Reform the physician fee schedule

Unfortunately, the U.S. healthcare system has long reimbursed procedures and other high-cost interventions at the expense of primary and MH/SUD care. As a result, primary care physicians and psychiatrists have average annual incomes less than half of top-earning specialties – and fall in the bottom half of specialties – contributing to chronic physician shortages in these areas.[1] Primary care spending accounts for less than five percent of all healthcare spending (a percentage that has been declining).[2] Similarly, MH/SUD spending as a proportion of private insurance reimbursement is also about five percent, with significantly lower reimbursement for MH/SUD providers than physical health providers for the same billing codes.[3] By comparison, other high-income countries spend a significantly higher percentage of their health care spending on primary care – an average of 14 percent versus five percent in the U.S.[4]

An important driver of this deeply flawed system is the Medicare Physician Fee Schedule (PFS), which undervalues primary and MH/SUD care and sets a benchmark for the entire healthcare system. In the long-established process, the American Medical Association’s RVS [Relative Value Scale] Update Committee (RUC) advises CMS on the supposed relative value of physicians’ work for purposes of setting Medicare reimbursement rates. CMS broadly defers to the RUC’s recommendations. Unfortunately, the RUC has long undervalued primary and MH/SUD care[5] and has numerous methodological problems, including small sample sizes, lack of transparency, conflicts of interest, and overestimates of physician time for some specialties.[6] The resulting Medicare PFS contributes to just over half of psychiatrists accepting Medicare, far less than the more than 85 percent of physicians in other specialties.[7]

Even without the inherent flaws in the RUC process, Congress and CMS should be setting Medicare reimbursement based on the value of services, prioritizing primary and MH/SUD care, which drive enormous value by improving health and well-being. Our failure to invest in MH/SUD has enormous costs, with patients with one or more MH/SUD accounting for an estimated 57 percent of total healthcare costs. Yet half of these individuals received less than $68 in annual MH/SUD treatment.[8]

Congress should also reject the current zero-sum game that demands that any increase in investments through the Medicare PFS for primary and MH/SUD care must come at the expense of other services. Such a zero-sum game creates a system in which significant investments in primary and MH/SUD care are extraordinarily difficult, preventing our country from moving upstream to promote health and prevent more costly illnesses. To get the U.S. healthcare system out of the vicious cycle where it underprovides primary and MH/SUD care and then must pay for overvalued procedures when individuals are sicker than they would be had they received appropriate primary and MH/SUD care, CMS and Congress must make the foundational changes necessary to change our current “sick care” system into a real healthcare system.