What Do We Need to Do to Fix the Medicare Physician Payment Problem?
Whenever the subject of Medicare physician fee payments comes up on this blog, the reaction from physicians, particularly primary care docs, is predictable: "You can't cut us, we haven't had a Medicare raise in years, we are already dramatically underpaid, and if Medicare cuts our payments we are going to stop taking Medicare patients."
There is no doubt that doctors have a point--particularly the primary care folks. A huge problem is that the payment balance between primary care and specialty care has gotten way out of whack as both private and public payers have tended to lump the two categories of physicians together. This has been going on for so long that it is also leading to a growing shortage of primary care physicians.
There is also no doubt that Medicare is financially unsustainable on its present track and that applies to all categories of health plans--public and private.
The Sustainable Growth Rate (SGR) formula is obviously not working--just the fact that the Congress keeps overriding it speaks for itself. But in concept, it did have a legitimate objective.
Congress created the SGR in 1997 as it became clear Medicare costs could not be sustained. The idea was to set an "affordable" physician cost trend and when real costs exceeded that level Medicare would compensate for it by cutting future fees.
The SGR message to doctors was simple: If you spend too much the Medicare program will compensate by cutting your fees in the future to balance things out. The objective was to give physicians a reason to control their costs.
As we now know, the Congress did a "never mind" every time a cut was required under the formula.
Maybe the SGR was too broadly targeted. Maybe the target should haven been broken down with a focus on primary versus specialty, or even by each specialty. Maybe it was an unrealistic idea in the first place. Maybe the fact that it was never enforced spoiled its intent. Maybe it was unrealistic to think the docs really had any control in the first place. Maybe we should just give the docs a blank check.
What is happening to Medicare and physicians also can't be seen in a narrow context--the same issues plague Medicaid, SCHIP, and the commercial market. Costs for hospitals, drugs, durable medical equipment, and everything else is also on the same unsustainable track.
But to all the physicians who post on this blog with the general message "you can't cut us," there may be a lot of truth to that but of course it's a lot more complicated than that. Medicare--and every other program--is simply unsustainable in its current form.
While it is true that everyone else in the system carries guilt--like insurance company overhead, cost insensitive patients, drug company behavior, and on and on, pointing the finger at the other guy doesn't count for the sake of this conversation--those are all legitimate issues but also provide a pass for physicians not dealing with their own issues here.
So, what is the answer?
"If you touch me I will abandon my senior patients," is not an answer. That's just a threat--and an unrealistic one at that. Even with a deal this month to defer the cuts, the SGR already has an automatic 21% cut set to occur on January 1, 2010--the problem is literally growing at an exponential rate. Stalemate on all of this just means physicians have to live with the current mess indefinitely.
Where does the physician payment problem go from here?
This month's fight over Medicare physician fees: Run For the Hills, the Doctors Are Coming, the Doctors Are Coming!!!!
Earlier post: There Won't Be Any Health Care Reform Without Physician Payment Reform and There Won't Be Any Physician Payment Reform Unless the Docs Lead The Way
23 comments:
>If you spend too much the Medicare program will compensate by cutting your fees in the future to balance things out. The objective was to give physicians a reason to control their costs.
But this did not take into account:
1. consumer demand, particularly when coupled with the MORAL HAZARD of consumers who get the benefit but don't pay the bill
2. The growing number of Medicare patients. More patients = more cost. Even people in Washington should be able to figure that out. Can't punish docs for longer lifespan and an aging population...after all, isn't that the point?
3. Costs for all kinds of non-physician services lumped into this SGR...like chemotherapy drugs. When those cost more or get used more, why should docs get punished?
>Maybe it was unrealistic to think the docs really had any control in the first place.
Bingo
>Maybe we should just give the docs a blank check.
No, just put the patients on the hook for a meaningful part of the bill and watch utilization decrease. Works like a charm every time it is tried.
>"If you touch me I will abandon my senior patients," is not an answer. That's just a threat--and an unrealistic one at that.
Really? Whether or not YOU think it is realistic, it is already happening...
http://www.youtube.com/watch?v=pGTqqQkMIDU
And once docs who have been abused by Medicare take the leap and opt out, do you think you could ever lure them back?
Bottom line: you can't sell each item in the inventory at a loss and make it up in volume.
Docs absolutely will vote with their feet. And so will students seeking a career.
There is a well established means for setting prices of goods and services that does the following things:
1. Matches supply with demand
2. Rewards quality, service, convenience, value, and innovation
3. Results in low transaction costs and administration
What is it?
THE MARKETPLACE.
Lift the balance billing ban so the treasury isn't bankrupted, but stop the price fixing so massive shortages can be avoided.
Let freedom ring.
Let the invisible hand of the marketplace work its magic.
Failure to do so will result in exodus from Medicare and possibly even medical schools.
The position that patients (and not just doctors characterized by the insurance industry and taxpayer groups as “overpaid”) will suffer here needs more than the typical anecdotal response. A Duke University study being published next week, funded by the National Patient Advocate Foundation's Global Access Project, will claim that reducing treatment reimbursements to physicians (in this case specifically for chemotherapy drugs) as a result of the Medicare Modernization Act of 2003 wasn’t detrimental to patient access to care. It appears that those who wish to deal with the health care crisis by attacking costs alone (clearly in order to sustain their profit-position in this marketplace) are doing a better job at laying the groundwork for ongoing policy changes that favor them over the physicians and researchers who treat and care for patients.
Physicians, working with others impacted (ie., treatment researchers, developers and manufacturers) need to have quantifiable and demonstrable impact data to prevent the cost-containment train from leaving the station completely. Patient advocacy groups have an equal stake in this otherwise true quality of care will suffer and all our real health care costs will become beyond our ability to absorb. Meanwhile the managed care, health insurance and pharmacy benefits managers will have profiteered nicely from our ineffectiveness to fully understand what they’re doing.
"If you touch me I will abandon my senior patients," is not an answer."
I argue that is the answer and I gave an economic analysis of 15 years of no significant raises in the setting of rising medical expenses and CPI inflation. In 4 short years under current government mandated rules, the primary care physician can expect a take home pay equivalent to the average American, under $50,000 a year. In 5 years, that income drops to minimum wage.
Yes, it's time primary care abandoned Medicare to save both themselves and their patients.
http://tinyurl.com/5objpe
Anon - marketplace advocates ignore the major differences between health care and other goods and services. Medicine is more of an art than a science, with the efficacy of many procedures and services undetermined. And humans are very different and respond differently to different treatments (see recent research on the poor record of blood doping tests for males of Asian descent, research indicating certain people of African descent metabolize opioids very rapidly). Humans also have multiple comorbidities, which also must be considered when treating any one condition.
This is not a 'market' per se; patients don't know exactly what they need and often physicians don't either. The diagnostic process is a craft business and cannot be dumbed down to a cookbook, and in many cases the treatment phase is also problematic due to individual differences and nuance.
And lets not forget the extremely influential power of medical device and pharmaceutical companies who are able to greatly influence medical care.
It would be great if we could flip a switch and magically the 'marketplace' could fix health care. And like most things magical, it's also a myth.
Bob, you always have a clear take on what's going on.
CMS can fix a lot by changing how it assigns RVUs. Boost RVUs for E&M codes and drastically lower them for procedures and diagnostics. There it is.
They did this in 2007 on a small scale by boosting E&Ms and lowering radiology. (So any primary care doc who says they haven't had a raise in years isn't being fully honest.) Incentivize old-fashioned visits (and maybe start paying for prevention?), and de-incentivize the tech bells & whistles, and lets see what happens.
And anonymous2, how exactly do you think physicians will be better off balance billing? You must assume that they'll actually collect, instead of spending more andmore on staff to dun seniors for money they don't have. Genius.
>And anonymous2, how exactly do you think physicians will be better off balance billing? You must assume that they'll actually collect, instead of spending more andmore on staff to dun seniors for money they don't have. Genius.
Well, I am a primary care doc. And I would collect the same way Wal-Mart collects...with a friendly face at the check out counter who says "Cash, check, or Credit card?"
And if they don't pay, they don't come back.
Medicine is a business, not a hobby.
>Anon - marketplace advocates ignore the major differences between health care and other goods and services. Medicine is more of an art than a science, with the efficacy of many procedures and services undetermined.
So? Are you saying that only science is appropriate for markets? Is not art itself traded in a marketplace?
What about law? The legal profession is art, not science, yet legal services are bought and sold in a free market.
Your objection is silly.
>And humans are very different and respond differently to different treatments
Indeed. And so what?
And re: comorbidities, etc. Why not an hourly rate for physician services like legal services?
>This is not a 'market' per se; patients don't know exactly what they need
You mean unlike law?
>The diagnostic process is a craft business and cannot be dumbed down to a cookbook
100% agree. I said market, not "widget".
>It would be great if we could flip a switch and magically the 'marketplace' could fix health care.
We won't know unless we try. It can't be worse than what we've got.
I have to say balance billing is compelling at one level. Let the market sort out prices and reward the docs who attract the customers with their better care and get away from this crazy government payment system.
But, one of the things critics of Medicare Advantage worry about is that it will create a two-tiered senior health system--private with a premium price and available if you can afford it and the traditional Medicare plan that devolves to Medicaid.
A pure health care market is tempting. But is health care different?
Until private plans came along, Medicare was a universal program--rich and poor got the same thing.
Do we want to move the program back to being universal (the same for all)or do we want to head in the market direction and let the market sort it all out out and arrive at a tiered system based on ability to pay?
While have 47 million uninsured and some employers a lot more frugal than others when it comes to health care, we do still have a sort of universal system at most employers for those under 65 who are lucky enough to be in employer-based care--the vice president generally gets the same plan the janitor has.
In Europe they talk about "solidarity"--that's their term for a universal system with everyone in it together.
Here we like markets more but that does tend to take us to that tiered system.
In balance billing, what happens to people who can't afford a doctor at the high end of the scale?
Balance billing sure solves the doc problem.
That puts us at a crossroads.
Universal or tiered? Solidarity or every patient for himself?
>In balance billing, what happens to people who can't afford a doctor at the high end of the scale?
Well, if you chronically underpay and reward only volume as the current system does, what makes you think there even will be a "doctor at the high end of the scale" in the future?
Let us concede that people respond to incentives.
First, if prices remain fixed as they currently are at below fair market value, won't vendors leave? In practical terms, this means docs retiring or choosing non-clinical work and students choosing other professions to start with. Or it could mean that the smartest kids just do something else, and future docs come from the ranks of the mediocre students that Douglas Adams would have consigned to the "B" Ark.
Secondly, in a fixed price system, quality is not incented. Volume (speed) is the only thing incented. So wouldn't a clever doc just ignore quality and push patients through as fast as possible? ER docs call this "moving meat". That doesn't result in a "high end" product.
>Universal or tiered? Solidarity or every patient for himself?
Every man for himself would be to terminate Medicare and Medicaid altogether.
Balance billing is a compromise position. It prevents bankrupting the treasury, incentivizes quality, reduces moral hazard, and prevents exodus from the profession.
How many of you know that many nurses earn more than primary care docs?
http://blogs.wsj.com/health/2008/06/18/some-nurses-land-higher-salaries-than-primary-care-doctors/
Let us view this as an investment choice, as indeed it is an investement in human capital for prospective students.
1. Primary care doc
a. 4 years college
b. 4 years med school
c. 3 years residency, mostly at 80-100 hours per week, earning about $40K per year.
d. Upon finishing residency, expected earnings of $120K MINUS $12K malpractice insurance, MINUS payments on $200K of student loans, 60 hour workweeks plus on-call duties.
2. Nurse anesthatist
a. 4 year college degree in nursing
b. 1 year of ICU nursing earning $60K for 50 hour week
c. Then start earning > $170K with minimal malpractice costs, maybe $100K student loans, 40 hour workweeks, no call.
Hmmm.
If both were stocks, which one would you buy? Which one has greater ROI?
If anybody expects students to ever choose primary care, this nonsense must be rectified.
How has it come to this? Because market forces have not been allowed to function because of Medicare's price fixing. It must end.
It seems to me that if there are those who want to paricipate in an insurance system that takes anyone and treats them all equally, then they have that option. Go ahead and set up such a system. Just don't force those of us who want something else to participate with you.
I get a kick out of those who want to help others but are unwilling to use their own resources - but want to force everyone else to do it.
Start your own health insurance company and set premiums based on ability to pay, with benefits the same for all. There seem to be plenty of people who are so concerned for the 47 million uninsured that this company would do just fine.
For me, I will allow you to live your lives the way you want - and please allow me to do the same.
Physicians must once and for all pursue unionization. In a country that has limitless billions of dollars to fight a war for uncertain gain why should our seniors have to annually engage in political warfare for adequate healthcare? 25 plus years of manipulating physician fees for political gain is ENOUGH! No other industry in America would or has allowed this type of manipulation. We must withdraw from this passive-aggressive mindset and establish a more direct collective bargaining position for the sake of the quality of our profession and the services that we deliver to our patients. With the continual improvements in technology in healthcare and the reduction in morbidity and increased life expectancy, there is no legitimate reason why physicians should be annually penalized for their successes.
The first question to ask is how does the average physician practice profit margin (3%) compare with large insurers (over 6% for Aetna and United Health) or pharmaceuticals (over 18% for AstraZeneca). In that context, is it logical for Congress to expect physicians to control their costs to Medicare when physicians’ own costs are rising faster than reimbursements? Obviously, no, since basic economic theory would lead them to either raise their prices or increase volume. Consequently, Congress is expecting physicians to take a cut, plain and simple, when other sectors of the system are free to maximize profits by protecting their patents or hard-balling providers. Global health care budgeting practiced by other countries keeps each segment in check within a common national percentage of GDP. Not here. Indeed, between Medicare policy and the current tax code, we seem to be a society that wants its best and brightest thinking up new ways to package and sell debt rather than repairing heart valves or catching subtle signs of cancer. Ultimately, we’ll get what we pay for.
I'm an administrator for a large multispecialty medicine practice, with both low-paid pcps and high-paid proceduralists. (And due to company policy, must post anonymously - sorry)
In general, our fees are set at roughly 130% of Medicare's fee schedule. So say our front desk staff bills the patient for the 30% and receives payment at the time of service. Great. But when Medicare pays nothing because the patient hasn't met her annual deductible yet, and we bill a second time for the same visit, four weeks later, we're going to have a hard time collecting. (And Medicare's eligibility system is nowhere near advanced enough to show deductible status beforehand.)
Balance billing will increase AR, increase our staffing needs (especially for customer service people to answer phones), and increase the number of accounts sent to collections. I don't see how it could pay for itself, let alone solve the physician reimbursement problem.
We are constantly explaining Medicare's policies to patients. This usually happens when the patients owe us money, so even though we're being truthful, they have reason to distrust us. Making the sytem even more complicated isn't going to help.
>Balance billing will increase AR, increase our staffing needs (especially for customer service people to answer phones), and increase the number of accounts sent to collections. I don't see how it could pay for itself, let alone solve the physician reimbursement problem.
I'm not sure you understand. With balance billing, Medicare wouldn't be fixing prices. So you could set your charges as you liked and the patients would presumably shop.
In my office we would simply collect the full amount up front, and whatever the patient recovered from Medicare would be fine with us.
Thus, AR goes way DOWN, billing is simplified, collections all done at the desk.
How would that not be better?
Anonymous said:
"In my office we would simply collect the full amount up front, and whatever the patient recovered from Medicare would be fine with us.'
"How would that not be better?"
My answer: Start asking your senior patients how they would like "paying you the full amount upfront."
I think you are right about one thing, in your case the market would work pretty well--you wouldn't have any patients.
>I think you are right about one thing, in your case the market would work pretty well--you wouldn't have any patients.
Since nobody around here is taking new Medicare patients NOW, and they have nowhere to go unless they want to drive 100 miles or move away, I highly doubt it.
>My answer: Start asking your senior patients how they would like "paying you the full amount upfront."
My office would do the same thing.
And I don't care if they like it or not. Medicare is a money loser in the office already. If they want to leave, good luck to them...if they can even find a doc still taking new Medicare patients.
"My answer: Start asking your senior patients how they would like "paying you the full amount upfront."
I think you are right about one thing, in your case the market would work pretty well--you wouldn't have any patients."
And if the patient doesnt want to pay your fee, they can search for another doctor. It's that mode of thought that has lead to the race to the bottom. Because Medicare doesn't respect docs fees and patients don't either. It's time to take care of patients who respect professional fees. Those who chose not to can go to the county health department or the federally subsidized clinics and wait for 3 months for their next appointment. Or as George Bush says, go to the ER.
I am not sure what markets you all practice in, but I set my fees, payment is due at check in, and if you use a credit card, you pay a 3%surcharge. I don't take checks. I do take my share of Medicaid patients and unassigned call at my hospital but no other third party payers. If you want me to manage your care in the hospital, you have to keep your credit card open to me.
When I have to look a patient square in the eye and charge him $25 for a swimmers ear of $330 for a comprehensive visit, you can be damn sure I gave him value first or s/he won't be coming back
I could fill my 2000 patient practice many times over on my current terms. Not a day goes by without at least one patient asking to come in after a description of my terms. Forget balance billing, the RUC has stacked the deck against cogitation and I will opt out of any third party system as long as reimbursent is calculated based on resources consumed rather than value added. Without a strong core of well trained primes supervising care, costs are going to escalate exponentially and since proceduralists control the pursestrings, guess who is going to suffer first. Currently, the market tells me I am worth more than four times what the government does. The only way to keep me from practicing the way I do is to nationalize me a la Canada.
And by the way anon, the fractional RBV adjustments to reimbursements over the past few years do not even begin to approach the medical inflation rate private practioners have to deal with......so it is your statement that is not honest.
I usually respect this blog's opinion, but he is dead wrong on this issue. If the cuts stand, watch for the private practice (read high quality) docs, especially primes, to opt out in large numbers by the end of the year. There will be no impact on employed docs, but they are pretty much a waste of space as far as productivity and cost effective care any way.
Perhaps when seniors have no access to care and the proceduralists have left the building, a value based system of reimbursement be instituted.
>"If you touch me I will abandon my senior patients," is not an answer. That's just a threat--and an unrealistic one at that.
http://abcnews.go.com/Health/story?id=5326078&page=1
According to the ABC story, it appears that docs abandoning Medicare is not, as you describe, an "unrealistic threat", but rather a movement that is already underway.
Remember, it takes 2 to tango.
Well it's about time. I've been reading this blog site for several months. I have rarely seen so many comments to one posting and usually never by so many MDs.
I've wondered for a number of years just WHERE are the MDs in the discussion on how to control the rising cost of health care?
Insurance companies are constantly trying to find new ways to control costs and remain competitive. I'm pretty sure doctors did not create PPOs, HMOs, POS, P4P, HRAs, Disease Management, Utilization Review, Rx Step Therapy, etc., etc., etc., to control costs.
Employers are desparate to manage premium costs. The latest explosion of work-site wellness programs, emerging employment health policies, consideration of on-site health clinics, healthy cafeteria menus, work-site gyms, etc., etc., are just some examples of employers attempting to address the issue of health and rising costs.
The cost of healthcare and the number of uninsureds has long been part of the dialogue at the state and federal level of govenrment, albeit, little meaningful action has emerged to control costs.
So docs, you had a lot of comments to this blog. It's about time you got to the table. Please keep it up and tell your colleagues to get with it. Because quite frankly, you and the consumer have the greatest impact on costs. Bashing insurance companies and government are excuses and solve nothing.
Personally, I would prefer to pay at the point of service. Then I would know exactly what I "purchased" and be able to determine if your services were worth your fees.
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