How Should Doctors Get Paid?

It’s a strange business we are in.

I can freeze a couple of warts in less than a minute and send a bill to a patient’s commercial insurance for much more money than for a fifteen minute visit to change their blood pressure medication.

I can see a Medicaid or Medicare patient for five minutes or forty-five, and up until now, because I work for a Federally Qualified Health Center, the payment we actually receive is the same.

I can chat briefly with a patient who comes in for a dressing change done by my nurse, quickly make sure the wound and the dressing look okay and charge for an office visit. But I cannot bill anything for spending a half hour on the phone with a distraught patient who just developed terrible side effects from his new medication and whose X-ray results suggest he needs more testing.

As a primary care physician I get dozens of reports every day, from specialists, emergency rooms, the local Veterans’ clinic and so on, and everybody expects me to go over all these reports with a fine-toothed comb.

A specialist will write “I recommend an angiogram”, and we have to call his office to make sure if that means he ordered it, or that he wants us to order it.

An emergency room doctor orders a CT scan to rule out a blood clot in someone’s lung and gets a verbal reading by the radiologist that there is no clot. But the final CT report, dictated after the emergency room doctor’s shift has ended, suggests a possible small lung cancer.

Did anyone at the ER deal with this, or is it up to me to contact the patient and arrange for followup testing? All of this takes time, but we cannot bill for it.

Most people are aware these days that procedures are reimbursed at a higher rate than “cognitive work”, but many patients are shocked to hear that doctors essentially cannot bill for any work that isn’t done face to face with a patient. This fact, not technophobia, is probably the biggest reason why doctors and patients aren’t emailing, for example.

Just lately, there is a new trickle of money flowing into medical offices for the type of between-visit oversight that goes with the new Patient-Centered Medical Home model of care, but it is not enough money to substantially change how doctors’ time is scheduled.

Taking a primary care physician away from direct patient care for just an hour can cost the employer somewhere around $400 in lost revenue. In today’s economic climate, few health care organizations can afford to fully embrace the notion of all the different indirect care activities others think physicians should engage in besides seeing patients one by one for a fee.

Of the three professions, physicians probably have the most confusing payment arrangement: Members of the clergy tend to make a straight salary regardless of how busy they are, lawyers bill for their time whether spent with the client or without, but we only get paid if someone is watching us.

If a tree falls in the forest, does it still make a noise?

If a doctor isn’t face to face with a patient, is he still a doctor? Is he still doctoring?

I say yes, but, then, how should we get paid?

(To be continued…)

Hans Duvefelt, MD is a Swedish-born family physician in a small town in rural Maine. He blogs regularly at A Country Doctor Writes, where this post originally appeared.

21 replies »

  1. It is indeed sad that we are treated as revenue-generators, and since so far in primary care we don’t generate a lot of revenue, we aren’t valued much.

    Not all older adults take more time. But obviously as people age, they are more likely to have multiple chronic problems, memory problems, physical impairments, caregiver involvement, care coordination needs, and other factors that make their primary care take more time.

    Remains to be seen whether Medicare will be able to up its investment in primary care…politically and logistically difficult, as everyone here knows.

  2. I think we’re on the same page, Dr. Kernisan. That two percent statistic you just cited reflects either a shortage of time or too high an expectation that doctors churn out maximum revenue. (P)ressured to be more productive surely sounds like being undercompensated or getting accused of wasting time.

    In any case I am in agreement that old people definitely take more time and a different approach to care as the result of age alone. And when they present with medical problems my guess is that doctors accustomed to working fast are tempted at some level to hurry the clock.

  3. Hm, in truth I’m a little perplexed by your conclusion that “doctors feel under-compensated if they have to spend too many minutes with patients,” but glad you find my comments overall helpful.

    I’d say that when we are salaried, the problem is that our employers get anxious if we have to spend too much minutes with patients…

    The recent expose on Medicare data shows that 12 billion of 600 billion was spent on outpatient visits in 2012…a measly 2%. And they say we can’t afford to give primary care docs more time, sigh.

  4. Twenty years ago I was sitting in a health insurer board meeting when it dawned on me that physicians are the only professional group that cannot set its own fees or rates. Lawyers, architects, engineers all set an hourly rate and/or bid on jobs…..ending up with negotiated recompense from their client.

    I believe this came about as Medicare evolved with a set fee per procedure…..and then the insurers (in my case we had 65% market share) simply told hospitals and doctor groups we’d pay medicare plus a set percent…..and no provider could afford to reject the deal as we had most of the insured patients.

    I am not sure when balance billing (where docs set rates, insurers paid “usual and customary” and patients paid the difference) ended….but eventually this practice was eliminated.

    So here we are: doctors have lost a fundamental thing….economic freedom…..the ability to establish their own fees. Restoring it (and the patients’) should be a critical element of reform.

  5. I don’t know who you are, Alex, but when I followed the link from your name I saw and read the three posts at your new blog. It is a model of neatness, simplicity and solid information with no bait-and-switch links and spam ads. Keep up the good work. Something tells me you have been putting in many hours doing a lot of work for very little pay, first as a CNA, perhaps now as an LPN, and have not given up climbing the health care professional ladder. If you have been following The Health Care Blog I don’t have to tell you this is a forum where posts and comments threads are written by professionals from many backgrounds, with earnings easily three or more times yours and career advancement opportunities about which you have only dreamed.

    To others — as a retired food service manager although I know nothing more about him than what I just said, I can relate to Alex. My career was built on the dedication and work of thousands of people like Alex, I almost wrote “hard work” but that would not always be accurate. The food business, like health care, is very labor-intensive. Some of the work is hard, but much, perhaps most of it is not all that hard. It’s tedious, time-consuming, repetitive, sometimes disgusting, and often boring. It’s not rocket science, as I have often reminded myself and others. We have jobs doing what other people either cannot or simply don’t want to do. No matter what the circumstances, there is nothing glamorous about cooking, cleaning and putting up with the unpredictable ways that strangers often behave.

    I have seen the work of CNAs in assisted living and skilled nursing settings and concluded they are the ones doing much of the grunt work of medical care. In terms of labor, housekeeping and food service are at the bottom of the pyramid with uniformed hourly employees one step up. CNAs are the elite of the hourly staff and the good ones frequently rotate into jobs requiring none of their special training — waiting tables, vacuuming floors, doing laundry and dealing with the aftermath of incontinence. It takes special training to change an ostomy bag but when one fails in the activity room cleaning up the mess is a disagreeable job requiring no special certification.

    Fee-for-service is not a bad way to charge for services, but it should not be linked to compensation — unless “compensation” takes into account all the many support functions that make that service possible. Maintaining an operating and hospital rooms with a competent support staff on call 24/7 is an expensive resource, And shift differentials used by hospitals are totally justified, even for non-medical personnel.

    But reading many of the comments here tells me doctors feel under-compensated if they have to spend too many minutes with patients. Dr. Kernisan’s comment above makes a good point:

    I used to work in an FQHC clinic and one of the reasons that I left was the clinic was reluctant to let me focus on geriatric patients…they take too long, devastating for revenue! Plus there is no federal productivity standard for geriatricians and we were being pressured to be more productive.

    Thanks to her and Alex for their contributions to this thread. They underscore points often overlooked in these discussions. I hope experts and others are taking notes.

  6. For the most part, it seems the health care system in any country appears to be in want of a truly responsive over-all improvement and efficiency. From the costs of actual medical care, to how payments are made and to how much a citizen may be entitled to by way of medical insurance. This should after all be the main consideration.

  7. The VA is a civil-service model of medicine and healthcare, and provides overall good value and usually pretty good care.

    I think Kaiser hustles its docs a bit more; I have friends who are providers there and it sounds very busy for PCPs.

    Even salaried docs are often pushed for productivity. (I was salaried at my FHQC and my guess is that Dr Hans is too.)

  8. The old Soviet joke. Cute.

    But those of us who know more professional professionals among them know better. My experience with government workers is that those dealing with the public are like the bark of a tree, but once you access the heartwood it’s not the same. From my mother’s Medicaid caseworker to my own experience with Social Security and Medicare, the people I have interfaced with have been models of proficiency.

    One of our neighbors is a nurse with the local county public health department and I have always wondered why their mission is so limited. The reason, of course, is that the medical community would raise hell if they stole too much business. But there is no reason that much of the revenue pipeline, even from Medicaid to the private sector, would dry up if the tests, drugs, equipment and various services were done for costs only, in publicly owned facilities by certified professionals working at civil service rates (with government benefit packages).

    Done correctly there should not even be a means test for such services. My guess is that plenty of people who now shell out tons of money going to doctors and hospitals would be pleased to have much of their care, particularly well care and screening, done by a public health department. If nothing else, better and more accessible mental health and substance abuse treatment programs would yield millions in return by reduced homelessness, suicides, firearms violence and domestic conflict.

  9. My understanding is that Kaiser Permanente pays its doctors on a salaried basis and a slightly above market one at that. It also does NOT base bonus compensation on relative value units billed. It allows patients to e-mail doctors for things like prescription renewals, basic questions and the like. The Kaiser system gets many millions of these e-mails per year which have to be read by someone and responded to. While patients love the e-mail capability, the most surprising thing to me is that, according to recently retired Kaiser CEO, George Halvorson, they don’t reduce the number of inpatient visits though Kaiser, at least in CA, has a good record for both keeping patients relatively healthy and out of the hospital which presumably helps to control medical costs and for patient satisfaction.

    The bottom line to me is that it appears that the salaried doctor model can work in an integrated delivery system like Kaiser’s where the providers and insurer are on the same team. They key, I think, in CA is that the Kaiser system is very large. It has the critical mass of hospitals, imaging centers, labs, rehab facilities, etc. to inspire confidence among patients and, presumably, Kaiser has relationships with other medical centers to which it can send patients who need something that it can’t handle internally.

  10. Civil service you say—we pretend to work and they pretend to pay us. Forget it.

  11. Straight salary. Make us cvil service in a completely not-for-profit system. Win.

  12. Amen. We’re spending a lot of time and effort on this “Field of Dreams”… If we build the PCMH, reimbursement will come… I’m skeptical that will actually happen. The reimursemnt has to come first, then providers can afford to invest in PCMH in a significant way (and then see if it’s providing any benefit to our patients). It is hard to invest in PCMH when we have no faith in the long term viability of this model.

  13. Physical therapy, occupational therapy, and speech therapy are right up there with you in the complexity and lack of payment. We have several systems we must comply with- SNF PPS, HH PPS, acute inpatient, outpatient fee for service, private practice regulation, school system. Each with a different set of regulation and payment for Medicare,Medicaid and private insurance.. It takes an enormous amount of energy in the form of paying people in the background to figure out every change in Washington DC. Great post- and people wonder why healthcare is expensive!

  14. “Just lately, there is a new trickle of money flowing into medical offices for the type of between-visit oversight that goes with the new Patient-Centered Medical Home model of care, but it is not enough money to substantially change how doctors’ time is scheduled.”

    A trickle…if that. Most of that trickle is grant money, which means it will be gone soon. The rest of the payment system remains corrupted, so it doesnt matter what fantasy model of care you come up with, it will degenerate into the model you are looking at right now.

  15. 1) it is very simple…if you lose money on every patient you just make up for it in volume.

    2)let mid levels do take care of all the low hanging fruit

    3) since you make the same amount of money if you see a uri/uti/ankle sprain vs a complex diabetic with renal complications just put 10 of them on your schedule a day, take the 50% reduction in productivity and accept the $5000 that the insurance gives your for all your hard work and be happy

    4) pay $25k/year for an EMR so that the govt can give you some impossible criteria to meet and then reduce your medicare reimbursement by 2%

  16. I used to work in an FQHC clinic and one of the reasons that I left was the clinic was reluctant to let me focus on geriatric patients…they take too long, devastating for revenue! Plus there is no federal productivity standard for geriatricians and we were being pressured to be more productive.

    It is strange that HRSA has not addressed this, esp in these days when it’s very easy to tell if the doctor made a phone call, to whom, and how long it lasted.

    For the rest of primary care outside integrated systems, we might be able to learn from the direct-pay docs, who are experimenting with various payment models. Some charge a monthly fee for all the primary care you need, some charge per time, some charge monthly plus per visit (whether in person or by phone).

    I myself now charge per time, but am not sure I want to see this implemented widely…what this billing model has done to lawyers is not pretty.

  17. Very good post. As one in full-time primary care I attest that current system’s margins are too thin to be sustainable; the only way I make it is by working about 62 hours a week, being in a group to share expenses and staff, and owning a lab as ancillary. Until we get to a truly proven and fully standardized and mature pcmh system, I say raise primary care fee for service rates by at least 20%, or let us start billing for time spent just like attorneys do.

  18. Man to dentist, “Doc, I want this tooth pulled. I don’t think it’s worth trying to save, How long will it take?”
    “I can get it out in about fifteen minutes once the anesthesia has worked.”
    “So how much will that cost?”
    “Tooth extraction is $225.00”
    “For less than an hour’s work. Isn’t that sort of expensive?”
    “Well… I can take longer if you like.”


    The jury’s still out for medical home/ ACO, but the model seems to have been working for years in a few well-run delivery systems, some with excellent outcome stats. (Not “many” because there aren’t very many.) The military active duty medical service corps and VA seem to be doing a pretty good job. I don’t hear a lot of complaining from those sectors. I’d be interested to know how medical professionals are compensated in those delivery systems.

    When I was drafted and trained as an x-ray tech I saw the Army side of medical service up close and personal, and as far as I know the doctors and nurses were paid in accordance with established officer pay grades, with some kind of “professional pay” added, but I don’t think it had anything to do with tracking how many cases they saw. I was also fortunate to have my wisdom teeth extracted by an oral surgeon serving as a captain if I recall right.

    In any case, the biggest problem I see with the civilian system is that most medical professionals are excellent with their professional performance but painfully lacking in accounting skills. Any businessman knows that there is a difference between employee compensation and corporate profit. The numbers appear on opposite sides of the balance sheet.

    Because so many doctors in private practice need enough revenue to pay expenses way more than their own professional compensation, they must bill patients (or their insurance companies) enough to cover all those expenses as well. The emergence of “hospitalists” strikes me as an encouraging development. If I were a doctor — even a specialist — I would trade higher compensation any day for more predictable schedules, smooth access to other professionals, in-house business and legal support services, retirement security and the prospect of an occasional vacation.

  19. “but we only get paid if someone is watching us”

    Classic line! Encapsulates many truths and much wisdom.

  20. Excellent post Hans. I guess my first response is, we keep hearing about how bad “fee for service” is, because it prompts docs to do more. Is there any hard data on that? The other side of the coin says fee for service doesn’t fairly account for the intuitive, cognitive, educative portions of the patient encounter.
    Regarding the PCMH, in my mind the jury is still out on how effective it is, and is it really the right model for all primary care practices. If so, how does a small practice afford the components of a PCMH, especially based on current payment schedules?
    Then you have the documentation requirements from CMS which take time, and is there really evidence these make a huge difference in quality or care, just because the right boxes are clicked? On top of all that comes time spent with EHR which may or may not be that effective and easy to use. That doesn’t even begin to cover coding issues which are required for appropriate payment.
    In the end, this has been an ongoing issue for many years, and now that the healthcare system is being turned on its head and many new patients will be added to the system, it has still not been addressed.