Physician Patient

Doctors are not at fault for Medicare’s soaring health care costs: Obamacare’s cost containment strategy

If you want to see the future of the ACO/HMO system, look no further than the Fairview-Accretive episode. What you have to remember about the new (Obamacare) system is:
1) The HMOs get and control the money.
2) The Accountable Care Organization (ACO) gets only the insurance risk. This is ironic since until now HMOs have argued that medical providers are unfit to assume insurance risk for the patient care they provide. But I guess once you separate the premium cost from the insurance risk, then they’re cool with it.
3)The ACO gets to keep all the deductible portion of the coverage. Assuming, of course, that they can collect it (hence the use of Accretive and dressing up bill collectors as doctors to shake down heart attack patients in the E.R. NICE!)
4) Once the HMO coverage kicks in, the ACO is paid pennies on the dollar.
5) To make this perverse system work, the HMOs also require patients to remain “in network” even as patients and families must spend their own money to satisfy high health care insurance deductibles.
6) The ACO is needed to cheat the feds out of facility fees and the like which the HMO cannot do for itself.
7) Thus, physicians and patients will do as they are told. The expression “Doctors’ Orders” will take on a whole new meaning.
8) The most important part – the HMOs will continue to upwardly risk adjust patients (as they do in Medicare Advantage) regardless of actual experience or cost. And, of course, the HMOs will continue to raise deductibles because of the “high cost of care.”
You gotta hand it to the HMO/insurance industry, this is pure moneymaking genius!
Dave Feinwachs

Sent: 6/6/2014 4:12:07 P.M. Central Daylight Time
Subj: Re: Doctors are not the cause of Medicare’s financial problems

Lee, you asked:
  1. With Medicare capitation models such as Accountable Care Organizations (ACO) which receive a fixed sum of government or third party money to service a population of patients, how does this affect the employee physicians’ pay and satisfaction with their professional work?
  2. Would this relieve or exacerbate the physician coding for pay issue?
  3. And what do patients think about these arrangements?
1. The financial success of doctors doing ACO gatekeeping for pay will be determined by their success in not ordering referrals and by self-referrals or doing nothing at all instead. Since the corporation will fix fees, the physician as bedside gatekeeper can enjoy expanded “risk” payment (“bonus opportunity” or “negative pay adjustment”—see the Orwellian SGR double-speak in the attached WSJ letter). Ultimately the salary of physician gatekeepers will be determined by their gatekeeping behavior (the “clinic cost of care index”) rather by the medical care services they generate. It’s what the gatekeeper orders, not what he or she does, that counts in the ACO/HMO/Cartel counting houses. This is the essential ObamaCare cost control scheme.
The Sustainable Growth Rate (SGR) repeal bill, which will pass congress with bipartisan support in 2015, is pertinent here since it solidifies the ACO cost control scheme for Medicare. The current bill will essentially coerce all docs into ACOs as pay for their Medicare patients. Participating Medicare doctors who practice outside an ACO will steadily decline (not by annual Congressional threats and actions) as increasing capitation payments to ACOs are realized. The alternatives for docs who want to treat Medicare patients are to opt out of Medicare entirely or else join an ACO. See the attached WSJ letter regarding the SGR “Repeal”—it is really an ObamaCare ACO implementation bill.
If docs join an ACO, they will become partners in an (insurance) corporation which underwrites the cost of a population’s care, but a corporation without financial reserves, since ACOs are not licensed insurance companies. “Reserves” within an ACO are future (withheld) FFS earnings of the docs (an ever- diminishing item) or Re-insurance purchased from the collaborating mega-payer HMO — as part of the capitation price for the population to be serviced.
The way one local ACO developer sees this scenario: The ACO will be acquired (in a merger arrangement) by a local HMO, which provides insurance expertise and legal status under state insurance laws. The merged corporations will then in turn be acquired (eventually) by one of the big 5 national HMO corporations (BUCHA for short)—the ObamaCare cartel is now legalized by fed (FTC and CMA) waivers of patient protection laws. Note again: This scenario is not mine, and is the logical consequence of the “Patient Protection” and Affordable Care Act and also the SGR Repeal bill. [Watch the stock prices, of the big 5 to follow the scenario—UHG stock price soared this week!]
Physician Satisfaction becomes another managed care issue, when a doctor’s paycheck means bedside rationing of care. When physicians break their covenant to hold the patient’s interest first (Hippocratic Oath), they rationalize this behavior as being “stewards of society’s scarce resources” [as stated by psychiatrist Jeremy Lazarus in his AMA presidential address of November 10, 2012.]
2) Gatekeeper docs in ACOs will find that the hospital corporation will add “facility fees” to every service they perform— and, the ACO corporation will gladly do the (padded, upcoded) coding and billing work. For example, Rosemary’s doc is not in any HMO but the doc is now a hospital employee—her office appointment bill typically previously was about $70, but is now just under a bit < $500 for the same care—yes, in an office palace with zillions of employees for sure.
3) For patients including Rosemary the care is “free”—so why should she worry? It’s those darn health care insurance premiums that are a worry, right?
Robert W. Geist MD
7 Sandpiper Lane
St. Paul, MN 55127-6310
(651) 484-6968
Sent: Friday, June 06, 2014 4:22 AM
Subject: Doctors are not the cause of Medicare’s financial problems

MPPA Colleagues,

When one examines actual allowable payments to physicians for medical procedures in the Medicare program, it is obvious that few independent doctors can afford to participate as Medicare “providers” when face time is required to do quality assessments and cognitive, interactive patient care. Psychiatrists, internists, and family medicine physicians are particularly affected, but so are surgical specialists (see the article from Florida neurosurgeon David McKalip, MD below).

The fee-for-service Medicare payment system is by design a zero sum game of “relative values” for physician services derived from a global budget for a patient population.

In order to be paid as a Medicare provider, whether the physician is independent or employed, a doctor must document his/her clinical work with CPT and ICD codes This shifts attention from the doing of patient care to documenting procedures in the electronic medical record (EMR). Of course, private insurers and clinics also require coding for payment, very often based on the Medicare RVS.

Independent practice doctors are selling their medical practices to hospitals and hospital-clinic organizations which support and require the EMR as both the basis of their payments from third parties and also the data base on which they base their evaluation of provider (doctor) pay-for-performance (P4P).

So, doctors are now coding for pay. There is clearly an incentive to “upcode” the intensity of medical services to justify better pay for the doctor. But as Dr. McKalip points out, the government sets the rates for physician services in the Medicare program. This is not determined in a marketplace. Patients have no say in how much doctors are paid in the Medicare program.

With Medicare capitation models such as Accountable Care Organizations (ACO) which receive a fixed sum of government or third party money to service a population of patients, how does this affect the employee physicians’ pay and satisfaction with their professional work? Would this relieve or exacerbate the physician coding for pay issue? And what do patients think about these arrangements?


Your comments?





Media and Federal Government Misleads on Physician “Overcharges” and True Source of Medicare’s Problems

By Sun Beam Times on June 2, 2014
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By David McKalip, M.D.

Do you want the $100 doctor or the $200 doctor? That is essentially the question you need to ask as a patient while the media and the Federal government attack physicians as charging “too much”. With the recent release of Medical physician payment data, the media is full of stories of doctors who are “over-charging” the system. While there is obvious fraud and abuse, that is not the main focus of these stories. Instead medical outlets like Pro-Publica and the Wall Street Journal run lists of doctors charging at the highest possible rate for their care and the percentage of time they charge that rate. They illustrate the larger alleged “overcharging” issue with anecdotes of obvious abuse, but ignore or minimize findings that the vast majority of billing and collecting by physicians is proper.

What is at the heart of the erroneous conclusion that doctors are “over-charging” Medicare is the fact that Federal government actually sets the prices for what doctors are paid. Think about this for a minute. Does the federal government set the prices for plumbers, lawyers, auto mechanics, nurses, or even local law enforcement or firefighters? The answer is no! It turns out that the complaints by the media about doctors charging “Top Dollar” (as ProPublica dramatically calls it) is about a doctor collecting $208.07 for a comprehensive medical evaluation. So if you go see your brain surgeon (like this doctor/author) and he spends about 45 minutes of his time on determining the diagnosis, prognosis and best treatments for your brain tumor, was $208.07 too much for that? What about a heart surgeon evaluating your damaged heart valve, or your internal medicine doctor looking at you and your out of control diabetes? Would it be better if that doctor were paid $108.31? That is the amount sought by some who want to see the “average” payment be the “middle code” (a level 3 out of five – as if some sort of arbitrary set of coding numbers accurately describes the correct level of payment – see table below)! Would you get the doctor to spend as much time and devote as much attention? Would they instead hire a nurse to do your care (which happens all too much already precisely due to low physician payment)? Would a student decide it was a good idea to invest the time to become a doctor, take on the debt, run their office, face the malpractice risk and devote time away from their family and leisure for $108.31 for full service? Don’t bet on it. In fact the true value for the care received by patients is probably closer to 250% of that rate (see table at end of story).

Consider the training of an internal medicine doctor. Four years of college then four years of medical school then three years of residency. Then consider they must become board certified and then maintain that certification with continuing medical education. Is the skill and experience of that doctor to do an initial history and physical worth only $208.07? How about for a neurosurgeon who spent seven to eight years in residency (after 8 years of college and medical school). Now consider the fact that the physicians have delayed much of their life to learn Medicine (during the prime of their young adult life), must buy malpractice insurance sometimes at the $100,000 level, comply with endless costly regulations of the government including computerized records costing tens of thousands and still keep their office open and staff paid. Is that visit really only worth $208.07? It turns out that Medicare has looked at this issue and discovered that the alleged “overpayment” is about $43 per case and the cost for investigating each one (which occur in 7% of cases for subsequent office visits) would be up to $55 per case. The investigation would cost more than the return on the findings. Further, most times the coding used is fully justified based on documentation. This is especially with the new computer systems the government coerced doctors into buying which have built in features designed to generate the highest possible code (a level 5). Paradoxically this pressure to buy computers led to higher coding and payment since it became easier to document all the things doctors have really been doing for years – a fact that stunned government officials! Further, the amount paid out to hospitals in alleged improper payments is twice that allegedly paid to doctors. Finally, the analysis of groups of data is not the same as individual audits of charts. It turns out that when physician coding is audited individually, it is often found to be accurate and physicians have a high rate or winning appeals against such “overpayment” claims.

This is a case of government price fixing producing what it always does: shortages. In this case there is a well-known shortage of primary care doctors since they can’t afford to stay in practice with the low payment from Medicare. That is why there is a proliferation of nurses, nurse practitioners and physicians assistants. This phenomenon is well known. Think of the gas lines when Richard Nixon imposed price controls on gasoline, or the waiting list for New York apartments with price controls or the Venezuelans lining for food with the price controls in that country. Price ceilings cause shortages, in this case a shortage of doctors willing to work for less to see more patients themselves.

The fact is that the Medicare fee schedule pays doctors far too little. It is a government price fixing scheme set by bureaucrats who are desperately trying to hide from the following fact: the Government can’t REALLY pay for the promised cost of Medicare it created in 1965. Rather than admitting that this big government programs can’t deliver (like the VA) it sets unreasonably low prices for valuable physician services. It is now trying to find other excuses to not pay for the doctor’s bill for care you need as a patient with so-called “pay for performance” (PFP). PFP (and global charges/bundling) is merely a scheme where doctors are given a single budget for your episode of care (say a heart attack) and penalized if they spend more money on you than the government and insurers want to spend. That leads to rationing of care as budgets are tightened.

The next time you see a story about a doctor charging “too much” for a Medicare visit, ask yourself how much if costs for an hour of labor to have your mechanic work on your car, your plumber to come fix your toilet, your lawyer to make a Will, your accountant to do your taxes and more. Do you really think that your brain surgeon is worth only $208.07 to see your for your brain tumor but it is okay to pay hundreds to have your transmission replaced, Last Will drawn up, or air conditioner fixed? There is only one reason why these stories are coming out now, and that is that the government is running out of money that it promised for health care in the massive government system called Medicare. It is about to get even worse with the supermassive system called Obamacare and the VA system is crashing as we speak. The easy target is the doctor, but the American people should recognize the real culprit if the government that created these programs in the first place.

There is no solution to be found in more price controls, regulations, audits, investigations, pay for performance and the like. There is no real solution for patients in the media/government/corporate demonization of doctors who are already spending less time with patients as they hustle to make up for lower payments and higher cost of practice. The real solution is to do the following: 1) confine government health care benefits to those who are either poor or combat wounded vets (with private vouchers), 2) allow people to keep their own money to buy all health care and health insurance tax free, and 3) allow the market to work as patients use their own money to shop and drive down costs and increase quality and access to care for all.



Code – for 1st office visit Medicare Payment 2014 Likely True Market Value*
99201 (level 1) $43.08 $107.70
99202 (level 2) $74.21 $185.53
99203 (level 3) $108.31 $270.78
99204 (level 4) $167.07 $417.68
99205 (level 5) $208.07 $520.18

Sponsored by David M. McKalip, M.D. P.A.
Copyright © 2014. All rights reserved.


Lee H. Beecher, MD
President, Minnesota Physician-Patient Alliance (MPPA)
7574 Mariner Point
Maple Grove, MN 55426-4746
“Empowering patients to make informed health care decisions”

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