A Backhanded Way to Make Policy

One of the arcane steps in government regulation of health care is the Physician Payment Rule. This is the manner in which CMS, the Medicare agency, annually allocates payment dollars among the various specialty services. The PPR effectively makes policy.

The construct for all of this is a zero-sum game. When CMS wants to raise fees for some specialties (e.g., primary care doctors), it is required to reduce the fees for others.

The American College of Cardiology notes that the most recent version of the PPR contains such a drastic reduction in payment rates for office-based cardiology diagnostic tests that many community cardiologists are considering joining a cardiology service in a hospital.* So what’s wrong with that? Well, once those MDs start providing the same services in a hospital, it means fewer services will be available close to people’s homes in the community. Further, the rate the hospitals can charge for exactly those same diagnostic tests is higher than the private doctors could charge.

So the overall cost to society of health care actually goes up, notwithstanding what is supposed to be a zero-sum impact. Patients are inconvenienced, too.

As you know, I have advocated for an increase in payments to PCPs, so they can spend more time with patients and get out of their triage role. But it is short-sighted to require that, in the short-run, the sum of physician payments from Medicare not change. Perhaps the President and Congress can add this item to their health care summit discussions

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