US Medicine: Death by Command and Control Regulation

When I discuss the corrosive effects of regulation on progress in medicine, such as the enormous and entirely unnecessary costs and barriers put in place by the US Food and Drug Administration (FDA), I usually focus on the research and development side of the coin: the process of creating new therapies. That is greatly impacted, not least because as the system presently stands it is actually impossible to gain approval for any treatment for degenerative aging - no medicine is permitted into the clinical trial system if its purpose is to treat old people to reverse some of their symptoms. The FDA doesn't recognize aging as a named medical condition that can be be treated, and there is no path short of complete revolution in the regulatory system in the US to make this any different.

The costs and prohibited actions due to the FDA propagate back down the fundraising chain. You can't raise venture capital if there's prospect for selling the resulting therapy. It's harder to raise funds for basic research when there's no connection to later commercial activity. There are thus far fewer research groups working on potentially important ways to address aging than there might be, and less press and public understand of what might happen if the FDA were not standing in the way, a hideous roadblock, a ball and chain that stops the research community from improving the human condition. The invisible costs, the therapies that might have existed but do not because of regulation, are always the hardest to make people understand.

But that's just one side of the coin. The other side is the provision of medical services: once therapies exist, how are they delivered, priced, and bought and sold? Here the institutions of regulation have just as horrific and corrosive an effect, raising costs and reducing availability to no good end - a system has come into being that benefits no-one, as every individual would be better off under a free market for medical services, and yet this system seems destined to become even worse in the future. Perverse short term incentives steer us all in the wrong direction. Allow me to point out an article that provides an unusually clear vision of how one facet of this process is proceeding:

How Government Killed the Medical Profession

At first, the decay was subtle. In the 1980s, Medicare imposed price controls upon physicians who treated anyone over 65. Any provider wishing to get compensated was required to use International Statistical Classification of Diseases (ICD) and Current Procedural Terminology (CPT) codes to describe the service when submitting a bill. The designers of these systems believed that standardized classifications would lead to more accurate adjudication of Medicare claims.

What it actually did was force doctors to wedge their patients and their services into predetermined, ill-fitting categories. This approach resembled the command-and-control models used in the Soviet bloc and the People's Republic of China, models that were already failing spectacularly by the end of the 1980s.

Before long, these codes were attached to a fee schedule based upon the amount of time a medical professional had to devote to each patient, a concept perilously close to another Marxist relic: the labor theory of value. Named the Resource-Based Relative Value System (RBRVS), each procedure code was assigned a specific value, by a panel of experts, based supposedly upon the amount of time and labor it required. It didn't matter if an operation was being performed by a renowned surgical expert--perhaps the inventor of the procedure--or by a doctor just out of residency doing the operation for the first time. They both got paid the same.

Hospitals' reimbursements for their Medicare-patient treatments were based on another coding system: the Diagnosis Related Group (DRG). Each diagnostic code is assigned a specific monetary value, and the hospital is paid based on one or a combination of diagnostic codes used to describe the reason for a patient's hospitalization. If, say, the diagnosis is pneumonia, then the hospital is given a flat amount for that diagnosis, regardless of the amount of equipment, staffing, and days used to treat a particular patient. As a result, the hospital is incentivized to attach as many adjunct diagnostic codes as possible to try to increase the Medicare payday. It is common for hospital coders to contact the attending physicians and try to coax them into adding a few more diagnoses into the hospital record.

Coding was one of the earliest manifestations of the cancer consuming the medical profession, but the disease is much more broad-based and systemic. The root of the problem is that patients are not payers. Through myriad tax and regulatory policies adopted on the federal and state level, the system rarely sees a direct interaction between a consumer and a provider of a health care good or service. Instead, a third party - either a private insurance company or a government payer, such as Medicare or Medicaid - covers almost all the costs. According to the National Center for Policy Analysis, on average, the consumer pays only 12 percent of the total health care bill directly out of pocket. There is no incentive, through a market system with transparent prices, for either the provider or the consumer to be cost-effective.

Once free to be creative and innovative in their own practices, doctors are becoming more like assembly-line workers, constrained by rules and regulations aimed to systemize their craft. It's no surprise that retirement is starting to look more attractive. A June 2012 survey of 36,000 doctors in active clinical practice by the Doctors and Patients Medical Association found 90 percent of doctors believe the medical system is "on the wrong track" and 83 percent are thinking about quitting. Another 85 percent said "the medical profession is in a tailspin." 65 percent say that "government involvement is most to blame for current problems."

If provision of medicine stultifies, then so does much of the impetus for research. In the field of aging and human longevity that matters greatly - we're on a timer, all aging to death one day at a time, and cannot afford to suffer through decades of collapse and slow progress in research, development, and provision of medical services. To my eyes the present system is doomed; the only way through is for it to fail utterly in one way or another. The most plausible collapse is the one the US regulatory monolith continues to exist, a drain on the declining US, but where near everyone travels to Asia-Pacific countries or other less regulated destinations for any meaningful medical services - in other words much like the UK, or other European countries. The only hope for the future is competition through medical tourism, which requires that other advanced regions of the world maintain far less onerous regulations for medicine.

You might look back in the Fight Aging! articles for links to a few other articles on the same theme, which variously blame the guild system of the medical profession and the command and control socialism of the hospitals for the present decline in medicine:

Comments

Sir,
This interesting article misses at least one important point. Aging or state of being old, oftentimes referred to as frailty is recognized as disease or at least as a clinical syndrome. It has a valid (and billable) ICD-9 code, which is 797, and there are corresponding codes in ICD-10 as well (R54). Symptoms include weight loss, weakness, fatigue, inactivity, and decreased food intake. In addition, signs of frailty (or aging, or state of being old) that are frequently cited as components of the syndrome include decreased muscle mass, balance and gait abnormalities, deconditioning, and decreased bone mass. These clinical characteristics have been shown to be highly predictive of a range of adverse outcomes including decline in function, institutionalization and mortality. There is significant body of research highlighting pathophysiological mechanisms and manifestations of this syndrome as well. It is up to individual physicians to code appropriately so that the true prevalence of this condition could be captured by epidemiological studies. Information provided by Fight Aging! group could be put to much greater use if it directly addressed the clinical reality.

Posted by: Andrius Baskys at April 28th, 2013 3:53 PM

@Andrius Baskys: I'd be surprised if there wasn't a billable code for non-specific frailty, given that a lot of services are offered to that demographic. Caregivers, managed housing, etc.

Code reference for the curious:

http://www.icd9data.com/2012/Volume1/780-799/797-799/797/797.htm

It's still the case that there is no path to obtaining FDA approval for a therapy to treat aging, however. That's a whole different chunk of bureaucracy.

Posted by: Reason at April 28th, 2013 4:03 PM

Post a comment; thoughtful, considered opinions are valued. New comments can be edited for a few minutes following submission. Comments incorporating ad hominem attacks, advertising, and other forms of inappropriate behavior are likely to be deleted.

Note that there is a comment feed for those who like to keep up with conversations.