The Society of Actuaries commissioned Milliman to do a great review of the different payment methodologies and their risk profiles for a wide variety of stakeholders in 2015. It is a great read (for the right definition of a great read). One of the things that I want to pull out is the chart below. It is a fairly standard commercial, employer sponsored insurance contract. The number is the multiplier applied to the Medicare fee for service fee schedule.
Let’s follow the money to see what we actually value.
There are a couple of very useful things to pull out of this table. First, the topline number is that the same services for a commercial plan will cost 170% or more than what Medicare pays. This is why one of the major goals of liberal health policy is to drive more services to pay providers rates closer to Medicare than Commercial.
The second most interesting thing to me is the payment for evaluation and management services. E&M codes are the primary care physician codes. These are codes that involve a good deal of time and talking and far less cutting and doing. We pay people lots of money to either cut something or do something. We don’t pay for talking as much. So we get a lot of cutting and doing and not as much talking.
Deecarda
For PCP’s E&M’s are the bread & butter of the practice, a solo practice would be unable to exist on the Medicare fee schedule, I know this because I’ve managed a solo family care practice for 20 years. The only way we were able to continue to accept Medicare/Medicaid patients was to become a rural health clinic.
Shakezula
Interesting. A question – what role do you think risk plays in valuing these services?
At the risk of boring people to death – E/M services are valued in part based on the amount of thinking (medical decision making) a provider performs during an encounter, even if the provider doesn’t have a lot of face-to-face time with the patient. Anesthesia also involves a lot of cerebral work, even when the provider doesn’t do a lot to the patient. However, the risk that an E/M service will kill you is close to 0, but there are lots of ways to die under anesthesia.
(Also – that general surgery designation under the third section isn’t correct. Those are aspiration for biopsy codes.)
japa21
@Shakezula: It is more a case of amount of competition available and just what Medicare pays. A couple years ago, Medicare reduced its payments for a lot of specialties and raised the payment for E&M. When that happened physicians started demanding more for specialties and insurance companies reduced the percentage for E&M.
The other factor, as I mentioned, is competition. By their very nature, specialties tend to have fewer practitioners and can demand more from insurance companies. PCP’s tend not to have that option except in rural areas. Anesthesiologists are the true outlier. Many refuse to join networks at all unless they receive extremely high reimbursement as that is the one area where Medicare really pays low rates.
Drunkenhausfrau
Anesthesia 700%?!
Richard Mayhew
@Shakezula: Risk is accounted for in the creation of the Medicare fee schedule. Higher risk procedures will have a higher Medicare payment. These are the multipliers on top of the Medicare fee schedule.
Richard Mayhew
@Deecarda: Yep, and we need to change the RVU for E&M a lot to make small practices in underserved and hard to serve areas viable.
WereBear
Which is fine: when they know what is wrong with you, and cutting and doing will actually fix it.
If it is not, you get the cutting and doing anyway, and keep the original problem, with probably a new one.
Our terrible track record in figuring out what is actually wrong with someone made years of my life a complete misery; barely made it out alive. And I was on the light side, and refused a lot of things: it could have easily turned into hundred of thousands of dollars in wasted tests and procedures.
Talking being an essential part of the diagnostic art.
WereBear
The reason it is so often overlooked is that if you die from it, it’s filed under something else…
WereBear
Ugh, scrambled URL:
Physicians Misdiagnose at an Alarming Rate
Wag
As a PCP with 25 years experience , both and n private practice and now in academics, I can say with utmost confidence that th American m rival system gets exactly what it pays for. We can ah people to do things TO patients instead of FOR patients. And as long as these perverse incentives hold we will continue to pay too much for health care
Barbara
More than 10 years ago I realized that until the RBRVS is repealed or drastically changed, nothing important could be achieved in changing the basic imperative of existing financial incentives in the practice of medicine. RBRVS is an example on a grand scale of the maxim that we often consider something significant not because it is actually significant but because it can be measured. The panel that sets the RBRVS is disproportionately composed of specialists (especially radiologists) and their maxim seems to be that because it’s hard to value judgment, it should be valued at a minimal level. Whereas, it’s easy to value buying MRI scanners. Congress did step in regarding the formula for establishing reimbursement for imaging techniques (which was grotesquely generous), but has not been able or willing to fundamentally change the shortchanging of valuing judgment. What does that mean? It means that if I go to a PCP with chest pain, more often than not the PCP will simply refer me to a cardiologist because she is not paid enough to do a real triage evaluation. At this point, it is not simply compensation to PCPs that has been affected but the entire composition of the American medical profession.
Shakezula
@Richard Mayhew: Thanks. And now that I can compare the malpractice fees for anesthesia and E/M I see my “gut” was correct.
WereBear
So true. In a way, the medical profession is the victim of its own successes.
Antibiotics are so extraordinary an answer to the problem of infection that doctors lose sight of the fact that there is not a “pill for every ill.” Decades of patients trained by pharmaceutical PR to ask for pills does not mean they are the right answer in every instance.
Surgery has made such incredible strides in only a couple of centuries that intervention is used for things that should be sought in organic methods: stents are no longer considered the first action for any artery blockage, as they used to be.
With an array of laboratory tests, there’s a tendency to rely to heavily upon them, to the point of ignoring actual symptoms. The test parameters themselves are often set by individual labs with no cross-referencing, and doctors rely on them too heavily instead of bringing their own clinical experience to interpreting the results. And many of these standards were set by a mere handful of young, white, male, well-nourished medical students from the 1920’s.
And now with the fee structure set in a way where treating a patient pays more than curing them.
Vhh
Trump loves him some Putin, so maybe he will go fir Russian health coverage. From Wikipedia:
The Constitution of the Russian Federation has provided all citizens the right to free healthcare under Mandatory Medical Insurance since 1996. In 2008, 621,000 doctors and 1.3 million nurses were employed in Russian healthcare. The number of doctors per 10,000 people was 43.8, but only 12.1 in rural areas. The number of general practitioners as a share of the total number of doctors was 1.26 percent. There are about 9.3 beds per thousand population—nearly double the OECD average.
Expenditure on healthcare was 6.5% of Gross Domestic Product, US$957 per person in 2013. About 48% comes from government sources. About 5% of the population, mostly in major cities, have health insurance.
amygdala
Atul Gawande has a new column that kinda gets at this, from a patient perspective. It’s an interesting read.
As a doc in a so-called cognitive specialty, I’m grateful that a surgeon with the kind of platform he has can make the case so clearly.
WereBear
@amygdala: That was great, thanks.
lahke
Now clone that fee schedule and run 250 variations on it, and you can get an idea of what a moderately-sized regional health plan has to administer for all the different contracts it has with providers. This group A has a different fee schedule for each combination of product and doctor affiliation, group B wants higher fees to its PCPs than average, group C wants Medicare rates plus a big check at the end of the year to distribute as bonuses….All of which has to be negotiated, modeled, tested, and loaded into the claims-payment system, and then debugged when the payments aren’t right. One of the reasons that Medicare has such a low admin cost compared to commercial insurance is that they set a fee schedule and it applies to everybody.