Excessive health care spending is overwhelming America’s economy, but the subtler truth is that this excess has been largely facilitated by subjugating primary care. A wealth of evidence shows that empowered primary care results in better outcomes at lower cost. Other developed nations have heeded this truth. But US payment policy has undervalued primary care while favoring specialists. The result has been spotty health quality, with costs that are double those in other industrialized countries. How did this happen, and what can we do about it.

American primary care physicians make about half what the average specialist takes home, so only the most idealistic medical students now choose primary care. Over a 30 year career, the average specialist will earn about $3.5 million more. Orthopedic surgeons will make $10 million more. Despite this pay difference, the volume, complexity and risk of primary care work has increased over time. Primary care office visits have, on average, shrunk from 20 minutes to 10 or less, and the next patient could have any disease, presenting in any way.

By contrast, specialists’ work most often has a narrower, repetitive focus, but with richer financial rewards. Ophthalmologists may line up 25 cataract operations at a time, earning 12.5 times a primary care doctor’s hourly rate for what may be less challenging or risky work.

These differences in physician worth and payment didn’t just happen. Instead, they have been driven by a 31 doctor – 26 specialists and 5 primary care physicians – American Medical Association panel, the Relative Value Scale Update Committee (RUC), which for 20 years has been Medicare’s sole advisor on the value of physician services. The Centers for Medicare and Medicaid Services (CMS), the federal agency overseeing the program, has historically accepted nearly 90 percent of the RUC’s recommendations with no further due diligence. So the RUC has huge financial impact throughout health care, not only for Medicare but for many commercial health plans that follow Medicare’s lead on payment.

CMS has never designated the RUC a Federal Advisory Committee (FAC), which has let it avoid the stringent legal requirements of the Federal Advisory Committee Act, ensuring that regulation is formulated in the public rather than the special interest. Even so, CMS’ reliance on this panel is congruent with legal precedents that would render it a “de-facto” FAC, and the rules would apply. The law is clear, for example, that federal advisory bodies’ proceedings must be transparent and available to the public. The panel’s composition must numerically reflect the real world. Scientific methods must be credible, and panelists must disclose and avoid financial conflicts.

CMS has willfully ignored these requirements, and the RUC has freely exploited the opportunities that resulted. Barbara Levy MD, the RUC’s chair, insists that the RUC is an expert panel, not meant to be representative. She has written that “The work of the RUC benefits the entire Medicare system and is done at no cost to taxpayers,” as though it is an altruistic activity. But in an interview last October, she admitted “We assume that everyone is inflating everything when they come in. They are wanting to fight for the best possible values for their specialties.”

Nor does every specialty get to play. Geriatrics was finally welcomed to a seat only in May. For the previous 20 years, Medicare, a program dedicated to seniors’ health care, didn’t feel specialty expertise on the elderly was pertinent.

Over time, the RUC’s over-valuing of specialty services and under-valuing of primary care has had serious real world impacts. It has created lucrative incentives for specialists to over-treat. Lower primary care reimbursements have resulted in shorter visits and a doubling of the specialty referral rate over the past decade. An increasingly rushed schedule has inhibited primary care’s ability to moderate inappropriate specialty care.

But ultimately the RUC’s payment distortions have damaged far more than primary care physicians’ work lives. Patients receiving unnecessary services are needlessly exposed to physical risk.  Purchasers – taxpayers, businesses and individuals – shoulder excessive and rapidly growing health care costs.

It is reasonable to place a sizable part of these excesses at the feet of CMS’ too cozy relationship with the RUC. Like lobbying, the RUC’s capture of regulatory oversight has been a boon to the health industry. It has driven ruinous national deficits, and is the greatest obstacle to turning around our health system and our economy.

Last August, Dr. Fischer and other Augusta, GA primary care physicians sued Medicare, challenging its reliance on the RUC. The case was tossed out in May on a procedural technicality, without considering the merits of the complaint, but is now under appeal.

That case could be made moot if the Obama Administration simply prevailed on the CMS Administrator to require the RUC to adhere to the FACA rules, as most other federal advisory panels do. (Of course, that would require that someone inside the Administration has the drive and the courage to focus on it.) At the same time, CMS could begin an energetic effort to re-evaluate mis-valued codes that represent high volume or high cost services. The simple act of changing the value and incentives associated with incorrectly valued medical services could immediately save tens or even hundreds of billions of dollars.

It is clear that it will be impossible to get American health care under control unless we can recapture regulation and reconfigure it to act in the common rather than the special interest. Until that is accomplished, America’s and our children’s diminishing prospects will be directly tied to our failure to stop the health industry’s rapaciousness.

Brian Klepper is Chief Development Officer of WeCare TLC and blogs at Care and Cost. Paul Fischer is a family physician who practices at the Center for Primary Care.  Along with 5 of his colleagues, he filed suit against HHS and CMS to challenge the illicit relationship between CMS and the RBRVS Update Committee (RUC), which has shaped the current payment system.