Physician Payment Disparities, and Physician Point of View on Payment Reform

There were a few articles from Archives of Internal Medicine last month revisiting pay disparity among physicians –and showing physician attitudes toward changes in payment methodology.

Leigh et al show that many specialties, especially surgical specialties, make as much as twice per hour worked as primary care. Harvard Link 

Here are data on selected specialties:

 Click to enlarge image 

Leigh, J. P. et al. Arch Intern Med 2010;170:1728-1734.

Federman et al review physician attitudes toward payment reform.

Physicians in general are leery of bundled payments. Physicians are split on incentives – with about half approving of these through general practice, medical specialists, and surgeons.    Primary care physicians are relatively enthusiastic about shifts in income from specialty to primary care. (67% in favor). Surgeons are adamantly opposed (17% in favor).  Harvard Link 

  Click to enlarge image 

Federman, A. D. et al. Arch Intern Med 2010;170:1735-1742.

Payment reform won’t be easy, and will be vociferously opposed by those who believe they will be the losers.

  

Read More

Payment Reform: Off the Rails in Massachusetts

Massachusetts not only led the nation in passing and implementing legislation to dramatically decrease the number of uninsured, but it also planned to lead the nation in reforming provider payment to be sure that we could afford near-universal coverage.

Health care reform in Massachusetts remains popular, but the wheels are coming off of the payment reform bus.

A state commission recommended a multi-year transition from predominately fee for service to a series of bundled payments to encourage better coordination and to discourage providers from “running the meter” and recommending diagnostic and therapeutic care which would enrich providers without real value to patients. 

The Boston Globe reported Saturday   that state Senate President Terese Murray has, for the moment, given up on enacting legislation to reform payment in Massachusetts.  She said ““It’s like going around in circles…Nobody is in agreement on anything.’’

It’s no surprise.  The goal of payment reform is to lower overall costs, and that means that some stakeholders will earn less.  Since all of us are intensely loss averse, the losers will fight much harder against reform than the winners will fight for reform.

Here is my summary of barriers to payment reform, and some steps to help overcome these barriers.   Under the best of circumstances, it’s hard to reform payment methods.  It’s probably even harder when money has to come out of the system.

Barriers	Potential Enablers
Many providers are doing quite well under fee for service, and perceive the threat that payment reform will lower their earnings.	As long as providers feel that fee for service will yield continued increases (in both fee per unit and allowed utilization), they will insist on continued fee for service.   We won’t see health care payment reform until providers feel a meaningful threat that there will not be future fee for service increases.
The payment system is fragmented, and employers demand that every health plan include (almost) every provider.   This gives health plans little leverage to change the payment methodology.	For most adult practitioners, Medicare is a huge source of revenue.  The commercial payers cannot legally collude around payment, so any health care reform will depend up on a Medicare waiver allowing CMS to pay other than fee for service for Medicare services. Limited networks could facilitate introduction of bundled payments.
Providers are fragmented, and few are arranged in such a way to take “risk” or capitation for their entire population.	As long as fragmented fee for service payment is available, many physicians who deeply value their autonomy will continue to practice in nonintegrated practices.  We'll need transitional approaches for those physicians who are not currently in integrated groups. We also should continue to pay fee for service for some specialty services.
Providers remember that the capitation of the 1990s included inadequate risk adjustment.	Risk adjustment software is far better than 10 years ago
We demand choice, and bundled payment is far easier to arrange if patients are locked in to a delivery system	We need bundled payments that have corridors to avoid excess loses or windfalls, and we must include contingencies for when patients choose to split their care among different systems.
Most large companies self-insure, and it’s difficult to administer payments other than fee for service for these plans which  are governed by ERISA	Health plans must show their clients that paying fee for service, even with discounts, is more costly than paying for bundles of care.
Capitation or global budgets lead to an incentive to undertreat	Payment reform must include quality scores and report cards, and payment must be decreased if all appropriate evidence-based care has not been delivered.
Capitation or global budgets lead to an incentive to reject the sickest patients	Risk adjustment should help – although we’ll have to rely on physicians’ professionalism too.  That’s imperfect, since we know professionalism has not prevented overtreatment in the fee for service system.

These aren’t all the challenges, and there’s no guarantee that these steps will overcome enough of the objections to payment reform in the provider community.  From my discussions with colleagues over the past few weeks, I’m convinced that many physicians and hospitals accept that we will need to reform payment to be able to afford to cover our population.

But it will take a real sense of crisis to move forward, and a real threat that rejecting health care payment reform will lead to unacceptable fee for service payment cuts.

Read More

Massachusetts Faces the Bill for Covering the Uninsured

Yesterday, the New York Times featured front page coverage of Massachusetts’ health care reform.  The effort was lauded as “boldest state health care experiment in American history” for reducing our uninsured rate to 1/6 of the national average.  The article also noted that there is currently a commission reviewing options for payment reform, and that the state can only afford near-universal coverage if health care spending increases are moderated.    

 

Yesterday’s Boston Globe had an op-ed piece by Jim Mongan, the CEO of Partners, who said four efforts would help us control health care spending.

1)    Transition payment away from “fee for service.”   Of course, this won’t be easy to do – since much of our delivery system is fragmented and providers will have a difficult time accepting (and dividing up) bundled payments.  The Massachusetts payment reform commission is taking this seriously, and the local Blue Cross Blue Shield plan has an alternative contract that has a “standard global budget,” otherwise known as capitation.  I’m enthusiastic that this is a real key to reining in health care inflation, but there are a lot of devilish details to work out. I’ll talk in a future blog about some critical issues in the conversion from “fee for service” to some type of bundled payment.

2)    Better use of healthcare information technology.  There is a real debate about the impact of HIT on costs, and an op-ed in the Washington Post  points out the lack of empiric evidence that electronic medical record really lower cost or improve quality.  I can’t imagine practicing in an environment without an EMR, but I wouldn’t want to count on the associated cost savings.

3)    Disease management for high risk patients.  Medicare’s randomized control trials yielded encouraging results in terms of quality, but disappointing results in terms of net savings.  We need to get better at identifying patients for disease management programs, and make these programs much less expensive.

4)    Comparative effectiveness research.  I’ve covered this issue in an earlier blog. We should clearly invest in research in comparative effectiveness, but the cost-savings will depend upon how we use the results.

I’d like to add a fifth suggestion to help control medical costs, which is outside of the medical care realm.  We should invest in improving the overall health of our population.    Let’s be honest, we smoke too much (17% of adults in Massachusetts – fewer than the national average but still far too many), we don’t exercise enough, and we weigh too much.  We need to rethink tax and farm subsidy policies to discourage tobacco use and extra calories on a national level.  On a state level, we need infrastructure investments in “built environment” and zoning changes to make it easier to exercise.  As spring is arriving, I’d like to see some shovel-ready bike paths. And of course hospital executives would like to see lower spending on double-wide beds.

 

Payment reform really will be key, though – and there are two good times to do payment reform. The first is when there is a surfeit of “new money,” so no one has to lose. The second is when most providers believe that the current system is unsustainable, and are fearful that if they don’t come to the table they might lose even more.   That’s where we are now – so it’s a good time for some real payment reform.  

Read More