.
• 15:49
  So it all comes back to the Baylor Plan of 1929.
• 15:53
  So the whole system, just to point out, does not start with doctors.
• 15:56
  Like, a lot of things in health care, doctors were kind of like, along for the ride.
• 16:00
  But the actual driving forces here are not quality of patient care and definitely not doctors either.
• 16:06
  So this all started in 1929 at Baylor University.
• 16:10
  So there's this guy, his name is Justin Ford Kimball.
• 16:12
  He's a VP at Baylor, and he runs Baylor Hospital.
• 16:15
  And, you know, he's spreadsheets guy.
• 16:16
  He's trying to, like, trying to make the numbers work.
• 16:18
  And he realizes Baylor Hospital has this huge mountain of unpaid bills.
• 16:23
  And he was looking at them and he's like, how are we gonna get these paid?
• 16:26
  And it turns out a lot of them were from Dallas.
• 16:29
  School teachers who had to go to the hospital for some reason.
• 16:32
  And because even back then we didn't pay school teachers much, they weren't able to actually pay for the healthcare that they got.
• 16:39
  And, like, honestly, who wants to spend their time chasing down, like, school teachers to pay the money?
• 16:44
  Like, that's kind of a bummer.
• 16:45
  I can see how that wouldn't be good for business.
• 16:47
  So if he starts thinking about, like, how can we deal with this?
• 16:49
  Like, how can I both address this.
• 16:52
  This problem now that I have all these unpaid bills, but also make a system in the future where this doesn't happen quite so much because it's very unpredictable?
• 17:00
  So he had this Great idea.
• 17:01
  This great idea that changed everything and created health insurance.
• 17:04
  Okay?
• 17:05
  It all comes back to this guy.
• 17:06
  He's like, you know what I'm going to do?
• 17:08
  I'm gonna have the teachers pay me 50 cents a month, total of $6 a year.
• 17:14
  And in exchange, if they need to come into the hospital, they can get 21 days of care and not have to pay for it.
• 17:21
  Like, it'll just be covered because they have paid all along the way just in case they need to go into the hospital.
• 17:26
  And y', all, this was.
• 17:27
  People love this.
• 17:29
  Like, people.
• 17:29
  This was a real thing that people were concerned about at the time.
• 17:32
  Like, if you needed to be hospitalized, you did get big bills that you maybe couldn't pay.
• 17:37
  And so by the end of that, three quarters of school teachers in Dallas had signed up for this plan with Baylor.
• 17:44
  And just as a reminder, there's one thing that's kind of tricky about this, which is that.
• 17:47
  So this was only for hospital care.
• 17:49
  So at this point, doctors, you know, like doctors, we all work in the hospitals now.
• 17:52
  That's a relatively new phenomenon.
• 17:54
  Back then.
• 17:55
  All the doctors are in private practice.
• 17:57
  They have privileges of the hospital.
• 17:58
  And so if you're a patient who gets in, who gets taken care of in a hospital, you're paying for the hospital part of that, totally separate than you're paying for the doctor part of that.
• 18:08
  Like, the doctor bills you separately.
• 18:09
  It's like a totally separate system.
• 18:11
  So anyway, this grade plan gets.
• 18:13
  Starts happening with school teachers.
• 18:15
  The American Hospital association is like, you know what?
• 18:18
  That's a good idea.
• 18:19
  Like, that's going to give us more predictability, more like steady income.
• 18:23
  And they decide to adopt this more widely.
• 18:25
  So this little plan, this little scheme from these school teachers in Texas, this becomes Blue Cross, Blue Cross, the.
• 18:31
  Like, one of these major components of our insurance apparatus today.
• 18:34
  And then ultimately, there's like, a lot of history that I won't get bogged down in here.
• 18:38
  Ultimately, doctors kind of realized like, oh, shit, like, we need to do that too.
• 18:42
  If we don't do that too, it's not going to work.
• 18:44
  And so Blue Shield, you heard, like, blue Cross, Blue Shield.
• 18:47
  Blue Cross is this system of insurance for hospitals, and Blue Shield is the same kind of system for doctors.
• 18:55
  And that part of it got launched in 1939 in California and is basically still the same system that we have today.
• 19:01
  And one thing that's important to work, that's worth noting about that is in the.
• 19:05
  In the initial model of Blue Shield, it was launched by the California Medical association and doctors, because again of this history of professional sovereignty, doctors controlled the terms for this.
• 19:16
  Part of that is how we've ended up maintaining this fee for service model where like doctors set the price for things.
• 19:23
  That fee for service concept comes back to this.
• 19:25
  And the whole point of maintaining that versus switching to like a, you know, like you just get paid for a certain number of patients or you just get paid per incident or paid per hour or something like the
• 19:35
  reason doctors didn't want that was because they wanted to be able to control every aspect of this and have the autonomy to be able to set their own prices and decide what those prices should be themselves.
• 19:44
  And at the time that, that idea was great like that, that idea was very successful.
• 19:49
  It protected our profession for a long time.
• 19:52
  It ultimately led to much higher doctor salaries over time, especially when we get into like 70s and 80s.
• 19:58
  But it also, unfortunately, as we're going to kind of talk about, set us up for a lot of problems down the line.
• 20:02
  Okay, so we got these like little projects.
• 20:04
  We got this business over in Texas, we got this business over in California.
• 20:07
  But like, how did we go from that to having employer based health insurance be the main health insurance happens in America?
• 20:14
  So this is another of those cases where not, no one tried to do this on purpose.
• 20:19
  Okay?
• 20:19
  Like this is sort of something that happened by accident, but it's a very powerful accident.
• 20:24
  So in 1942, we're in the middle of a war.
• 20:27
  FDR is concerned about inflation in the setting of wartime.
• 20:30
  And so he freezes wages.
• 20:33
  He's like, you cannot raise wages anymore.
• 20:35
  We gotta stop this inflation.
• 20:36
  And this, you know, put kind of our whole economy into turmoil.
• 20:40
  One of the wrinkles in that plan though, is that health benefits were exempted from that freeze.
• 20:46
  So now you have employers who aren't allowed to charge or who aren't allowed to raise salaries, but are still wanting to compete to get the best employees.
• 20:54
  And so those employers start competing on how good their benefits are.
• 20:59
  So all of a sudden, anyone who wasn't offering employer health insurance, they're offering it now and they're offering fancy extra perks, anything they can come up with in the health insurance space or the healthcare space.
• 21:11
  It's just an extra way that they can try to attract talent in a time where that was really in demand.
• 21:15
  And then finally to kind of like, what sort of cemented this as being like, this is America, our employers pay our health insurance is that in 1954, Congress made employer health benefits permanently tax free.
• 21:28
  And once that happened, basically like Third party processing of claims.
• 21:32
  Having health insurance like this became the default way that almost everybody in America has health insurance.
• 21:37
  Now you may be wondering now, because yes, employer sponsored health insurance is a big one, but where does Medicare come into all this?
• 21:43
  So I thought this is something that I think is a common misconception.
• 21:45
  I think people think of Medicare as being like this core thing that everything else is based on.
• 21:50
  It's actually the opposite because Medicare does not show up until later.
• 21:55
  Medicare is basically just adopting all this weird groundwork and this like strange system that we've set up for employer sponsored health care.
• 22:02
  And it's just like, okay, if that's working, I guess we'll just do that for the government.
• 22:07
  So Medicare finally gets, comes on the scene in 1965 again.
• 22:11
  1954 is when we got that, that law sort of like solidifying employer based health insurance.
• 22:15
  And instead of like coming up with a new system or doing something different, this Medicare law basically is just saying like, we're going to keep doing things exactly as we're doing them.
• 22:24
  Now the language is kind of funny.
• 22:26
  The language is that we use usual, customary and reasonable charges, ucr.
• 22:32
  And the, the point of that was just to say like, whatever.
• 22:35
  However doctors are setting prices in other contexts, it's just going to be the same for Medicare.
• 22:39
  And at the time that was honestly a huge win for doctors.
• 22:42
  That's something that the American Medical association negotiate in order to get doctors on board with this idea of having Medicare.
• 22:47
  And in the short term, like shortly after that, it really was a windfall for doctors just because doctors got access to a lot more patients who weren't able to pay before and they continued to have a lot of
• 22:57
  control over setting those prices, over deciding what things were going to cost.
• 23:01
  So thank you, AMA of that era.
• 23:03
  Like y' all did great work back then, but I gotta say I feel differently about the AMA today.
• 23:08
  And part of it has to do with one of the acronyms we've been discussing and that's CPT codes.
• 23:14
  CPT codes, again, current procedural terminology.
• 23:17
  Those are the codes that we use to say like I did an appendectomy, that is code, blah blah, blah, blah blah.
• 23:23
  I don't know what the code is, but it's a five number code.
• 23:25
  That coding system, the system of CPT codes was actually developed and published by the AMA in 1966.
• 23:32
  So that's like a year after we get Medicare.
• 23:34
  Like it's just an effort to try to standardize some of this nomenclature.
• 23:37
  But what's crazy about this, this is that the American Medical association owns the copyright for the CPT coding system.
• 23:46
  Okay.
• 23:46
  All CPT codes.
• 23:47
  There's like, there's, you know, there's a lot of them.
• 23:49
  There's like several thousand of them.
• 23:51
  Okay, like, it's a lot.
• 23:52
  But we're talking about that.
• 23:54
  That means that every time, like an IT company, a hospital, like literally anyone who wants to use CPTs to do business, which is everyone in healthcare, they have to pay the AMA because of the copyright on this information.
• 24:08
  And if you're feeling like that's kind of nuts.
• 24:10
  Nuts, like it is kind of nuts.
• 24:11
  And you're not the first person to say that this actually has been challenged before in court.
• 24:15
  So in 1997, there's a group called Practice Management Information Corp.
• 24:19
  They sued the ama, basically saying, like, the CPT code system is public infrastructure that is like, required to interact with the government and to interact with Medicare and Medicaid and to handle this billing.
• 24:31
  Like, you cannot own like a piece of critical infrastructure like this that's needed for our nation's like, like public sponsored health insurance.
• 24:38
  And the court actually like partially agreed with this.
• 24:40
  They did say that they'd misused their copyright because they had this exclusive deal with the government that locked them out, like, locked out any competitors, like an anti competitive component to it.
• 24:49
  So they did make them drop that exclusivity, but they got to keep.
• 24:52
  But they got to keep the copyright and they're still using it today.
• 24:55
  And so let's talk about the ama.
• 24:57
  And this is just a little bit of a caps, like little capsule of a story about how where your money comes from really influences what you do.
• 25:05
  And that's even for nonprofits, even for organizations like this, that at least present themselves as being about advocating for something.
• 25:12
  So in 2011, CPT licensing brought the AMA about $70 million.
• 25:17
  That was about a quarter of their total revenue.
• 25:19
  Back in 2011, they still had like a larger percent of the revenue coming from dues and like actually a little bit more of an active organization.
• 25:26
  Now in 2023, they took in $285 million just for licensing out this stupid CPT code system that we all have to use.
• 25:37
  And that was over 50% of their total revenue.
• 25:40
  This is crazy numbers, y'.
• 25:42
  All.
• 25:42
  Okay?
• 25:42
  Like basically the entire AMA lives and dies off of the CPT code copyright system.
• 25:48
  And remember, this is the same organization that back at its founding, back in its early days, this was like a fiery group that was like out there representing and defending doctors and like the rights of our profession.
• 25:58
  And now they're very much just like a rent seeking organization that is, if anything, fully and completely dependent on maintaining the payment system that we have today.
• 26:10
  Because they make money every time someone uses a CBT code.
• 26:13
  And if you look, if you like, watch what the AMA does, if you pay attention to what they do, they are not.
• 26:18
  They are, they advocate strongly against any kind of public option, any kind of like single payer system.
• 26:24
  Like, they advocate against that stuff.
• 26:26
  They're making money off this complexity.
• 26:27
  And that money that they're making is adding no value.
• 26:31
  Okay?
• 26:32
  Like, it is purely just harvesting value.
• 26:34
  And this organization that used to really be about representing physicians is now just like another rent, it's like another clearinghouse type thing.
• 26:40
  They're just there, like hand open, taking their money for doing almost nothing.
• 26:44
  And you can see it too.
• 26:45
  And like, you know, we're, we're onto them.
• 26:47
  Like, you may not have known why we don't like the ama, but like, that's why we don't like them.
• 26:51
  And it's because, like back in the 1950s, 75% of practicing physicians belong to the American Medical association because it was a real advocacy organization for us, for doctors.
• 27:01
  As a block talk.
• 27:02
  Today, less than a quarter of people are members of the American Medical Association.
• 27:06
  And there's even a good survey out there from 2011 saying that like three quarters of physicians, like who, like they surveyed people who quit the ama and they basically said, like, this organization does not speak for me.
• 27:17
  It doesn't actually represent practicing physicians.
• 27:19
  Like, it's just out there kind of pretending.
• 27:20
  Okay, so I, I ranted about the ama.
• 27:22
  Honestly, I've been wanting to get off my chest, like, thank you for listening.
• 27:25
  But I have one more rant that I want to get through for this episode.
• 27:29
  And it's another, another bit of Alphabet soup.
• 27:31
  So let's talk about RVUs and the R, U, C.
• 27:35
  So this is probably the most nefarious seeming part of this process.
• 27:38
  And it's almost like, it almost seems not real.
• 27:41
  So what I think about when I think about this is if you've ever watched the Office, the American Office, there's this scene where they're trying to decide, like, how to divvy up bonuses.
• 27:51
  There's like an extra bonus that needs to be given out.
• 27:54
  And Jim at the point, at that point, I think is in charge and he's like, I know, know.
• 27:59
  We'll print out pictures of everyone's faces and then we'll put beans, we'll distribute the beans and like, however many beans somebody gets, that's how much of that percentage of the bonus they get.
• 28:09
  That that like, distribution of things via beans from like a fixed pot, that is how doctors get paid as well.
• 28:15
  So let me show you how.
• 28:16
  So you've probably, if you've ever been, especially with a surgeon who's in an RVU based model, you have heard the rants about RVUs.
• 28:23
  So RVU means relative value unit.
• 28:26
  So this is basically kind of a unit of your time and labor that kind of takes into account several factors.
• 28:33
  So every CPT code that you put in as a, like, say you're a surgeon, you do an appendectomy, that CPT code is associated with a relative value unit.
• 28:42
  That relative value unit in turn is built out of three things.
• 28:46
  Physician work practice expense and malpractice risk.
• 28:51
  So basically, if you think about like my, my example from the office is trying to decide how many beans, like appendectomy is versus a breast augmentation versus a primary care visit versus whatever else.
• 29:01
  But everything has to be in beans.
• 29:04
  The beans are the RVUs.
• 29:05
  RVU is our only unit that we have.
• 29:08
  So the problem here is that just like in that example, we have fixed pot of RVUs, the RVU pie, it is fixed.
• 29:17
  So the only thing that can change is relative.
• 29:21
  So like, basically every single doctor, every single procedure, every single thing that doctors do in this country is modified, sanitized in the system.
• 29:30
  And say, like, say we decide that like, we think appendectomy should get more money because we're like, doing it with this new technique.
• 29:37
  Now the only way that you can change the RVU of an appendectomy is by reducing the RVU of something else.
• 29:46
  Because it is a zero sum game, y'.
• 29:48
  All.
• 29:48
  It is a fixed pie, it's a fixed pot of beans.
• 29:51
  And like, the only way that one doctor wins, that one profession wins, the only way is by someone else losing.
• 29:58
  And let me just say it's fucked up because rather than this system being about doctors being paid what they're worth, this system is practically designed to pit doctors against each other, especially across different specialties, because again, if somebody
• 30:11
  wins, somebody else loses.
• 30:13
  And that's how it works.
• 30:14
  So the way that Medicare decides then what to pay you is they multiply the rvu.
• 30:19
  So like your appendectomy, rvu, whatever that number is, it, it multiplies that by some kind of dollar conversion factor.
• 30:25
  And however many RVUs then gets turned into however many dollars, that conversions factor is set annually by Congress and by cms and then private insurers mostly use that same benchmark.
• 30:36
  So like this one number gets set, Congress sets the conversion factor, and then that's multiplied by the RVUs, and that's how this all gets decided.
• 30:42
  Just trickles.
• 30:43
  Trickles down to the whole Hogarth system.
• 30:44
  Okay, so you're probably wondering now, like, who is Jim Halpert in the scenario?
• 30:48
  Who's the one who gets to distribute the beans on all the faces?
• 30:51
  So now I don't want to sound conspiratorial here, but I gotta say, this is one of the weirdest, shadowiest organizations in this whole system.
• 30:58
  And they're so powerful, y'.
• 31:00
  All.
• 31:00
  So who gets to decide?
• 31:02
  The rvus is the ruc.
• 31:04
  The RUC stands for the RVS Update Committee.
• 31:07
  So this is like the people who get to decide what RVUs are.
• 31:12
  Are these people elected?
• 31:14
  Do we, do we like, are they somehow selected from like a esteemed group or something?
• 31:19
  Like, how's work?
• 31:20
  They, that's, that's.
• 31:21
  They're just circumvened by the ama.
• 31:23
  Y' all like the ama, Those same people who I'm not sure we trust anymore or I'm not sure really have our best interests at heart.
• 31:28
  The AMA picks the people who are on this committee.
• 31:32
  It is 32 volunteer physicians.
• 31:34
  They represent a lot of different specialties, but by no means is it necessarily proportional to like the workforce or the needs of our society.
• 31:41
  So, for example, like primary care care, like a quarter of our workforce is primary care.
• 31:45
  I promise you, a quarter of the RUC is not primary care.
• 31:48
  People specialties are almost definitely overrepresented.
• 31:50
  So basically how it works, like, obviously they're at least pretending like this is an evidence based process.
• 31:54
  And I get it, it's complicated, but I just want to say these 32 people get to sit in a room somewhere and decide how much everything we do is worth.
• 32:00
  And that's a little bit insane.
• 32:02
  So basically, each of these people on this committee, the specialty societies that they come from, they survey their members about how much time stuff takes, how much effort it takes, all the kind of like, like trying to get
• 32:13
  a sense for what the relative complexity and the relative value of things that we do is.
• 32:18
  And then this committee, the R U C, they vote to decide ultimately how all of that pie is going to get divided that year.
• 32:24
  Now this is not binding, like technically, again, technically, this is an expert committee recommendation.
• 32:27
  But the reality is that CMS doesn't have time.
• 32:30
  They don't have time to go through all this stuff.
• 32:32
  So they adopt like upwards of 90% of this all the time anyway.
• 32:35
  It's completely insane.
• 32:36
  And honestly, if you look at the kind of any kind of public press about the R U C, a lot of what you see is concerned that this is probably allowing doctors to basically more or less lobby against
• 32:46
  each other to get more money and to inflate the value of what they do to try to get more.
• 32:52
  But honestly, like, I don't really think that's what's going on here.
• 32:55
  Like, I'm sure there are people who are saying that it takes longer to do stuff or whatever to try to like, goose the numbers a little bit.
• 33:01
  But when it's a fixed pie, like, it's.
• 33:04
  It's like the wrong.
• 33:05
  We're playing the wrong game, you know, like, we're fighting the wrong enemy.
• 33:08
  Like, what's crazy about this is this random committee from the ama, which again, does not represent our interests anymore.
• 33:15
  Like, that's who gets to decide everything about how we get paid.
• 33:18
  Okay, so to close, like, this is a lot.
• 33:19
  I know this is a lot, and I know that I got on some side tangents, but I do think they're pretty juicy.
• 33:23
  I hope you agree.
• 33:24
  Let's do a quick.
• 33:25
  A quick recap of, like, what is happening here.
• 33:27
  How do doctors get paid?
• 33:29
  Doctors get paid via claims.
• 33:31
  A claim is five fields.
• 33:33
  It's built out of ICD10 codes which tell you what the diagnosis is.
• 33:37
  CPT codes that are basically a pay to play, like, big database that the AMA invented in 1966.
• 33:44
  They still own the CPT codes, then get turned in to RVUs.
• 33:49
  RVUs are in turn set by the shadowy organization called the RUC and rubber stamp by the cms.
• 33:55
  And then all of that gets passed through any, like a huge, at least one clearinghouse.
• 34:00
  There's always a clearinghouse, okay?
• 34:01
  And all of these steps along the way are harvesting, chipping away more and more at what's there.
• 34:07
  And in the end, the doctor doesn't really have much recourse if the insurance company just decides not to pay them at all for work that they've already done.
• 34:15
  So next time you have to put in a CPT code or an rvu.
• 34:18
  Let me just.
• 34:19
  I just want you to think about this stuff, okay?
• 34:20
  I just want you to just start to be a little bit aware of this system that is operating all the time, right under our noses that very few of us understand.
• 34:28
  And like, yes, I've talked a lot in this episode about how doctors make money.
• 34:32
  But the real, the reason that this is so important to me, honestly, if you take a Step back is that all of this complexity is really driving a wedge between doctors and patients.
• 34:42
  Because just as like, this was just about us, this was just about the complexity that doctors face.
• 34:47
  It's the same for patients, okay?
• 34:49
  Like, the patient is also dealt such a terrible hand and has to deal with all of these insane organizations, these insane policies.
• 34:57
  And when that doesn't work out, they turn to the only face that they actually see.
• 35:01
  And that's you.
• 35:02
  That's the doctor.
• 35:03
  So to me, the actual, like, real cost of all this is that loss of trust.
• 35:06
  Like, it's.
• 35:07
  It's just makes it seem like we're putting more and more distance between doctors and patients.
• 35:12
  And all through these systems that I believe add little to no value.
• 35:17
  It may actually be making our care worse.
• 35:18
  So before we go, like, I just.
• 35:20
  There are.
• 35:20
  This is.
• 35:21
  I know this is, like, sort of pitched as a evergreen episode, but I do want to say these are active issues.
• 35:26
  There's some cool stuff going on, particularly around CPT copyrights.
• 35:29
  We've got some new proposals out there about, like, maybe getting away with the ruc.
• 35:33
  Like, we'll see.
• 35:34
  Anyway, I'll do some episodes as well along the way for news if anything comes of those things.
• 35:38
  But for now, I just want you to keep in mind that the system by which doctors get paid is not normal.
• 35:43
  It's not okay, and we can do better.
• 35:45
  But the first step to doing better is just understanding how crazy it is and how it works.
• 35:51
  Because if we don't know how it works, we can't fight for better.
• 35:53
  Thank you for listening to Cut and Tell.
• 35:55
  If you enjoyed this episode, please subscribe, rate us five stars, and leave us a review.
• 36:00
  Better yet, send this to someone that you know who you think should also be outraged or at least better informed, and then check out all of our other amazing shows and episodes@hippocratic-collusive.com.