It won’t surprise many to learn that the age of the solo practitioner has, for the most part, come to an end. Over the past several years, small and solo practices have closed, been sold to hospitals, or merged with larger groups. The reasons are fairly obvious. Declining payments, rising malpractice costs, increasing regulatory burdens, costly new health information technology requirements, and crushing medical school debt have made it difficult for physicians to operate the small practices that once were commonplace around the country.
Now add the Affordable Care Act (ACA) to the mix. At a July 19 hearing of the House Small Business Subcommittee on Investigations, Oversight and Regulations, lawmakers questioned whether the health reform law would help or hurt physicians looking to keep their practices small and independent. The answers from the expert panel were mixed.
Gone are the days of Marcus Welby. Courtesy Wikimedia Commons/Public Domain License
The emergence of accountable care organizations (ACOs) will drive more hospitals to buy up small physician practices, Mark Smith, president of the physician recruiting firm Merritt Hawkins, predicted. The health reform law heavily promotes the formation of ACOs, which call for physicians and hospitals to work more closely and to share in bundled payments for episodes of care. Mr. Smith said small practices aren’t well-positioned to enter the ACO world if they aren’t integrated with a hospital because the ACO model calls on practices to assume financial risk.
But Joseph M. Yasso, Jr., DO, a family physician in Independence, Mo., who sold his practice to a hospital group 20 years ago, said the ACA’s promotion of patient-centered medical homes could be a lifeline for small practices. Physicians are adapting to the new environment by becoming medical homes and participating in government pilots where they can share in the savings they generate by providing more efficient care, he said.
One thing everyone on the panel did agree on was the need to fix the Sustainable Growth Rate (SGR) formula used in setting physician payments under Medicare. No surprises there either.
Tom Scully, the outspoken former head of Medicare, recently said that one of the biggest mistakes policymakers made when redesigning the physician payment system in the early 1990s was giving the American Medical Association control over the Relative Value Scale Update Committee or the RUC.
The RUC, which is as controversial as it is unknown, is a 29-member panel that makes recommendations on how to value of thousands of physician services under Medicare. While Medicare officials are under no obligation to accept the panel’s decisions, most of the time that’s exactly what they do.
Courtesy Wikimedia Commons/ Public Domain.
Mr. Scully told members of the Senate Finance Committee that the current RUC structure, as run by the AMA, isn’t objective enough. There’s a lot on the line since the RUC’s decisions impact about $80 billion in Medicare spending each year, he said. As lawmakers consider how to reform the physician payment system, he urged them to also think about ways to make the RUC less political and more independent.
The comments in the Senate hearing room were just a sampling of the criticism that the AMA and the RUC have received recently. Over the past year or so, the RUC has been under near constant attack from a small group of primary care physicians who are suing the Centers for Medicare and Medicaid Services with the goal of getting the agency to dump the RUC. Their contention is that the RUC is biased toward subspecialists and that the panel’s recommendations have contributed to a significant gap between primary care and specialty pay.
The AMA has continued to support the RUC process, arguing that a group of physicians is best positioned to determine the value of medical services and that the panel has often championed payment increases for primary care services.
Recently, officials at Hoag Memorial Hospital Presbyterian, a regional health care system in Orange County, Calif., decided to rebrand their 60-year-old institution. The not-for-profit health care system is now known simply as Hoag. They weren’t just going for brevity. They specifically wanted to drop the word “hospital.”
Dr. Richard Afable, Hoag’s president and CEO, recently spoke to a small meeting of hospitalists in Las Vegas and explained that the name change reflects a shift toward providing more services outside of the hospital. Hoag’s hospitals do a great job treating the acutely ill, he said, but the leadership wanted to reach out to people in the community before they got sick enough to make it to the hospital.
Dr. Richard Afable. Photo by Mary Ellen Schneider/ Elsevier Global Medical News.
So officials at Hoag have been working to offer more services related to conditions that either slightly touch the hospital or don’t touch it at all, Dr. Afable said. For example, the system has beefed up its offerings around diabetes care and now provides counseling on how to manage the disease and prevent complications. In the old days, they would have waited for someone to have a heart attack or lose a limb before taking care of them, Dr. Afable said. They also are developing community-based programs for breast cancer, a condition that today is treated primarily outside of the hospital.
And Dr. Afable advised hospitalists to consider following Hoag’s lead and look how they can be involved in care outside of the hospital. He noted the example of CareMore, a medical group and health plan based in California, which is being acquired by the health insurer Wellpoint, Inc. Under CareMore’s model, hospitalists not only care for patients while they are in the hospital, but also after they leave. Once a patient is stable, they are sent back to receive the rest of their care from their primary care physician. Since CareMore uses a capitation payment model, there aren’t concerns about which physician gets the payment for the post-discharge care. The model is food for thought for hospitalists as care becomes increasingly less hospital centric, Dr. Afable said.
The Independent Payment Advisory Board, the new panel that will be charged with reducing the growth in Medicare spending, was the focus of intense debate on Capitol Hill last week. In the July 18 edition of the Policy & Practice podcast, we have all the details on the two House hearings held on the panel and why physicians are worried about its impact.
The Independent Payment Advisory Board (IPAB) was created under the Affordable Care Act to help keep Medicare spending under control. But most physician groups are calling on Congress to scrap the board or substantially change how it operates. Opponents, who include the American Medical Association, say that if the IPAB goes forward, physicians would be subject to two levels of cuts: one from the IPAB and one from Medicare’s Sustainable Growth Rate (SGR) formula. Physicians are already facing a nearly 30% Medicare fee cut next year from the SGR unless Congress steps in.
HHS Secretary Kathleen Sebelius tours Frager’s Hardware Store in Washington, D.C., before an event to announce new rules on health insurance exchanges. HHS photo by Chris Smith.
This week’s Policy & Practice podcast also has news on the new federal regulations for how states can set up health insurance exchanges. Those exchanges, which aim to make it easier for Americans to buy insurance, are slated to be up and running by 2014. And check out the podcast for the latest on the debt ceiling negotiations and how Medicare could be affected.
Take a listen and share your thoughts:
Check back with us next week for more on the debt ceiling legislation and the Institute of Medicine’s recommendations on what preventive services health plans should cover for women.
House Republicans and Democrats debated legislation concerning Medicaid, malpractice suits, and alternatives to the Sustainable Growth Rate (SGR) this week.
Despite repeated attempts by the Democrats to exempt certain groups, the Health subcommittee of the House Energy and Commerce Committee passed a bill, H.R. 1683, that would repeal the Maintenance of Effort Provisions of the Affordable Care Act. The bill would give governors the power to change Medicaid eligibility requirements.
From Wikimedia Commons User: Nino Barbieri
The full committee also voted to back a bill, H.R. 5, that would set limitations on filing, damages awarded, and fees related to malpractice suits.
The House Ways and Means Committee looked at alternatives to the SGR, discussing alternative payment models and the elimination of the Independent Payment Advisory Board.
For more on that, and on the Fourth Circuit Court of Appeals consideration of the health reform law’s constitutionality, listen to this week’s installment of the Policy & Practice Podcast.
The issue of medical liability reform has been getting a lot of attention so far this year. A bill proposing caps on non-economic damages was one of the first pieces of legislation introduced in the new Congress. President Obama even mentioned tort reform in his State of the Union speech as a way to bring down health care costs. But now, a consumer advocacy group opposed to capping malpractice damages is saying that tort reform won’t help reduce health spending because estimates of the cost of defensive medicine are inflated.
Image via Flickr user clevercupcakes by Creative Commons License.
In a new report called “Defensive Medicine: The Doctored Crisis,” researchers with Public Citizen make the case that physicians order unnecessary diagnostic tests not because they fear lawsuits, but because there are financial incentives to conduct more testing. They cited a 2008 study from the Government Accountability Office that showed that imaging tests generate a growing amount of revenue for certain physicians. For example, the report found that in 2006 cardiologists obtained 36% of their total Medicare revenue from in-office imaging, up from 23% in 2000.
Public Citizen also criticized claims that defensive medicine comes at a significant cost for the health care system. For example, one of the higher estimates sometimes cited by supporters of tort reform is that defensive medicine accounts for as much as 26% of health care spending. Public Citizen says the real number is likely less than 2%. The problem is that many of the higher estimates are based on unscientific physician surveys that suffer from response bias and a failure to distinguish between useful and wasteful practices, according to the Public Citizen report.
So is Public Citizen right? Is defensive medicine overblown? And if defensive medicine isn’t responsible for driving up the cost of health care, should Congress still be working to address medical liability reform this year? Share your thoughts.
There’s not a lot that Democrats and Republicans agree on when it comes to the federal budget, except maybe fraud prevention. With so much focus on deficit reduction, the two parties have both embraced the idea of aggressively going after waste, fraud, and abuse of federal funds. And they see the Medicare and Medicaid programs as places that are ripe for a crackdown.
Last week, lawmakers held hearings where they tried to get a handle on the scope of the problem. This week, the Senate’s Homeland Security and Governmental Affairs Committee will look at new tools for curbing waste and fraud in the programs.
Image via Flickr user borman818 by Creative Commons License.
Tackling fraud could help the bottom line for physicians, as well as for the federal government. President Obama has said he would like to use money saved through fraud prevention to help pay for a two-year fix to Medicare’s Sustainable Growth Rate, the statutory formula used to calculate payment to physicians.
Hear about this, plus how the Affordable Care Act is being received in the courts and by governors in this week’s Policy & Practice Podcast. Take a listen and share your thoughts: