William A. Hyman
Professor Emeritus, Biomedical Engineering
Texas A&M University, w-hyman@tamu.edu
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The latest final rule release on physician payments is replete with assertions of burden reduction and cost savings. Without various addenda, the rule comes in at a mere 2378 pages, 2063 for the discussion and 315 for the rule itself. “Burden” or “burdensome” is addressed 1,011 times. Before getting to the savings we might note that any promise to reduce a regulatory burden means that the previous rule could not have been the least burdensome, unless the agency is saying they are now going below the least necessary to do the job.
The rule is said in various places to save physicians $87 million in Evaluation and Management (E/M) administrative costs, although I couldn’t find this number in the rule itself. Such numbers are generally derived by counting up a minute saved here and a minute saved there and then multiplying the total by an average income per minute. It would be less exciting if the number of minutes saved were touted, and even less so if it were minutes per person. But what does a regulatory burden cost savings actually mean? In normal parlance “savings” would mean that less money would be spent than would otherwise have been the case. But in this case it isn’t actually about real money.
By the CMS methodology if you are waiting for an elevator and it comes 1 minute earlier you saved 1/60 of your hourly rate. But, of course, you didn’t actually save any money and it is quite difficult to put that one minute to beneficial use. Moreover, even if you saved one minute per day you can’t bundle those minutes into a more useful amount during which you might earn some extra money. Without getting into the physics of time, a minute here and a minute there is exactly that. You can’t collect them such that they amount to an hour someplace else.
In order for there to be real savings you have to actually spend less money. If you go to the store to buy something and it is $2 off, and you actually buy it, you saved $2, assuming you were going to buy it anyway. When you get home, you will have $2 more in your pocket then if the product hadn’t been on sale. That’s is saving money.
You might save money on administrative costs if you were paying someone else to do the work, and you could reduce their pay accordingly if the time necessary to do a task were reduced. In this case you would actually save money–and the employee or contractor would lose money. But it is rare for salaries or contractor costs to be that tightly accounted for. If it were we would have an example of one person’s savings being another person’s loss of income. I don’t think I have ever seen an administrative cost savings announced as “Clerks to take an $87 million pay cut.”
While no money will be saved by reducing the regulatory burden, maybe someone will get to leave 5 minutes early which isn’t a totally bad thing. Or you do 5 minutes of something else, or 5 minutes of nothing. Make the most of your 5 minutes.