Already counting down to the next physician fee cut

Robert Laszweski has been a fixture in Washington health policy circles for
the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog.

Is the "medical home" a real solution?

Now that this year’s fight over Medicare physician fees is all but over, it is important to turn to real solutions.

The recent Senate and House vote to kill the 10.6% physician fee cut only defers the problem for 18 months.

On January 1, 2010, the Medicare physicians are slated to get an automatic 21 percent fee cut!

More importantly, the Medicare physician fee structure is grossly out of whack with primary care docs starving under the current fee system.

In a recent post, I asked just what is the solution to this problem? I
got a record number of replies from docs all along the lines that they
are fed up with being underpaid by Medicare and they aren’t going to
take it anymore. If they have to go to a cash relationship with
patients for the fees they deserve, or balance bill, so be it.

While their frustration is understandable, these aren’t solutions.
Collecting $350 upfront from a senior, as one doc suggested for a
comprehensive visit, isn’t progress.

So, we have 18 months to just keep heading toward the next cliff (this
one twice as big at 21%), let the system degenerate (cash, balance
bill, or a crisis in access as docs stop taking patients), or actually
start taking some constructive steps forward.

It strikes me that the growing discussion over the "Medical Home" is a
constructive one that we need to continue developing. The "Medical
Home" isn’t a new fee schedule, it’s a new patient relationship
structure that could be the foundation for real physician payment
reform. Because the current fragmentation in the system is at the heart
of the problem, I will suggest that it is structure that is more
important than just fees toward the objective of better cost and

In a recent post, I said it was the doctors that have to take the lead
in the development in a new payment system for Medicare–and therefore
the entire system since private pay is generally based on the Medicare
structure. The politicians aren’t going to do it until they get
permission from the doctor lobby for a specific plan. As the recent
House and Senate votes showed, the politicians are afraid of the
docs — but not so afraid that they have been forced to come up with a
real solution. The private payers aren’t going to do it because they
aren’t going to unilaterally develop something the doctors will accept.

It is notable that the leading primary care physician
organizations — Family Physicians, American College, and Osteopaths —
have gotten out front on this idea.

And to the health plans, you need to be encouraging real solutions
because, as the recent votes made clear, the next 21% is going to come
out of your hides if a real solution isn’t found!

Here’s a Wikipedia article on the Medical Home.

I don’t pretend to be an expert in this area but Vince Kuraitis over at
the e-CareManagement blog, who first pointed me in this direction, is
and he has done a large number of posts on the issue. I encourage you
to take a look.

But here is what I am arguably an expert on: Docs, you have 17 months,
20 days, and 13 hours until you get hit with an automatic 21% fee cut.
You can throw all the tantrums you want and you will again almost
certainly get the the politicians to put off the next cut. But you will
still be stuck in the mud with the same out of whack fee structure.

Recent 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

3 replies »

  1. The feds “toe in the water” on PCMH, the CMS “Medical Home” demonstration – by definition – has to be budget neutral.
    While the model hasn’t yet been finalized / announced, the offset is (I think) expected to come from reduced hospital admissions (PART A).
    The challenge, though, is that in a one year (?) demonstration, there’s not much time for practices to mature as medical homes or for prevention activities to significantly impact admissions.
    An area of interest and short-term opportunity, however, will be whether patients in medical homes who are dischared from hospitals will have lower readmission rates (from, presumably, better coordination at discharge). This will, of course, require practices to FUNCTION as a medical home (and not just implement a registry or EHR for the extra dough)…and – God forbid – actually know that their patients have been in and out of the hospital.

  2. And the best way to kill this potentially useful idea is for some idiot OMB staffer or Congressional committee chair to insist on budget neutrality, and that the money to fund it be taken away from the surgeons and radiologists (e.g. inside the Part B physician fee budget). If it gets set up as a class warfare deal within medicine, kiss the funding goodbye. If you’re going to take the money to do this away from anything, take it away from Part A Medicare, which funds inpatient hospital care.

  3. The Patient Centered Medical Home (PCMH) concept is indeed about much more than payment reform, but payment reform represents one of the three “legs” upon which getting adoption and ROI out of PCMH relies.
    In addition to payment reform (i.e. primary care getting paid for more than just office-based procedural work), getting value from PCMH will require:
    – Digitization of practices (and sharing information among healthcare stakeholders)
    – Redesign of practice processes and workflows
    Practices that think that PCMH represents more money for basically doing what they are already doing (or for building a registry or implementing an EHR system) will be sadly disappointed.
    Getting value from PCMH will require the kind of disruption (and perhaps structural changes) that practices have long resisted.
    Organizations like AAFP are stepping up to assist (with their TransforMED initiative), but practices must be willing and able to change. As TransforMED CEO Dr. Terry McGeeney recenly said, “the recently completed TransforMED National Demonstration Project shows quite clearly that the two greatest vulnerabilities for practices seeking to become Patient Centered Medical Homes are lack of leadership and lack of communication. ”
    The financial incentives (pot of money) necessary to encourage this kind of change among primary care practices will require a redistribution of wealth from somewhere…and will require demonstration by primary care practices that more money will result in ROI.