Washington's Plan to End Private Practice Medicine Opinions expressed by Forbes
Contributors are their own. by Scott Gottlieb MD 12/8/14
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.
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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