Wednesday, February 24, 2010

A back-handed way to make policy

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

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

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

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

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

*ACC also charges that the CMS data and methodology are flawed. I don't comment on that.


Anonymous said...

I will only cynically note that the American College of Cardiology is noted within the profession for its aggressive and proactive tactics to maintain its members' incomes. (I was totally unaware of this till recently.) They seem to be light years ahead of their peers in other specialties in this regard. Therefore, I regard their comments with some skepticism when one considers their skyrocketing incomes ever since interventional cardiology came into being.
Again, Paul; I know as a CEO you have to play within the dictated rules, but I contend nothing less than a transformational overhaul of all of these issues will change anything. Unfortunately, we are unlikely to see any such thing.
Although therefore you may be right in the short term, I don't want people to be unable to imagine any different system, such as bundled payments for example.


Brad F said...

I encourage you to read this excellent piece by Trudy Lieberman. I am not a generalist incidentally.

Anonymous said...

the 'skyrocketing' incomes of interventional cardiologists were at least partly a result of new technology which dramatically changed treatment of heart attacks. it also involved a dramatic shift in night time responsibility. if 400k is too much, how much is appropriate for them to make? how long before they decide to just take call from home and be available to consult on the phone? the cardiology call is brutal. if people don't make enough to offset the rigors of the night and weekend call, they simply will stop offering those services and stop pursuing additional training (see cardiovascular surgery). cms knows that for the most part, the hospitals can't allow this to happen and will find ways to subsidize cardiology incomes to keep patients coming. but eventually with continued cuts to all specialties, there won't be enough money left for the hospitals to subsidize everyone, and (i'm guessing) primary care will be once again wondering how come the rheumatologist, nephrologist, neurologists, and everyone else seem to get support from the hospital but they don't?

i disagree with the characterization that the acc is aggressive, at least compared with other healthcare business practices. imo, one reason primary care has been reduced in prestige and income, is that they have been unable to really unite themselves. in my experience, they tend to be more fiercely independent and resistant to mergers. they don't spend enough time managing their office business end. they are unable/unwilling to merge groups to achieve economies of scale in terms of staff, and unable to effectively negotiate with insurers since they are individually such a small portion of each insurers business in any given area.

nonlocal cardiologist

Anonymous said...

Sorry to disagree with nonlocal cardiologist, but I'm on Brad F's side here. Lots of folks have to work nights and weekends, making hundreds of thousands of dollars less than cardiologists. So claiming that it's worth $400k because you work nights and weekends is laughable.

Yes, your training is specific, yes, you save lives and should be compensated for your knowledge and skill, but not to the point of bankrupting the country.

As to CMS, what else are they supposed to do when the budget is finite? If you can't make the balloon bigger (which is Paul's point about Obama maybe making decisions), you have to shrink something when the other side expands.

Anonymous said...

I think all involved in the provision of health care need to face the stark reality that we are in a publicly subsidized business which can no longer sustain the incomes of those providers. Rather than argue over which type of provider "deserves" the high income, resign yourselves that incomes are too high across the board and will go down. Yes, I mean physicians, hospital administrators (sorry Paul), pharma, insurers, makers of hip prostheses and defibrillators, all the various middlemen - everyone. We have literally priced ourselves out of the market - and in a market which is increasingly paid for by public monies, the market will simply refuse to pay these prices. Like firefighters, police officers and teachers, we will provide a valued but "undercompensated" service.
So please divest yourself of the mindset that you "deserve" this income just because bankers and lawyers make more and your job is more important to society. That argument just ain't gonna wash anymore; Joe Blow won't pay for it.
Keep in mind that in other countries,where health care is even more largely paid for through taxes, doctors are basically middle class citizens, not the God-like figures here.
The time is coming - adapt, or die, as they say.

nonlocal (MD)

Anonymous said...

Nonlocal: So physician salaries are bankrupting us despite making up less than a fifth of health care costs? Despite the fact that they are not the part of health care whose growth is out of control? Is that why it's necessary for Canada to pay their doctors 50k a year to maintain health care paid for by taxes? Oh, wait...

Your analysis is essentially wrong in every single way. Excessive use of overall services (ICUs, diagnostic testing, etc.) compared to the rest of the world is why our health care costs are higher. You could chop every doctor's salary by 50%, produce a mass wave of retirements, shortages and disgruntled professionals... and that entire savings would be eaten up within three years by the continued growth in service utilization.

Anonymous said...

I should also note that I am actually fairly unsympathetic to cardiology because they are being hoisted by their own petard. They are by far the worst offending specialty in medicine at driving up costs by unnecessary expenditures and overuse of technology (though on a per capita basis I suppose radiation oncology is worse). "Better safe than sorry" in getting a perfusion scan of every patient that walks into your office produces a collapsing health care system.

Anonymous said...

Anon 10:29;
My comment did not infer that high incomes are the (sole) cause of our bankrupted system. As I have commented many times here, the causes are multifactorial and also go beyond your own simplistic explanation of overutilization.
I am only predicting that since taxes will cover an increasing share of U.S. medical costs, incomes of all involved will drop - and I specifically included others as well as physicians, if you will reread the comment. And, since I am an honest person, I will add that as a pathologist I made about 4x what I expected to make as a medical student, probably unjustifiably - and the same can be said for radiologists. On and on it goes. Like I said, all will go down......

nonlocal MD