Pay Some Doctors More to Save Money

Paul Levy

Posted 3/26/12 on Not Running a Hospital

One of the strange things about health care in America is the manner in which decisions are made about how different kinds of doctors should get paid for their services.  It turns out that the system is controlled in a way most consumers would find unbelievable. As noted by the Wall Street Journal:

 

Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars.

The group, convened by the American Medical Association, has no official government standing. Members are mostly selected by medical-specialty trade groups. Anyone who attends its meetings must sign a confidentiality agreement.

Yet the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous. The Centers for Medicare and Medicaid Services, which oversee Medicare, typically follow at least 90% of its recommendations in figuring out how much to pay doctors for their work. Medicare spends over $60 billion a year on doctors and other practitioners. Many private insurers and Medicaid programs also use the federal system in creating their own fee schedules.

Procedural specialists – the people who do things to you like surgery, endoscopies, and catheterizations — have more influence on this panel.  Therefore, the process results in greater values being ascribed to the procedures than to cognitive services – the doctors who take histories, listen to you, evaluate symptoms, and make recommendation. And greater value translates into higher payment rates for those proceduralists.  Payment levels are skewed away from cognitive specialists, like primary care doctors (PCPs).

We need to ask the question:  What if the system were changed?  What if primary care doctors were paid more?

It turns out that this would save money for American consumers.

Why?  We all know about the way things are today.  When you go to your primary care doctor, the appointment is often rushed, 20 minutes or less.  This is because those PCPs get paid very little per visit and therefore have to squeeze in many appointments each day.  In many ways, the PCP ends up being just a triage stop along the way to referring you to a specialist.

It would make more sense if the PCP could have the time to engage in “old-fashioned doctoring.” Then the doctor talks, listens, probes, and uses his or her cognitive skills to figure out what’s wrong with you and what might be done about it.

Now, I am not suggesting that surgeons and others are not important to medical care.  But one can certainly make a case that a PCP’s evaluation can make a significant difference in the course of treatment of a patient. Indeed, this doctor’s diagnostic skills can often obviate the risk, cost, and disruption of interventional procedures.

So, the idea is that if PCPs could afford to spend more time with patients, many treatments and tests that are currently done by specialists could be avoided.

How can we test this proposition?

Well, a recent study by the Commonwealth Fund did just that.

Using a simulation model, researchers concluded that raising the fee for PCPs would boost the number of primary care visits by 8.8 percent, while also raising the overall cost of primary care visits. “But these increases would yield more than a sixfold annual return in lower Medicare costs for other services—mostly reductions in hospitalizations, outpatient services, and postacute care—once the full impact on treatment patterns is realized. The net result would be a drop in Medicare costs of nearly 2 percent.”

The Commonwealth Fund study does not cover private insurance plans, but it is reasonable to extrapolate the result from their Medicare analysis to those employer-based plans as well.

Some people in Massachusetts believe that the best way to increase income for primary care doctors is to establish a system of “global payments.”  Under this form of capitation, there would be the equivalent of an annual budget for each patient’s health care costs – covering everything from primary care through surgery treatment to rehabilitation.  If a health care network were able to take care of patients for less than this annual budget, it would get to keep the surplus.  A portion of that surplus could then be redistributed back to PCPs for their role in helping to manage the patients’ care.

Would this work?  To date it is unproven.  Also, the issue of how the surplus would be shared among all types of doctors is, as you can imagine, not a slam dunk guarantee for the PCPs.  Instead of relying on what might be mythical savings, why don’t we just get it done the right way? Increase what we pay PCPs, reap the savings, and improve care for the people of the Commonwealth.

About Brian Klepper

Brian Klepper is a health care analyst and the Chief Development Officer of WeCare TLC onsite clinics.
This entry was posted in Analytics, Health Care Cost, Innovation, Market Dynamics, Medical Management, Physicians, Policy/Law/Regulation, Quality, Reform and tagged , , , . Bookmark the permalink.

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