The Seduction of Primary Care

Hey there, big, smart, good-looking doctor….

Are you tired of being snubbed at all the parties?  Are you tired of those mean old specialists having all of the fun?

I have something for you, something that will make you smile.   Just come to me and see what I have for you.  Embrace me and I will take away all of the bad things in your life.  I am what you dream about.  I am what you want.  I am yours if you want me….

Seduce:   verb [ trans. ]

attract (someone) to a belief or into a course of action that is inadvisable or foolhardy : they should not be seduced into thinking that their success ruled out the possibility of a relapse. See note at tempt .

(From the dictionary on my Mac, which I don’t know how to cite).

If you ever go to a professional meeting for doctors, make sure you spend time on the exhibition floor.  What you see there will tell you a lot about our system and why it is in the shape it is.  Besides physician recruiters, EMR vendors, and drug company booths, the biggest contingent of booths is that of the ancillary service vendors.

“You can code this as CPT-XYZ and get $200 per procedure!”

“This is billable to Medicare under ICD-ABC.DE and it reimburses $300.  That’s a 90% margin for you!”

This is an especially strong temptation for primary care doctors, as our main source of income comes from the patient visit – something that is poorly reimbursed.  Just draw a few lab tests, do a few scans, do this, do that, and your income goes up dramatically.  The salespeople (usually attractive women, ironically) will give a passing nod to the medical rationale for these procedures, but the pitch is made on one thing: revenue.

Our practice has succeeded despite the fact that we don’t do a lot of procedures.  We are in a shrinking minority, and the monthly cash-flow is putting increasing pressure on us to think about “alternative sources of revenue.”  Most of my colleagues in private practice have labs, x-ray equipment, or do procedures.  Some do such medically vital services as hair removal.  I haven’t had the stomach to go that direction…yet.

Who’s at fault for this?  Is it the doctors, who are seeking profit over what’s best for the patient?  Is it the vendors, who find loopholes in the reimbursement structure to milk extra dollars out of the system?

If you leave meat on the floor, don’t be surprised when your dog eats it.

The payment for the E/M codes (the codes used to bill for doctor’s visits) are low and the payment for CPT codes (the codes used to bill for procedures) are high.  This is how our system is set up (with great thanks to the RUC) and it is one of the main reasons we spend so much money on healthcare.  We aren’t doing healthcare, we are doing sick care.  Healthcare is prevention, which takes face-to-face encounters with the patient.  It involves talking and listening, and talking and listening are not deemed valuable by our system.  We are paid to do, not to educate or listen.

It takes great resolve to resist this siren’s call.  A few years ago, we made a deal with one of the other practices in our building to buy a portion of their x-ray equipment.  It seemed to be a good way to make money off of something we do normally in practice.  But a few months into this deal, we realized two things:

  1. We weren’t ordering enough x-rays to be profitable.  We had established a mindset of ordering x-rays that minimized their use.  It was a nuisance to wait for the reading on an x-ray and it was inconvenient and costly to the patient, so we made most of our judgments based on something else: the physical exam.
  2. We were ordering a lot more x-rays than we had before.  Instead of trying to find reasons to not order x-rays, we were now financially motivated to order them.  So if someone hurt their ankle, we were much more likely to order one.  If someone had a chronic cough, we were much more likely to order a chest x-ray.  The change wasn’t that we were hungry for profit, it was just that we were suddenly 180 degrees from our previous mindset: we were trying to find medical justification to order more x-rays.  It was incredibly seductive.

We did back out of the deal, feeling that the care we gave wasn’t better and not liking the fact that we were losing money.  But would we have backed out if our practice wasn’t already financially stable?  We are a well-run practice that has been successful despite our non-reliance on procedures, but what of the other practices out there that aren’t so successful?

One of my favorite sayings is: your system is perfectly designed to yield the outcome you are currently getting. Nowhere is this more true than in healthcare.  We have set up a system that encourages consumption.  We pay doctors more to do more.  We pay doctors less to spend time with patients.  We want our doctors to do better care, but we pay them to do worse care.  We want to save money, but we reward those doctors who spend the most.

So why not change?  Why not pay more for E/M codes and less for CPT codes?  Yes, some doctors will abuse this system by running patients through their office and spending little time with them, but at least it will increase availability of doctors to see patients.  There will always be those who take advantage of any system; that shouldn’t stop change.

I went into medicine to take care of people, not spend their money.  Why can’t we have a system that doesn’t force me to decide between the two?

Rob Lamberts, MD, is a primary care physician practicing somewhere in the southeastern United States. He blogs regularly at Musings of a Distractible Mind, where this post first appeared. For some strange reason, he is often stopped by strangers on the street who mistake him for former Atlanta Braves star John Smoltz and ask “Hey, are you John Smoltz?” He is not John Smoltz. He is not a former major league baseball player. He is a primary care physician.

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83 replies »

  1. “Your concerns regarding incentives could be addressed by reimbursing patients who go to non-participating physicians at l0% below the standard Medicare allowance less coinsurance.”
    Barry – I agree with your modified scenario 🙂 If insurance (private or public) offers fewer benefits/reimbursements for out-of-network providers, then there is an incentive to be in network. In commercial PPOs, out-of-network benefits are often 20% lower.
    But if the payment amount is exactly the same (as in your example) and the timeliness of payment is the same (why would it be different?), it’s hard to see why any provider would elect to stay in network.

  2. Paolo – I disagree.
    Doctors who opt out of Medicare would have to collect their charges from patients directly and offer discounts from list on a case by case basis. Patients would have to submit a claim to Medicare to be reimbursed for the Medicare allowance less coinsurance though, as a courtesy, the doctor’s office might submit the claim on the patient’s behalf. Moreover, doctors with a practice consisting mostly of patients from the lower half of the income distribution might be hard pressed to collect from patients on a timely basis and could be much better off participating in Medicare to ensure prompt payment if nothing else. Your concerns regarding incentives could be addressed by reimbursing patients who go to non-participating physicians at l0% below the standard Medicare allowance less coinsurance.
    While some doctors opt out of commercial insurance as well, most don’t. I think the same dynamic would work with Medicare and/or Medicare Advantage if they were structured along the lines I suggested.

  3. Barry – if any medical provider could bill Medicare for the same amount, there would be no incentive to be in Medicare’s network. Almost every provider will opt out. This would transform Medicare into a stipend system where all members get a fixed subsidy per procedure and then use it to shop around for medical services. If (and this is a big IF) this is what seniors want, I have no problem with it.

  4. Barry Carol is exactly right. And thank you to Dr Urbach for a supportive statement.
    I am here to be constructive. People do not realize that harsh actions are meant to bring about effective endpoints. Striking is outlandish, but, it would get attention of Washington as fast as saying the word “What?!”
    And believe me, we would not be striking for long. These are desparate times, and we owe it to patients and our equally invested colleagues to restore order and sanity.
    Again, to hell with the business model for this profession! Happy Thanksgiving. And to all going to airports, think about how this is the metaphor for coming federal intrusions into health care as well!

  5. Barry: your last post is exactly what I’m talking about. And if DeterminedMD is still reading this, thank you for a constructive comment. I agree wholeheartedly with you.

  6. Barry,
    All of that would take major legislative changes. Current law specifically sets the benefits and caps the plans and cost sharing that can be offered.
    I think insurers are very closed minded, they aren’t int he business of underwriting risk anymore. Your idea for a high deductible medicare option makes perfect sense, what about all the people with HSAs prior to 65 who suddently have to drop their consumer driven plan and switch to the most unconsumer plans of all. Not to mention if you have accumulated a sizeable chunk in your HSA you could never spend it down with current Medicare.
    If you think about all the waste in Medicare HSAs would be a great first step to fixing that.
    All new retirees after 20XX should be giving no choice but a high deductible.

  7. I think the most practical potential solution for the balance billing issue within the Medicare patient population is to allow doctors who do not participate in Medicare to be considered what commercial insurers call out of network providers. While providers who accept Medicare might still have to accept its allowance as full payment, patients who choose to go to a doctor that doesn’t accept Medicare should be able to collect from Medicare what it would have paid if the doctor were in network. So, if the normal charge for a 99213, for example, is $100 and Medicare allows $50 and pays $40 (80% of the allowance with 20% to be paid by the patient), the doctor would be able to collect some or all of the balance from the patient while the patient would not have to pay the entire bill completely out of pocket. To implement this approach, would, of course, require legislation to change the rules. Alternatively, perhaps Medicare Advantage could be allowed to work this way while keeping the current rules for standard Medicare. Changing the rules would be a tough sell on Capitol Hill, however, because of the combination of a “we know best” mentality and that people, especially less educated people, cannot be trusted to act in their own best interest.

  8. Dr Lamberts:
    You end this post with this comment:
    “I went into medicine to take care of people, not spend their money. Why can’t we have a system that doesn’t force me to decide between the two?”
    I do not think they can be mutually exclusive, because unless you want to take a vow of poverty and treat people for the sake of personal satisfaction alone, you have to be paid for providing a service, albeit one that it is hard to put a specific monetary value on it.
    So it comes down to the basic premise of any transaction: what will people pay for your service as a health care professional? And that is the point I have been trying to make here for what, a year now of commenting? It should be between you and the payor, which should be the patient, but third party payors are part of the world we practice in now, and that won’t change for the most part, because it is entrenched in the mind set of all involved, and no one really wants to take risks to make change, I mean let’s be honest about this!
    And isn’t bargaining about the process? But, do we have a say in what we can charge? No, and that is unacceptable and should be rejected, and rather harshly at this point!
    Again, we strike and what, we are all jailed? Don’t think so!
    If people were offended by my last comment, while I do apologize with some sincerity, not completely. Too many colleagues are whores and cowards, maybe not the participants at this site, but to knowingly accept these behaviors and make no effort to change things, well, passivity is not excuseable, not in my eyes at least.
    So, with the pending health care legislation to take hold, and the majority of physicians basically doing nothing of substance to reject it for what this law is now, I have a right to speak my peace, and that is I abhor the passivity and lack of real advocacy amongst my peers.
    This is my last comment at this thread. Happy Thanksgiving.

  9. “Besides, with balance billing, as I’ve said before, there would be a huge market for supplemental insurance, who would most assuredly negotiate usual-and-customary prices.”
    Dr. Urbach, isn’t this just a simple reductions of benefits for Medicare people?
    The supplemental carrier will be the one deciding how much you get paid.
    This doesn’t look or sound like the balance billing Dr. Lamberts had in mind, where people have to bargain for discounts or beg for charity when they go to the doctor (or perhaps bring in some homegrown squash).

  10. Dan – For the last several years, CMS has means tested Part B services by requiring beneficiaries who earn more than $85K (single) or $170K (couple) to pay more than the standard Part B premium of $110.50 per month for those aging into Medicare this year. That standard $110.50 is intended to cover 25% of program costs which implies that the actuarial value of Part B services is currently $442 per month ($110.50/ 0.25). At the high end, both singles and couples who earn above $428K must pay $353.60 per month each for their Part B services or 80% of the program’s estimated cost.
    I’ve asked a couple of insurers that I’m in contact with if it would make sense to offer a high deductible network product to address this niche for those who would be willing to forgo participation in the traditional Part B program. I think it would require changes in the legislation to allow them to offer such a product but it probably wouldn’t be worth their effort in any case because they think the addressable market is too small.
    Separately, regarding the Part D prescription drug program, I’ve never seen a PD plan that offers a deductible higher than $310 which is the standard deductible this year. Personally, I would be interested in a plan that offered a $2,000 or $2,500 deductible with 25% coinsurance above that with an OOP limit of $5 or $6K and then 100% coverage above that. Again, the market may be too small to be of interest to the major carriers. I just don’t know.

  11. Determined: You miss the point of this post. I am not complaining that the system doesn’t favor physicians in a business model. If I was doing it simply as a business, I would just rack up as many procedure codes as is possible. The business model is not hard, it is just bad. It is bad because it dooms the system and it penalizes those of us who want to practice business HONESTLY. The system encourages a business model that is harmful to its own survival.
    By the way, I do not write for THCB. I write for my own blog and they republish that which they like.

  12. Dan – I get your point. I think a reasonable solution/compromise would be to allow some premium MA plans to contract with doctors who opt out of Medicare and pay them above Medicare rates. I don’t know if this requires a change of statutes, regulations, or business practices. But it’s the only way to keep contractual rate protections for all Medicare members, while allowing a few wealthier members to use some of their Medicare dollars to pay for better services. I think this is much more likely to happen than balance billing.

  13. Paolo: I’ve opted out of Medicare. So Medicare Advantage is not applicable to my practice.

  14. Dan – I am not a benefits administrator, nor do I work in the medical sector. I’m just a consumer who knows by experience to never go out of network.
    I infer from you lack of response that you don’t take any Medicare Advantage plan. If there really were a huge market for seniors who want to pay extra to access premium doctors, there would be some premium MA plan by now that addresses that market.
    In any case, we all know that nothing is going to happen in this area unless the majority of seniors want it.

  15. DeterminedMD: I would love to know what you propose to fix our health care payment system. It would be really helpful if you stopped insulting everyone. I don’t think I’m a coward or a whore. I am interested in what you have to say. I clearly agree that we should not capitulate. What else?

  16. Paolo: you sound like a benefits manager. Is that what you do for a living?
    I think your doom-and-gloom scenario is unrealistic. When patients have the opportunity to shop for provider networks, especially Medicare patients, they look for the one that has as many of their doctors on it as possible, or that has their primary care doctor on it, or whomever they are seeing the most (for example their oncologist). Besides, with balance billing, as I’ve said before, there would be a huge market for supplemental insurance, who would most assuredly negotiate usual-and-customary prices. The point is not to milk the public. It is to be able to maintain doctor-patient relationships and provide the best care possible for Medicare patients. That is not currently possible, because Medicare pays under cost in primary care, and it is quickly cutting payments to other physicians as well. It is not responsive to supply and demand. As I’ve said before, it overpays some and underpays others, creating absurdities in the supply of physician services. This has to change. When there is a crisis, it will change. I’m arguing for one of many things we need to do to prevent a crisis.

  17. Dan – the second most important benefit of any health insurance (public or private) is the provider network. This guarantees that the patient will get contracted rates when going to a network provider. I’m not on Medicare, but I would never choose a private health insurance plan without a provider network. I don’t want to have to negotiate every time I go to the doctor. I know the insurer has more market power than me and can get better pricing. And I don’t think I’m the only one. Traditional indemnity health insurance is not in high demand these days.
    Allowing any doctor to balance bill Medicare patients is equivalent to not having a provider network for Medicare patients. Unless the provider network is too small or worthless, I honestly can’t imagine many seniors (at least the ones I know) being happy with this.
    Btw, do you take Medicare Advantage plans? If yes, can you recommend your ex-patients to join whichever plans you accept? If no, are all the MA plan payments too low?

  18. Yeah, it is confusing when you just capitulate to whatever your payment schedule enforces on you, because you and your colleagues are cowards, and/or whores, and never took a legitimate stand when it was obvious managed care came to be just a profit driven machine, and either a sizeable population of doctors just said, “oh, as long as the patients don’t get hurt” in a clueless, naive fashion, or, more disgustingly, an equally sizeable population of MDs concluded “how can I milk this to stay ahead and feed the cash cow!”
    A lot of you know this, as you are probably in one of the two groups! And furthermore, who I am and how I conduct my practice is none of your goddamn business, I gave a disclaimer in a post about three weeks ago, which is the full and complete truth, and if you are just looking for bits to attack and try to disclaim me, just call me an asshole and rally around your base, which is as soulless and deserving of your support!
    Hey folks, watching the disgusting display at airports these days? Another example of government gone wild and inattentive, but even moreso, just plain dismissive of the public. You know, the people you are supposed to serve and protect, not as policemen, but as advocates and professionals who took an oath to treat people.
    Oh yeah, that got lost after medical school, eh? Did anyone here really attend medical school and listen to mentors and teachers who tried to teach you how to be a doctor, not just a memorizer of medical facts, as much as a cash register or failed activist who embraced a vow of poverty as a true liberal idiot would do!?
    It is about moderation. A word vilified in this culture today, but interestingly, not by the majority. I believe there are more people out in America who really believe in compromise and negotiation, but they need leadership, and not to tell them what to do, but reempower them to set limits and kick rigidity and inflexibility to the curb.
    Which what is profit driven ideology in the end. Make a buck, and don’t give a f—! Is that a motto doctors should support? THINK ABOUT IT!
    And turning to a pure electronic health care system is another nail. Do you enjoy making your own coffins? That is what you are doing, listening and then embracing this failed rhetoric of non professionals dictate the course of health care.
    But don’t listen to me, I am a hopeless idealist. And thank you for calling me that if you do. It reinforces my soul.
    You know, that thing you dumped at the door when you agreed to managed care, and now federal health care.
    By the way, to end on a positive note, Ms G-A does say something reinforcing at least once in a while:
    “I don’t think you can have it both ways. If you want to decide what you charge each person, you cannot sign fixed price contracts with payers to ensure adequate volume.”
    Well said, Ma’am, and thank you!

  19. “Well, at least I listened to my mentors and did not just bend over and say thank you for what was to follow.”
    So, please share with us how you run your practice. Do you pay your staff? Do you bill your patients? Do you look for the lowest costs for supplies?
    Honestly, DeterminedMD, everyone is VERY confused about what you are arguing for.

  20. Paolo: It is the wealthy who complain about being forbidden to buy more time with the doctor. The more expensive pre-paid practices take advantage of this situation. Wealthier patients are their customers. However, if a patient does not want to pay a big yearly fee (maybe because the patient only sees the doctor once a year), he/she ends up having to see a doctor in a big hospital-owned group, which many do not like. The current arrangement is all-or-nothing. Either the doctor accepts the paltry Medicare fee, or the doctor has to drop Medicare entirely. The result is a mass movement of Medicare patients to large hospital-owned clinics. I hope that when enough wealthier patients learn how this works, they will be open to improvements, which would benefit them, not just the doctor. At the moment, most patients don’t seem to understand how the government has set the system up. At least that’s my experience.

  21. “What we want is to have some control over our finances.”
    Most other people want that too. I don’t think you can have it both ways. If you want to decide what you charge each person, you cannot sign fixed price contracts with payers to ensure adequate volume.

  22. determined to not let this “that’s just the way it is” mindset dumb down and defeat physicians who are willing to fight for the profession.
    My mistake is taking this fight to a site that really isn’t really interested in telling readers all the truth per their motto: “Everything you always wanted to know about the health care system; but were afraid to ask.” This blog site is really about “Everything that can be turned into an electronic record and make people a profit margin, and we don’t want you to ask”.
    But, readers aren’t really asked to skew from the party line, are they? Yeah, you are right Dr Lamberts, I don’t make sense to you because you run a business, then write a post complaining how it’s unfair the business model quite doesn’t fit into the physicians’ model.
    Gee, and that is a surprise.
    Well, at least I listened to my mentors and did not just bend over and say thank you for what was to follow.
    Face it, listening to the basic bent of this blog site, this profession basically deserves what it is getting. And people don’t have the gonads to admit the mistakes and failures and make tough choices to correct them.
    Like, the politicians we elect to allegedly represent us? No, they just resent us, and do it very well these days. And this site will profit from it, no doubt about it.
    So, determined to teach who wants to hear the truth. And not afraid to offer, ’cause I ain’t afraid to ask!
    Do you care, or just being careless!?

  23. I understand why balance billing is advantageous to the physician. In economic terms, price discrimination allows suppliers to make more money by extracting consumer surplus.
    However, I just can’t see how the politically-influential Medicare population as a whole will ever let this happen. I can’t imagine many wealthy seniors wanting to negotiate new price surcharges for every visit. I can’t imagine poor seniors wanting to fill out charity applications for every doctor they see. Realistically, neither party will propose anything like this.

  24. Actually, that is an argument (what goes around comes around) for balance billing. Allow it for only E/M codes. With balance billing, the patient knows what the payment will be from the insurer, and knows they will need to cover the rest. Enabling doctors to put up their charges up front would allow patients to decide if the particular doctor is worth what he or she is charging. That’s how regular business works. Plus, if a patient had a significant financial need, the doctor could discout to accept only the payment from insurance. All businesses do this to some extent (giving discounts for seniors, or those in the armed forces, for example). What we want is to have some control over our finances. When we are forced to accept puny payments or be subject to penalty, it makes folks like DeterminedMD (Not sure what determined about) frustrated to the point of giving up.

  25. I know virtually every patient that walks through the door. Every doctor who’s been in practice for a long time with a stable set of patients does. Specialists who take referrals see many patients who are new to them. Large groups of primary care see many of their colleagues’ patients whom they don’t know. But many of us know most of our patients.
    I don’t deny the complexity and difficulty of determining who needs discounts, at least in theory. In practice, if a patient struggles with paying their bills, we become aware of it. We ask them what they are willing and able to pay. We almost always can work something out that is acceptable to both parties. If you demand a system that satisfies government desk-jockies, then it’s harder. I really don’t care what the government thinks about how much of a discount I give poor Mrs. Smith, as long as she and I are both comfortable with it.
    There is a world of difference between theory and practice. The great pity for patients and for providers is that the theorists are gaining ever more ability to manipulate what we do in practice, and this has NEVER improved the provision of health care.

  26. @Margalit,
    No, the days when “the doctor” knew everybody who walked thru the door are NOT gone. Maybe in most places, but not everywhere. I am privileged to know my patients, their kids, their parents, their grandkids, their aunts and uncles, and often their cousins to the third degree! And no, this is neither exaggeration nor sarcasm. 😉

  27. “I’m told that way back in the old days, prior to the passage of Medicare, virtually all doctors charged on a sliding scale basis. The wealthy banker would pay top dollar while the unemployed person or the poor or elderly widow might pay nothing at all.”
    “I’m not sure how doctors verified income back then or how they would do it today.”
    Through the IRS Barry. Healthcare should be paid through taxes which privately and fairly judges who can pay, how much, and who cannot. It also exposes everyone to the costs which puts pressure on the system to cut the fat and not hide costs through faceless people denied care.

  28. “The wealthy banker would pay top dollar while the unemployed person or the poor or elderly widow might pay nothing at all. ”
    I am not at all comfortable with this “sliding scale” being applied by the physician at his/her discretion. Bargaining or begging for discounts every time you see a doctor is demeaning to both sides, I believe. The days when “the doctor” knew everybody that walked through the door are gone. I am also not aware of any other service that is purchased through this bazaar model.
    However, the basic idea of people paying for health care according to their financial ability is a good one, and the only way to accomplish such parity in modern times is to pay for health care through progressive taxation.

  29. Gee, I don’t know, maybe as a profession take a stand and say “F Y”, and strike?
    Oh, that is too outrageous and against our oath(there needs to be a sarcasm font!).
    Our empathy and compassion continually gets used against us, by those who have no clue what those terms mean, much less practice them. And most of my colleagues equally have no clue how to rebel.
    Oh well, game over. For us, and this country!
    Business model? BAH!!!!

  30. Dan – I’m told that way back in the old days, prior to the passage of Medicare, virtually all doctors charged on a sliding scale basis. The wealthy banker would pay top dollar while the unemployed person or the poor or elderly widow might pay nothing at all. I’m not sure how doctors verified income back then or how they would do it today. Would you ask to see a tax return or pay stubs if a patient wanted a discount? While the vast majority of doctors might try hard to handle billing and collection in a fair and equitable manner, there might be quite a few others who are less tolerant and quick to engage the services of collection agents when patients don’t pay after a reasonable time. I don’t see a satisfactory solution out there.
    It’s hard to see how utilization can be significantly lowered until patients change their attitudes. We need to accept reasonable tort reforms and to stop thinking that everything bad that happens to us in life must be someone else’s fault which we should be compensated for through the litigation system. We need to become more accepting of death when the time comes like people in other first world countries are rather than expect to have our dying process prolonged by wildly expensive drugs and technologies to be paid for by someone else. We also need to learn to care about how much services, tests and procedures cost even when insurance is paying all or most of the bill.
    Doctors, for their part, need to engage patients in shared decision making so patients fully understand their options including the risks and benefits of each when considering high cost procedures like expensive surgeries and cancer treatments. If we can start to bring about some reduction in demand for high cost, hospital based procedures, we might find that there is suddenly more money to pay primary care doctors adequately for cognitive and preventive medicine.

  31. I agree that balance billing would be difficult for many people. Forbidding it across the board, however, forces all to be under Medicare price controls, no matter the patient’s wealth or lack of it. I think means testing is an obvious answer to this problem. In my own practice, I would be able to see every Medicare patient if I could balance bill enough of them, and those could be the ones that could afford it. Cost shifting certainly occurs whenever prices are kept artificially low. Right now, the only place the costs can shift are to private insurers. Their premiums are skyrocketing. So why not shift costs to others who can afford it? As long as I am paid enough, I’m happy to bear costs of some charity work. I have no problem using sliding scales, providing some care for free, and almost every one of my colleagues does the same. It’s simply silly that wealthy Medicare patients are provided care for less than cost, with the true costs of their care shifted to someone else. I can assure you that as long as balance billing is illegal for all Medicare patients, and prices are fixed below cost, nobody who refuses to accept new Medicare patients will change their minds, and many more will drop Medicare. Those patients will end up at hospital owned practices, which means that the practices will depend on hospital subsidies to stay open. This just shifts costs to Medicare A, and pushes up harder on private insurance premiums.
    I don’t mean to suggest that balance billing will solve all our problems. I don’t think all of our problems will ever be solved. One maneuver has countless unintended consequences. Hundreds of maneuvers made at once creates thousands of unintended consequences. I think stepwise reform is far wiser than what our government proposes to implement over the next few years.
    Margalit: regarding the radiology clinic we discussed, I don’t know what all their contractual arrangements are, but I wouldn’t assume that they are all ideal. Maybe they just charge a lot less for cash payments.
    Dr. Lamberts and rbar: Of course as an internist, I agree that E/M codes should be paid higher. I just don’t think that price controls for everyone are a good idea. When reimbursements were first designed, they apparently made sense. The problem is that government doesn’t respond to the real world. Increasing E/M codes would help primary care and other E/M practices now. What about the future?

  32. “Being controlled and manipulated by people who do not provide the care, who instead just profit from it, and sucker you into trying to keep up with a model that does not fit the service, that is what medicine has degraded to.”
    DeterminedMD: how do you avoid this control and manipulation?

  33. @DeterminedMD,
    No, you are not the only one who sees it. Myself and my partners all see it. I cannot speak for anyone else. When I started here at my municipal hospital, I reminded the administrators that their paychecks proceeded from my license. I was hiring them to take care of all the money BS, so I could just practice medicine. They said this was understood. I’ve had no interference from them. Too bad this model can’t be replicated everywhere.

  34. This post typifies what is wrong with medicine, especially from physicians. You all sit here and debate mindless business mechanics, because as a whole the profession has allowed the hijacking of it by business models, and we are not in a comfort zone any more. And the more you allow the assimilation, the less we control, the less we function, and the less we heal.
    So, That’s just the way it is? All of you who answer yes, you are pathetic, you are part of the problem, and just sit down and shut up and accept your destiny.
    Being controlled and manipulated by people who do not provide the care, who instead just profit from it, and sucker you into trying to keep up with a model that does not fit the service, that is what medicine has degraded to.
    And I am the only one seeing this?

  35. I think that the discussion has drifted away from Dr. Lamberts initial suggestion. I think he is right and this is one of the few relatively simple and fixable issues in US health care.
    Where do we spend too much money in the US? Drugs (that’s a separate issue and involves value issues as well as the question of negotiation, a tool which the Obama administration gave away in an act of corporate socialism/welfare), end of life care, needless imaging and procedures (angioplasties and laminectomies probably leading).
    With regards to the latter items: just pay doctors about as much for procedures as they would be paid for cognitive medicine, with moderate adjustments for expertise and risk (e.g. the neuroophtalmologist may charge more given his additional training, and so does the cardiothoracic surgeon given training and higher level of risk/stress during surgery).
    Right now, we are going bankrupt (by we I mean both medicare and nearly unaffordable private insurance) because we grossly overpay scans, sleep studies, injections, back surgeries, all kinds of -tomies. No wonder that there is overuse of all that stuff as it is strongly incentivized. Take the incentives away and only the necessary procedures will be done (except for the defensive stuff – mostly imaging – for which tort reform would be the answer).
    I really want to hear the arguments against this obvious, simple and rather fair solution if there are any.

  36. Since most docs in private practice do not own diagnostic equipment and/or centers, ordering tests is already “unhooked” from their income.
    For physicians employed by private hospitals, there may be a variety of “hooks” gently encouraging them to order tests that are profitable for the hospital.
    A community clinic is the closest you can come to the dreaded “socialized” medicine.
    Perhaps work ethic and professional pride is not as easy to maintain when temptation stares you in the face every morning.
    The better question, IMHO, is why is that efficient and cheap clinic, Dr. Urbach is writing about, not on every single insurance plan?

  37. And as Rob has clearly pointed out, removing all “fear” of lawsuit would not equate to docs/institutions accepting loss of revenue. Can you hear the doc’s conversation to his wife, “Honey, we’ll have to move to a smaller house because I’m billing half what I used to as there’s no risk of lawsuit any more.”
    True enough. Then unhook ordering tests from physician income. I work at a public, community clinic/hospital. I don’t get paid a cent more or less regardless of what I do or don’t order. I don’t get paid on volume (or lack thereof) of patients I see. My only real motivator is my own work ethic and professional pride. And the need to protect myself from lawsuits, ahem. This works for me. I don’t understand why it wouldn’t work for others.

  38. “The argument that allowing balance billing would worsen the situation is incorrect.”
    Dan – it depends on how you define the “the situation.” Allowing balance billing would obviously improve your economic situation and the situation of any doctor taking Medicare. It would also probably improve the situation of patients who want more doctor choice and can afford (and don’t mind) being balanced billed.
    However, it is certain to worsen the situation of patients who can’t afford being balanced-billed. They may no longer be a able to find a doctor. It is also certain to worsen the amount of money the country spends on health care.
    The US government is responsible for more than half of all health care expenses. This gives it huge purchasing power. Allowing balance billing is tantamount to giving up that purchasing power and handing it out to millions of individual consumers. This would naturally lead to an increase in the total health dollars spent on the Medicare population.

  39. “America has price controls as well. That’s why we have to keep fighting over who gets what out of Medicare.”
    Dan yes (maybe), but we don’t have billing controls. If you read here people also say the system cost shifts from Medicare to private insurance, another revenue workaround where the higher price is considered the “correct” price. Cost controls would mean the entire system is (negotiated) price controlled. And as Rob has clearly pointed out, removing all “fear” of lawsuit would not equate to docs/institutions accepting loss of revenue. Can you hear the doc’s conversation to his wife, “Honey, we’ll have to move to a smaller house because I’m billing half what I used to as there’s no risk of lawsuit any more.”

  40. Dan – First, I’m not a doctor and neither are any of my colleagues. I work in the financial world.
    I agree that, in theory, different parts of the doctor and hospital sectors could be treated differently with respect to balance billing, but it could still get complicated. For example, my cardiologist is also my PCP. Indeed, about 80% of his practice is primary care. Any consult could include elements of primary care and cardiology. Chest discomfort could be caused by non-cardiac issues from acid reflux to pulled muscles. A 99213 could be cardiac related or not. How could he balance bill for the primary consults only but not the cardiac consults? Aren’t many specialists also certified as internists?
    The NYC medical market, I’m told, is like no other in the country. There are lots of doctors in Manhattan from PCP’s to teaching hospital affiliated surgeons and specialists who accept no insurance whatsoever. Indeed, it can be a huge challenge to find a surgeon in certain specialties who takes insurance, either public or private.

  41. Margalit: we do use the free-standing clinic whenever it’s in the patient’s insurance plan.
    Barry: You’re description of how supplemental insurance works now is correct. However, it doesn’t need to stay that way. It is illegal to charge more than the Medicare allowable, and Medicare pays 80% after deductible. So why would supplemental pay more than the remaining 20%? Also, balance billing has only been illegal since the 90’s. I wasn’t in practice until after it was outlawed, but I’ll bet someone in this discussion was and can tell us how it worked.
    Also, I don’t see why balance billing must be the same for every part of a patient’s care. Medicare pays doctors differently from hospitals now. Why couldn’t they allow balance billing for doctors and come up with some other arrangement for hospitals? If you come right down to it, PCPs are treated differently from specialists now (besides being paid less). If society thinks primary care is THE KEY to excessive health care costs, why couldn’t primary care become a separate system within the whole?
    Your example of specialists who charge $17,000 for a hip replacement is a perfect example of what a command and control economy does to prices. The argument that allowing balance billing would worsen the situation is incorrect. If I charged $1000 out of pocket per office visit, I wouldn’t have a single patient left to see. (And how much do your colleagues charge for an hour of surgery? It sounds like they are major price gougers.) Artificial prices (both high and low) have created absurdities in the system. Our solution should not be simply to tinker with prices.

  42. Primary care is essential for every individual of the world. Wherever we live but we have to always help others in whatever manner to provide primary health service to the whom he is in need of it.

  43. Peter – Japan uses one set of prices for the entire country. In the U.S., wages, benefit costs, real estate costs, malpractice insurance and lots of other expenses vary significantly across regions and between major cities, nearby suburbs and outlying rural areas. There is no way that a one price system could work here. As Dan also notes, Medicare, along with Medicaid, already use dictated prices which wind up paying too much for some procedures and too little for others.
    Japanese society is very different culturally from the U.S. They have developed imaging equipment that is not as good as ours but costs one-tenth the price. They think it’s good enough. It’s highly unlikely that we would accept it, especially given our litigation environment. As Dan says, we wouldn’t accept 3-5 minute office visits either and I doubt that we would tolerate three hour waits in the reception area as a matter of routine.
    Dan – My understanding of how most Medicare supplemental policies work is that they pay the patient’s 20% share of the Medicare allowance for Part B services assuming the provider accepts Medicare. So, if your patients can’t bill Medicare because you don’t accept it, supplemental insurance would not pay either.
    We have the same issue in the commercially insured under 65 population when members use non-network providers. The carrier determines what it considers a usual and customary amount for the service in that particular market using an industry database. It pays its share of the usual and customary amount and that’s it. The provider can balance bill. The member owes the remainder but the amount above the carrier determined U&C amount does not even count toward the member’s out-of-pocket maximum (OOP) for the year. This is a big deal when it comes to surgical procedures. Based on recent experience of a couple of colleagues, for example, NYC based surgeons at teaching hospitals bill $17K for a hip replacement. Most don’t take any insurance but our insurance will pay about $11K in NYC leaving the member on the hook for $6K. Our people can afford it but most can’t. Balance billing would be a nightmare for big ticket cases.
    You’re absolutely right about the imaging. I’ve written about this in the past too. Non-hospital owned imaging centers charge far less than hospital owned facilities whether they are billing insurance companies or uninsured individuals.

  44. “…we ARE leaving money on the table to refuse to order tests that are not needed but would be profitable”
    I don’t think conducting business with integrity qualifies as leaving money on the table. The opposite though, qualifies as stealing.
    Dr. Urbach, if that free standing imaging clinic offers the best quality of service around at the cheapest price, why on earth would you not send all patients there? Why do they have to demand it? Even if they don’t have “skin in the game” shouldn’t you refer to the best facility?

  45. Barry: Yes it would mean taking money from Medicare patients, over and above the money taken from the Medicare program. There are pros and cons to that arrangement, and you have pointed out some of the cons. Competition would take care of some of it, certainly not all and not near enough for some.
    People often deny that competition makes a difference in medicine, so just let me point out one good example: radiologic studies cost far far more at our local hospitals than at free standing radiology clinics. When we have to order a study for a patient without insurance, we call around town to see who does it the cheapest. It is always the free-standing clinics. Interestingly, the best patient and consultant service we receive in radiology is from free standing clinics, hands down. If Medicare patients had skin in this game, we would order all our radiologic studies there, because they would demand it.
    Regarding my 65 and older patients and the disabled, I charge them a retainer of $900 per year. That covers all service I provide. (It is also half or less than the usual retainer practice.) Medicare is either-or. You have to opt out to do a program like mine. Neither I nor the patient can bill them for anything that I do (although my arrangement does not affect labs, xrays, etc, since they are provided by others, on my orders). RE: Your argument that masses of the elderly would be deeply in debt if balance billing were allowed, look at my arrangement. If I could balance bill, I could stay in Medicare, receive their payment, and bill the difference between their fees and usual and customary. There would be hardly anyone who paid me as much as $900 per year out of pocket. (That’s ignoring the likelihood that the balance would be covered by expanded supplemental insurance, if this were implemented.) Supplemental insurance is, in fact, the answer to your other objections as well. Balance billing would not subject patients to bankruptcy any more than current insurance practices do. Their premiums would go up. Competition would help mitigate this, but not enough for some.
    Margalit: Barry has pointed out a potential problem with balance billing, although he paints only the worst case scenario, and he ignores supplemental insurance.
    Peter: America has price controls as well. That’s why we have to keep fighting over who gets what out of Medicare. If I charge more than Medicare or Medicaid allowables, they call me a fraud. RE Japan: What do you think would happen if American doctors spent 3-5 minutes with each patient? Litigation galore. We will never function like the Japanese system. Also, there is widespread distrust of the medical system in Japan. I don’t know if it is deserved, but the arrangement does nothing to help win trust.

  46. Barry, and others, Japan also has price controls, that’s why it can do it for 8%. America, get with the program.

  47. Determined: Am I allowed to speak both sides of the argument? It is because we run our business well that we have been able to survive and keep our medical integrity DESPITE a system that pushes us to choose between doing good business and doing good. So far, we’ve been able to do well enough, but we ARE leaving money on the table to refuse to order tests that are not needed but would be profitable.
    Besides, this post is talking about the system itself, not the specifics to my office. If all doctors did only that which is necessary, we’d save a ton of money. But instead, docs do what is ALLOWED and profitable. This is the system’s fault, for not guarding against this kind of thing. The system is majorly flawed. Do you deny that?
    Margalit: Simply raising E/M would be a political bomb. I do agree that it would all come out in the wash, but the “law of unintended consequences” would no doubt rear its ugly head. People will find ways to profiteer of of any system.

  48. “Yet, the Japanese have the world’s longest life expectancy”
    I thought this was disproven with the discovery of 10s of thousands of phony centurians. Family had been hiding deaths to continue collecting retirement benefits.

  49. There was a Frontline program a year or so back that profiled five healthcare systems around the world. One was Japan’s. In Japan, patients can go to any doctor they want but for those who go to the most popular docs, it’s not uncommon to endure a three hour wait in the reception room before seeing the doctor. When the actual appointment with the PCP finally occurs, it typically lasts all of three to five minutes. Yet, the Japanese have the world’s longest life expectancy and the country spends a relatively piddling 8% of GDP on healthcare.
    The role of healthcare as a key determinant of life expectancy is significantly overrated. I think it was Leonard Schaeffer’s work that concluded that an individual’s life expectancy and overall health status is attributable to the following factors: personal behavior – diet, exercise, weight, smoking, drinking, etc., 40% weight; genetics, 30% weight; socio-economic status plus living and working environment, 20% weight; and access to good quality healthcare, 10% weight.
    Separately, regarding balance billing, if it were allowed for PCP’s, it would presumably have to be allowed for specialists too. Many of the elderly have extremely low incomes. Even those with liquid assets aren’t generating much income in this interest rate environment. Those who own their own homes would have to take out a home equity loan or reverse mortgage to access actual cash which can create a whole new set of risks and stresses. People undergoing expensive surgeries like CABG or hip replacement could receive bills for literally thousands of dollars beyond what Medicare pays. Patients who can’t pay will likely be hounded by collection agents creating further stress and aggravation.
    Dan – Since you abandoned Medicare, how does it work for your age 65 and older patients? After they pay your fees, can they recover anything from Medicare or are they paying completely out-of-pocket? Also, does Medicare Advantage work any differently?

  50. Balance billing should be allowed under Medicare, and standard fees for primary care should increase. This would solve several problems (and cause others, naturally). Besides putting some competition back into play, it would change the political equation: doctors would no longer need continuously to lobby congress on fees, and therefore would no longer be viewed as simply another special interest group. It would solve the shortage of PCPs available to new Medicare patients, and most importantly it would help PCPs practice good medicine, and allow them to stop trying to ram through too many patients in a day.
    I’ll never forget my encounters with patients who asked me not to abandon Medicare (which I eventually did). Many said they would pay the difference between the below-overhead Medicare fees and those I charged to non-Medicare patients. They were astonished to learn that this was illegal. They felt this was an infringement on their rights.

  51. Insurers desperately seek a reason for their existence, other than perpetuating their income. Finding none, they must make one up.
    Yes, Dr. Lamberts, it is nice doing a job that is real, necessary and good; even if it is neither recognized, properly remunerated, nor respected.

  52. Nate:
    E&M codes with primary care docs would be paid out of pocket, but E&M codes and procedures with specialists would be covered? Seems like that would only make things worse.

  53. the problem is not fee for service or increased E/M reimbursement or capitation it is who pays the bill. Any system with a third party payor not in the room will be abused.
    They have tried capitation and increased fees for PCP and doctors did less, shorter visits, run more through or work just up to the minimum standard.
    FFS hyperinflates productivity
    Capitation kills productivity
    If you want just the right balance stop covering primary care with insurance and have people pay directly. It wont be 100% perfect but considerably better then the two alternatives

  54. Good concept and excellent post. This is my first time i visit here. I found so many interesting stuff in your blog. I am looking forward some more information from your end, it’s really helpful for me. I will bookmark your site to check if you write more about in the future. Please keep up the good work.

  55. Margalit,
    Tiered pricing is not about shifting costs. It’s about steering necessary utilization to the most cost-effective high quality providers. Why should premium payers or taxpayers pay a large hospital system above market rates for routine surgeries and other care that nearby hospitals can perform just as well just because the large system or the one with the famous name has significant local or regional market power? To pay a lot more money without getting any better quality is waste in my book. The more of it we can squeeze out through tiered pricing, the better.
    Regarding lifetime costs, according to a study done in the Netherlands a few years back, healthy people actually had higher lifetime costs than unhealthy people because they lived significantly longer. Diseases more common in old age including Alzheimer’s, dementia and cancer can’t be completely prevented by healthy lifestyles. Frailty resulting from old age often results in the need for expensive long term custodial care as well. These diseases and conditions of old age can last a long time and are very costly to treat. While we will all die of something, very few of us, unfortunately, will go quietly in our sleep after leading a long, healthy, high quality life to the end.
    Finally, on utilization more generally, determining necessity is far from a precise science. The fee for service payment system rewards doctors financially if they do more. Patients often think more care is better care so they want more, especially if it’s not painful or invasive. Imaging is especially popular in this context. Fear of lawsuits, especially failure to diagnose claims, also encourages more utilization. So, in the end, how much of our utilization is unnecessary? I have no idea but probably quite a lot. Attacking it will require systemic change, especially with respect to how providers are paid and in how medical disputes are adjudicated.

  56. Barry,
    If proper primary care cannot cut costs in the form of unnecessary hospitalizations and more expensive interventions in general, then where is all that waste everybody keeps talking about? It cannot all be end-of-life, and even there, primary care should be able to beneficially intervene.
    As to saving money on the 50-60 crowd coming back to haunt us in the form of Alzheimer’s 30 years later, I guess that is a possibility, but not a certainty. It is also possible that these people would live long enough to get Alzheimer’s after all the expensive interventions, in which case we double the loss.
    From a strictly financial perspective, I would take the gamble and take good care of middle aged folks and save money in the now and then.
    I’m not sure what Health Affairs says, but primary care now ranges from superb to 3 minutes or whatever it takes to write a referral and some orders. This is similar to the Dartmouth study that found no effect on outcomes for people who had one primary care visit per year, ignoring the variance in the quality of care.
    I understand that reducing costs to the system is most easily accomplished by making people pay for more, which is what all those end-of-life and QALY and tiered pricing arrangements are really about. Those who can pay for everything out of pocket will do so, thus their costs although shifted, will remain the same, and those who cannot, will go without and that will be the entire cost reduction.
    This is probably where we are headed because you don’t have to take on any powerful interests here; just regular people who are by and large poor or “middle class”.

  57. No, you’re not going to have it both ways, SIR! You ran a post about how you are running a business, and now complain you are being made to think like a businessman!?
    And all you above commenters miss that little inconsistency?
    Get a life colleagues, and be consistent. If you are a physician for what the profession asks of you, then suck it up and be the advocate for what is right, and call these joker profiteers what they are, and stop worrying about being labeled the “bad guy”. Take it from one who is called the bad guy by the bad guys, I may have less friends, but at least I know I can count on them! And, I sleep well at night because I know I won’t be called being a bastard and a businessman. I am a doctor, and think and act like one!
    Look around you at your professional circle. Do people of real quality respect you, or just suck up to you and your group? Think about it.
    And “you” in the above is not directed to Dr Lamberts, but those who either read these comments and have them resonate, or nauseate.
    If the latter, hope you choke on it!

  58. Margalit,
    I think access to good primary care helps people to lead longer and healthier lives. To the extent that there is a shortage of primary care doctors, one way to combat that is to raise reimbursement rates for what they do – mainly the E&M billing codes. Another is to make fuller use of NP’s and other physician extenders to ensure that patients get the right care at the right time. I’ve read in Health Affairs and elsewhere that good primary care does not save money on a lifetime cost basis. If Dr. Lamberts and his colleagues help patients avoid, say, hospitalizations due to heart disease in their 50’s and 60’s, they may live long enough to cost the system even more money to treat Alzheimer’s or dementia in their 70’s and 80’s. We should raise the reimbursement rates for the E&M codes because it will help to alleviate the shortage of primary care but the current fiscal state at both the federal and state levels make that difficult to impossible right now. The cost saving argument is far less than compelling, I think.
    You’re right about a fairly small percentage of patients accounting for a disproportionately large share of costs. In the Medicare program, for example, 5% of patients account for over 40% of costs in any given year though they are not the same people from one year to the next. The least expensive 50% of patients account for a mere 4% of program costs. Medicaid spends over 70% of its money on the aged, blind and disabled (ABD), much of it for long term care, even though that population is a clear minority of total program enrollees. Children, by contrast, are relatively cheap to cover.
    We could save money on the high cost patients through a more sensible approach to end of life care. We could save money for the system broadly through tort reform including moving medical dispute resolution to special health courts instead of juries and giving doctors safe harbor protection from lawsuits when evidence based standards were followed where they exist. We could save money by subjecting high cost specialty drugs approved by the FDA to cost-benefit analysis including QALY metrics. If we are serious about trying to save money, there are clear strategies to pursue but they all require taking on powerful interests from hospitals and doctors to trial lawyers and drug companies. In this context, the PCP argument, however meritorious, comes across as one more interest group arguing for a bigger piece of the pie for itself. If they’re so convinced that they can save tons of money for the system, why aren’t they prepared to share financial risk with payers? One probable answer is that they can’t control patient compliance. Another is that they can’t afford to. And so it goes.

  59. Barry,
    I know many people contend that demand for superfluous treatments are a major factor in driving costs up. Other than never seeing this assertion proven in a scientific study, I am having a hard time reconciling it with other measurements. For example most studies show that a very small percentage of folks consume an inordinate amount of health care dollars each year, while the vast majority barely moves the needle. Those high-spenders are the ones afflicted with a handful of multiple chronic diseases or those who suffered a traumatic injury.
    While trauma is probably outside the scope of primary care, those chronic conditions may lend themselves very well to major savings with improved and expanded primary care.
    It’s the 80-20 rule: save a few hundred dollars on these chronically ill people is easier and faster and more valuable than trying to save a few pennies on the multitude of healthy folks who may indulge in a unneeded x-ray once in a while.
    As to elderly folks going to the doctor to ward off loneliness, I am perfectly willing to pay for that, because there are not that many and because it is cheaper than treating depression and because it is the right thing to do.

  60. Rob,
    I think raising the reimbursement rates for the E&M codes makes sense intellectually. However, suppose CMS could do this by decree outside of the RUC price setting procedure. Their premise, presumably, would be that it would save money long term but probably cost money short term. At the same time, the overall cost of Medicare is perceived, correctly, as unsustainable while the federal budget is in a deep hole to put it mildly. If they could somehow do it anyway and it turned out to not save any money, the program would be in even worse shape than it is now. So, in context, it’s easier said than done.
    Private insurers, for their part, could agree to pay substantially higher rates for E&M codes but they would probably want doctors to share some downside risk if the hoped for reduction in utilization failed to materialize. Financial risk sharing is not a concept that gets a very warm reception from most doctors or even hospitals for that matter.
    It’s well recognized that the third party payment system shields patients from the true cost of their care. I think it could be helpful if both insurers and employers were more aggressive in communicating the costs of healthcare and health insurance to individuals and families. As part of the health reform law, employers are supposed to start identifying on W-2 forms how much the employer paid for health insurance on the employee’s behalf. The amount is not taxable income, of course. It’s just intended to make them aware of how much health insurance actually costs. Insurers, for their part, could replace explanation of benefit forms with monthly or at least quarterly statements that list services consumed, amounts paid by the insurer and the member and, importantly, how much has been spent overall on the member’s behalf during the year and cumulatively since the inception of the policy. I’m not sure how much impact it would have but it wouldn’t do any harm and it wouldn’t cost much money. For people who have accumulated expenses well beyond statistical norms, some additional follow-up might make sense to ensure that the costs are legitimate and necessary. I understand that the system in Taiwan does something like this through its smart cards that track utilization at the individual level.

  61. “how do you handle the hypochondriac who wants to come in for every sniffle or the lonely but not ill elderly patient who wants to come in frequently just to chat? How much of that should taxpayers reasonably be expected to pay for on behalf of the Medicare and Medicaid populations?”
    Currently, they get laminectomies for non-radicular back pain and catheterizations for non-cardiac chest pain.
    If you really think that is what primary care is, you don’t know what you are talking about.

  62. Barry: Think about how many frivolous doctor’s visits it would take to pay for 1 angioplasty prevented or 1 ER visit prevented. If we can become motivated to provide care that focuses on keeping people healthy (and I believe that is possible), we can save the system a ton of money.
    Which, by the way, is the reason I think hospital ownership is fatally flawed. The system wants reduced consumption, the majority of which is done in the hospital. Fixing the waste in HC would (will) significantly lower the revenue of hospitals. This is a good thing; we want less sick people and want less tests done. A hospital’s motivation is for consumption, not to reduce spending (I wrote a recent post on the “Deal with the Devil” that talks about this).
    I am not anti-Kaiser, BTW. They clearly are doing something right, but also clearly haven’t taken over. If their model was significantly better, it would have more of a foothold than it does. I suspect the numbers would show it is better, but not by a whole lot, because the flaw is in the HMO applies mainly to PCP’s, not specialists, who are still paid FFS>

  63. Margalit: It is already special-interest dominated (see my link to the RUC). I would love the e/m code to be raised, but I do realize that there is never enough money for people. You not only have to raise incentives for good care, you need to reduce incentive for consumption. Both are a problem.

  64. Thank you Barry for realizing that specialists have taken large cuts—50% to me is a large cut. It isn’t as if we are sitting here making a lot of money as the prices to run the practice have not taken the same cut.
    Back in the day a pathologist in private practice could make over a million dollars—now a third or less. Yes, i know that is more than most generalists, but then again we did train longer and are diagnoses can have major consequences.

  65. Rob – Kaiser is a closed network, staff model HMO. That’s not what I’m proposing. I know there is widespread skepticism that insurer ownership, low costs and high quality care could ever be used in the same sentence but that is where the value of information transparency comes in. If insurer owned hospitals and physician practices couldn’t provide high quality care for a reasonable price, they wouldn’t have many (or eventually any) customers. By the way, Kaiser, for its part, has over 8 million members making it one of the 10 largest insurers. Presumably, it didn’t achieve that position by providing lousy care.
    One important trend of interest to me is the growth of hospital owned physician practices. I’m not sure if this is good or bad. Potentially, it could make it easier to develop Accountable Care Organizations when all (or most) of the providers are owned by the same entity and are presumably on the same page regarding quality and cost-effectiveness. Assuming doctors are paid a competitive salary with the potential for a quality metric driven bonus, they should also like the fact that the organization is paying for electronic records and malpractice insurance and that there is staff to take care of the business end of medicine for them. There should also be less competition between physicians and hospitals to provide lucrative services like imaging, labs and ambulatory surgery. On the negative side, a large provider organization could negotiate higher reimbursement rates from insurers which could drive up costs. Also, if the hospital owners structured physician compensation to reward revenue and/or referral generation, that could also drive up costs. I wonder what you and the other docs think about this trend.
    On the issue of procedure codes, as Ted said, many of these have been revised downward over the years. From my personal history going back to 1999, I can cite the example of a colonoscopy (CPT: 45378). My most recent procedure in early 2009 was billed out at $700 with an insurance allowance of $184.21. The same procedure done by the same gastroenterologist at the same community hospital in 2000 was billed at $700 and insurance actually paid $379. That works out to a 51.4% cut between 2000 and 2009.
    Finally, I’m a big believer in good primary care and, perhaps, as Margalit suggests, we should just raise the allowed amounts for the E&M codes though a doubling might be a bit of a stretch. I hear you when it comes to talking, listening and educating. However, how do you handle the hypochondriac who wants to come in for every sniffle or the lonely but not ill elderly patient who wants to come in frequently just to chat? How much of that should taxpayers reasonably be expected to pay for on behalf of the Medicare and Medicaid populations?

  66. Ms. Gur-Arie is, again, right on target. This would take 10 minutes of CMS’ time to effect. AAFP and other primary care groups would be well advised to lobby directly for this, rather than continue to stay seated at a table where they are the main course. (I would go for 2.5 to 3.0 increase, just to compensate for the resulting decrease in the conversion factor).

  67. I should have said “price controls,” rather than “cost controls.”

  68. Supply and demand cause the market to find the right price. Cost controls create destructive distortions, over- and under-supply, pent up demand, artificially elevated demand, etc. Adjusting reimbursement with command and control maneuvers are only a temporary and incomplete fix, and are manifestly subject to special interest pressures.

  69. Don’t cut CPTs and leave fee-for-service alone, because both are difficult and politically charged. Instead just double (yes double) the E&M reimbursement.
    If we are correct in our assumptions that proper primary care is important and that most docs want to take good care of patients, then this should do it.
    Sure, it will cost a little more, but sometimes you have to spend money upfront in order to save money in the long run.

  70. Not all CPT codes are reimbursed well and over the years certain ones have been cut back over and over. For instance in the 80’s a prostate biopsy could be 100.00 for a pathologist to read. Now it is a third of that or less.

  71. Barry: I think that is the Kaiser model. The problem is, of course, that you are putting an insurance company in charge of care. This puts a reverse incentive to do less care for the sake of the employer. There are checks to that, but I think a system that moves to put positive motivation on positive behavior is not a real hard thing to do. Cut reimbursement on CPT and increase it on E/M. You need to take care doing this, as there are always unintended consequences, but it seems like a simple enough adjustment. The % of HC cost from E/M codes is minuscule when compared to that generated by CPT, yet it is in the encounter with the patient that care is given.

  72. Perhaps private insurers should think about buying hospitals and physician practices. Pay the doctors a competitive salary plus a bonus for meeting agreed upon quality metrics. As long as doctors have a reasonable number of patients on their panel and quality metrics are achieved, insurers and doctors should have aligned incentives to spend less rather than more while doctors can earn a decent living without having to worry about which billing codes are well reimbursed and which aren’t.

  73. What’s truly mind-boggling is that the primary care societies continue to participate in and give credibility to the completely corrupt RUC. We would be better served by a highly publicized walkout from and condemnation of this discredited organization.

  74. Although this post is stating what is obvious to most (here), I think it can’t be said often enough. I think that revising codes that docs/providers are paid mainly by time, similarly for procedures and visits (plus some adjustment for expertise and risk) would do wonders for cost control and would be as important as our recent extension of coverage reform.

  75. Incredibly insightful post. This is the crux of the problem. Fee for service and overpayment for “procedures” means that we pay for a lot of unnecessary “health care” but don’t get much in the way of “health”.

  76. It’s all so true. But this one sentence really caught my attention: “We have set up a system that encourages consumption.”
    This shouldn’t come as a surprise, as our society encourages consumption.
    Patients believe that more is better, that doing something, anything, is always better than doing nothing.
    Tough nut to crack, but we have to get there as a country.

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