Health care reform. Be humble. Be afraid of the accounting rules.

We're going to change American health care again.

It would be good to learn from past mistakes. In particular it would be good to remember that accounting is terribly dull and terribly powerful, which means it's terribly dangerous.

Consider the way we account for ambulatory care today.

In the 1980s, when I was doing my family medicine training, the Feds wanted to encourage primary care physicians. They looked for a "fair" way to divert money from procedural specialties to primary care and came up with the "RBRVS" (emphases mine) ...

Resource-Based Relative Value Scale - Wikipedia, the free encyclopedia

... RBRVS was created at Harvard University in their national RBRVS study from December 1985 and published on September 29, 1988. William Hsiao was the principal investigator who organized a multi-disciplinary team of researchers, which included statisticians, physicians, economists and measurement specialists, to develop the RBRVS.

In 1988 the results were submitted to the Health Care Financing Administration (today CMS) to be used in the American Medicare system. In December of the following year, President George H. W. Bush signed into law the Omnibus Budget Reconciliation Act of 1989, switching Medicare to an RBRVS payment schedule. This took effect in January 1, 1992. Starting in 1991, the AMA has updated RBRVS continually. As of May 2003, over 3500 corrections have been submitted to CMS.

Physicians bill their services using procedure codes developed by a seventeen member committee known as the CPT Editorial Panel...

To implement the RBRVS rules an accounting system had to be developed. That accounting system is expressed as the rules for "Evaluation and Management" codes.

Who developed that accounting system?

The AMA.

Who funds and controls the AMA?

Surgeons and procedural specialists.

So the RBRVS, aimed at improving reimbursement for non-procedural work, was transformed into accounting rules by an organization dominated by proceduralists.

It worked about as well as one might expect. From the mid 1990s through 1999 the "E&M" rules went through 3 revisions amidst a bitter struggle between physician specialties. The controversy was so great that the 1999 rules were never implemented, and today variations of the 1995 and 1997 rules are both accepted.

The rules are, and I say this carefully, insane. I've designed expert system solutions that worked with the rules, and no human should ever have to think about them. The saving grace is that despite all the complexity and branches and calculations and summations and variations, there are only 3 likely code choices for the care of a particular patient. Physicians pick what feels right, knowing that they must be breaking the rules some of the time and so, on average, tending to bill a bit on the low side.

The worst effect, however, is how the accounting rules perverted primary care. The penalties for error are theoretically severe -- for a while the FBI devoted a special team to looking for cheaters. Physicians are required to document all that's done, and thus care was radically changed to focus on documentation of material of virtually no clinical value. The modern medical note is almost unreadable.

Lastly, since the accounting rules involve points for bits of the body examined, physicians are incented to spend too much time on rote and pointless examination and documentation, at the cost of thinking about a patient's needs and problems.

Primary care is in bad shape today. I wonder if William Hsiao has any idea what came of his original work. It's a beautiful example of the unintended consequences arising from accounting rules.

Let's try to remember the lessons of the RBRVS and the E&M coding story.

Accounting is dull, Accounting is terrible.

Be afraid of accounting.