Saturday, October 22, 2016

Government wrecked Healthcare

Washington's Plan to End Private Practice Medicine Opinions expressed by Forbes Contributors are their own. by Scott Gottlieb MD 12/8/14
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Scott Gottlieb, MD: I’m a physician and a Resident Fellow at the American Enterprise Institute in Washington. I previously worked at the Food and Drug Administration as the agency’s Deputy Commissioner and before that, as a senior official at the Centers for Medicare and Medicaid Services where I supported the agency’s policy work on coverage and payment, particularly related to new medical technologies. I spend my time now analyzing developments in policy and regulation and their impacts on innovation, medical care, and the public health. I work with firms engaged in the financing of early stage healthcare ventures, giving me a firm grounding in how policies conceived in Washington are impacting private entrepreneurship on Main Street. I work as a senior advisor to Avalere Health in Washington, and as a member of the Product Investment Board of GSK. I am also an editorial board member of the journal Value Based Cancer Care, the Food and Drug Law Institute’s Policy Forum, and as a Clinical Assistant Professor at the NYU School of Medicine. Follow Scott Gottlieb on Twitter @ScottGottliebMD. Scott Gottlieb's articles can also be found at http://www.aei.org/scholar/scott-gottlieb/
The author is a Forbes contributor. The opinions expressed are those of the writer.
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In fixing the busted system that Medicare uses to pay American doctors, Congress has settled on a scheme that visits so many complexities on physicians, that it will inevitably stoke the continued demise of private, independent medical practices.

Many in Washington favor this outcome. Regulators at the Centers for Medicare and Medicaid Services have long preferred to deal with large entities and corporations that employ physicians, rather than try and enforce rules on a fragmented system of small, independent doctor offices.

Meanwhile, the “experts” on Capitol Hill, who are working to engineer the perfect solution to the nation’s healthcare system and its challenges around cost and quality, believe that large health systems modeled after Kaiser or the Geisinger Clinic are the optimal structuring. And that these models can be replicated nationwide.

For their part, the already big or near-big healthcare institutions, straining under declining reimbursement, see the leverage that comes with increasing their market share as a way to also improve operating margins and better control costs.

The result is a bipartisan package of “reforms” that visits so many new rules and complexities on doctors that individual physicians simply won’t be able to participate. They’ll face three choices. Refuse to see Medicare fee for service patients. Sell their practices and join a hospital or health system. Or ask their older patients to join Medicare Advantage plans, and see them under that arrangement. (Under Medicare Advantage, doctors won’t be directly responsible for adhering to many of the new payment conditions. The presumption is that these plans already enforce their own conditions to try and coordinate medical care.)

At issue is the framework that Medicare uses to set the rates doctors are paid by Medicare’s fee-for-service program on everything from thoracotomies to throat cultures. Referred to as the “sustainable growth rate” it’s part of a budget gimmick designed to cap what doctors are collectively paid and then let physicians fight amongst themselves over how that fixed pot of money gets allocated.

But the ploy never worked, and the price schedules are never properly adjusted for the rising cost of delivering medical care. Since private insurers adopt the prices, the malfunctioning system ends up having an outsized influence on medical care.

As I write in today’s Wall Street Journal Editorial Page, the major bipartisan, bicameral “reform” bill, set to advance in the next Congress, largely adopts many of the so-called doctor “payment reforms” already implanted in Obamacare. These changes are all variations on an old theme: capitation. The idea is to shift risk to providers with the goal of making doctors more discriminating about the cost and benefits of the treatments they prescribe. Rather than have the government ration care, or patients (through consumer directed health plans); the idea here is to have the providers do that reconciliation.

As I note in my WSJ op ed, the problem is that the new payment provisions come with their own alphabet soup of rules, reporting requirements, administrative procedures, and new bureaucratic infrastructures. Small doctor offices or medical groups simply won’t be able to participate, and will see their income under Medicare Fee for Service purposely reduced as a result.

This is no accident. The architects of these provisions don’t believe that small medical practices are efficient, equipped to take risk, or to comply with reporting requirements.

It isn’t any one single provision that will spell the demise of independent doctors. It’s the meshwork taken in its entirety, and the complexity if visits on providers.

Independent doctors practicing in smaller settings won’t be able to keep up with the requirements for overhead, reporting, and tracking. And the law makes it hard (illegal) for doctors to collaborate in loose associations to help them pool resources and buy these services. The end result is that collectively, the policies intentionally favor the consolidation of previously independent doctors into larger institutions.
In the market, this is turning out to mean selling doctor practices to a local hospital.

When it comes to paying for doctors’ services, Washington has been setting prices for so long that it’s hard to envision another approach. But instead of dictating administered prices, it’s possible for Washington to measure them based on market surveys. One idea would simple be to survey prices paid by private Medicare plans, and use these as a barometer for setting rates in the fee for service program.
There’s a chicken and egg problem here.

Medicare Advantage plans derive their own prices off the Medicare fee-for-service schedule. But if Washington were to turn the tables, and pay off a survey rather than its own rate setting, the market would quickly settle into a competitive equilibrium, with Medicare Advantage rates rising and falling to reflect supply, demand, and quality as plans compete to contract with the more popular medical practices. There would be new winners and losers. That is part of the problem. Many providers prefer the devil they know to the untried.

But right now, as the consolidation of once independent, privately practicing doctors accelerates it will also extinguish any semblance of local healthcare competition.

Obamacare is already leading to this desired outcome.
A 2014 survey of American docs that sampled 20,000 U.S. physicians found that 35% of doctors described themselves as independent, down from 49% in 2012 and 62% in 2008.

These trends are becoming self-fulfilling by shaping expectations of newly minted docs. A new survey of 1,400 medical students conducted by Epocrates found that 73% plan to seek employment with a hospital or large health group when they graduate. Only 10% of students hope to work in a private practice.

Proponents of a market-based alternative to Obamacare will find that there’s not enough local rivalry between providers on which to eventually fashion a competitive structure to replace the Affordable Care Act.

All medical care is local. Once a single, large healthcare system or hospital controls all of the providers in an area, relying on market competition between separately contracting health plans won’t be possible. We will be dependent on administered pricing and increased regulation. For some in Washington, this is a fine outcome.

Many of our most pernicious problems in medicine don’t exist in spite of Medicare, but precisely because of the disorganized way that the Centers for Medicare and Medicaid Services buys doctors labor for seniors and other beneficiaries, and the outsized influence that the program exerts on the practice of medicine. If Congress passes this current bill, it might as well breath honesty into the law and repeal longstanding language saying that Medicare doesn’t regulate medical practice.

In a nutshell, the new legislation nixes the existing formula for capping the rate of growth in Medicare spending on doctors in favor of a new calculation. It ends the SGR, which was an attempt to tie Medicare’s budget to the inflation rate. In its place, the new plan limits total spending on physician services to .5% annual updates.

To give doctors a chance to earn more money, the legislation creates a new Merit-Based Incentive Payment System (MIPS). This plan basically consolidates three existing incentive programs, the bulk of which were already solidified under provisions established in the Affordable Care Act.

MIPS confer on doctors a score of 0-100 based on their adherence to different programs that purports to measure quality and outcomes based on information the doctors report. Those above certain numerical thresholds will get a raise. Those below it will get cut. To estimate their bottom line, doctors will have to track their performance against benchmarks they derive off of data that Medicare provides.

Mostly, the scores are tied to steps that doctors have to take in their medical practice that are believed to improve care. In other words, it measures inputs, not outcomes. The reporting requirements will be subject to audits, and civil penalties for mistakes. It doesn’t seem to matter that none of the programs that MIPS cements have reliably demonstrated that they actually improve outcomes, or lower costs.

The fee increases that the law enables (even baking in the bonus pools) are expected from the outset to fall far short of the real rise in medical practice costs. Physicians’ real income under Medicare will decline. It is another reason why the new scheme strongly favors the delivery of Medicare services through large, often hospital based systems. These bigger systems have more opportunity to enroll in the alphabet soup of legislative programs and inducements that will help goose reimbursement.

Over a short period of time, it’s likely that remaining office-based physicians will stop taking Medicare, or cap their Medicare patients at a small number. In fact the law explicitly exempts doctors that don’t treat a lot of Medicare patients from some of the penalties that are levied on doctors who don’t take part in MIPS. There’s little chance that smaller, independent medical groups (in particular, medical specialists) will be able to meet the multitude of provisions that this new law outlines, even with the help of some exemptions and special subsidies that the law provides.

Some doctors will just absorb the cuts to their rates (up to 9 percent a year). Others doctors will opt out entirely. The provision of services for the elderly will shift to the hospital outpatient setting. The law’s most significant payment bonuses are already reserved for doctors that practice as employees of hospitals and other integrated medical systems (which are referred to as Alternative Payment Models under the new law). In this way, the law furthers provisions in ObamaCare that favor the consolidation of medical practice around large hospitals and health systems and the movement of doctors from independent practices to salaried arrangements.

The law may also favor Medicare Advantage. These plans may have an easier time contracting with the doctors who cannot comply with the requirements, but still want to see some Medicare patients. Medicare patients, in turn, may favor Medicare Advantage if these plans are able to let them continue using outpatient practices.

But in the end, what the bipartisan plan really favors is Obamacare. It’s ironic that the only major healthcare reform measure likely to pass in 2015 is a bill that cements some of the most significant features of the Affordable Care Act. Republicans say they oppose Obamacare. They need to seize the opportunity to roll back some of its pernicious features. Or at least preserve enough of a medical marketplace to reserve for the future, a chance to come up with a better alternative.

Dr. Scott Gottlieb on Twitter @ScottGottliebMD


Comments

The best model for consumers is to get government completely out of healthcare and allow private practice to be restored.  Healthcare needs to undergo the cleansing fire of the free market in order to lower the cost of treatment.  Malpractice needs to be replaced to license suspension by local Medical Boards.


Norb Leahy, Dunwoody GA Tea Party Leader

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