A couple of diaries on the Rec List right now are focused on the complex but critically important topic of health system reform. In Chasm grows between Washington and everyone else on healthcare by National Nurses Movement, there is a lot of discussion about Medicare for all as the first step towards a politically acceptable single payer system. I commented that Medicare-For-All, without significant changes in the structure of Medicare, would likely mean the death of independent practice. I expected to be challenged on this, and I was. I thought that this deserved a well considered response, and wound up writing a diary length comment. So, please follow me below for the discussion.
First, a clarification that I am adding as an update, because I think I created some confusion by not being sufficiently clear: By "independent", I don't mean solo practice, although physicians in solo practice are generally independent. I mean physicians who are not employed by large corporations or large integrated systems. Independent physicians often have the option of partnership. Independent physicians run the gamut from "mom-and-pop" operations (especially in rural areas) to single or multi-specialty groups, often with sophisticated operations that include clinical research, team approaches to care, and electronic health records.
My contention is that Medicare-For-All does NOT fix the problem that people want to fix. Way back in 1965, when Medicare was first enacted, the insurance industry made absolutely certain that the only way Medicare was going to get through Congress was if it was written into the law that insurance companies would remain the middle-men, or "Intermediaries" in offical parlance. And so, every single bill submitted to Medicare by any health care provider, regardless of whether it is traditional fee-for-service Medicare or one of the Medicare Advantage managed care plans, and regardless of whether the care is rendered via a hospital (Medicare Part A) or a physician's office (Medicare Part B), is paid via an insurance company, currently called "Medicare Administrative Contractors", or MACs.
So, if you believe that a huge part of the problem are the dollars siphoned off the top to feed the insurance beast, and the inordinate control and the interference in the provision of care on the part of insurance companies, then Medicare needs to be completely revamped. If what is now Medicare becomes expanded as the "Public Option", it needs to be recognized that this would not be a "public" plan at all -- it would grant even more power and control to the insurance industry, and likely to hospitals (which, in many states, also own the insurance companies). And if you like the care that you may get from independent physicians, you may be gravely disappointed, because it's likely that under such a system, independent practice will even more rapidly disappear than is already happening. What you'll be left with is Big Business Medicine. Maybe for some that's OK. But I think it can be fairly stated that the choices open to most people will be dramatically fewer, and personalized care may become be a thing of the past.
This is where I was challenged:
I'd like to understand how you come to the conclusion that independant physicians would go out of business.
As to the middle man factor, Medicare awards, after bids, their processing of claims to one insurer every few years. Blue Cross has been of the processors. So it's not quite how you're painting it, though I'm open to understanding your interpretation of this.
Traditional Medicare reimbursement rates (the fees paid to physicians for anything that they do) are set nationally, but vary a great deal regionally. The formulas that determine what a physician gets paid in one state versus another are complex, supposedly taking into account local costs (e.g. rental rates for office space) but end up be very political, and nearly impossible to change over time. (The adjusters are called Geographic Price Cost Indicators, or GPCIs.) So, physicians in some states do much better even relative to their costs than physicians in other states, for providing exactly the same care.
BUT, regardless of where physicians practice, the overall reimbursement paid by Medicare has actually been declining, relative to costs, for many years. In many states, and for many specialties, Medicare payments are LESS than the costs to the physician of providing the care. There is a single "key" rate, called the Medicare conversion factor, that acts as a multiplier of the "relative value" of the service given. Every year for the past number of years an archaic formula based on assumptions that are no longer accurate, called the sustainable growth rate (or SGR), is supposed to be used to adjust the conversion factor. The problem is that the SGR is "volume based", and does not take into account the fact that many services that used to require hospitalization are now routinely done in physicians' offices, and that has triggered the SGR -- which is required by statute to provide for budget neutrality in Medicare Part B -- to substantially decrease the conversion factor.
So, every year there has been a crisis in Congress to prevent dramatic decreases in Medicare reimbursement triggered by the SGR, and every year Congress has provided a temporary fix to avert a Medicare crisis. You may remember the most recent of such emergency fixes, on July 10th of last year, when Senator Kennedy made a dramatic return to the Senate to cast his vote that guaranteed a veto-proof majority. And in January of 2010, the conversion factor is supposed to be decreased by 20.5%, meaning a 20.5% reduction in Medicare payments to physicians. This will of course trigger another crisis, because the Congress has been absolutely unwilling to fix this formula.
We're now at the point that any such decrease will lead most physicians to dramatically decrease the number of Medicare patients they will agree to see, or to stop seeing them at all. Nobody likes to talk about money because physicians are supposed to be motivated by altruism, and to a very great extent they are. But physician practices are businesses, and the electric companies and the banks and supply houses have a nasty habit of not simply saying, "No problem if you can't pay your bills." And if you are losing money on each Medicare patient, you can't make that up on volume.
Incidentally, no such formula applies to hospitals; they are guaranteed a relatively generous annual "market basket" increases in Part A Medicare. (Update: thanks to decembersue for pointing out my error in referring to profit rather than the "guaranteed ... market basket increase", as currently corrected.)
How have physicians been able to stay in business so far? By a technique called "cost shifting". Most people don't realize this, but physicians must negotiate contracts with commercial insurance carriers for high enough rates on NON-Medicare patients to offset the losses they incur when they treat Medicare and Medicaid patients (Medicaid often only pays a fraction of Medicare rates). And most physicians continue to give charity care to uninsured patients who can't pay at all, and they are able to do this because up until now they have been able to cost shift.
So, if the public option becomes the same as Medicare, and if in addition to the previously uninsured and underinsured, a significant fraction of people choose the public option instead of their previous commercial insurance (a phenomenon called crowd out), then commercial insurance will for all intents and purposes disappear, and there will no longer be any possibility of cost shifting.
And, all this is happening in the context of rapidly rising costs of practice. For example, adoption of electronic health records (EHR's, also frequently called electronic medical records) is being strongly pushed for all physicians, and this costs approximately $45,000 PER PHYSICIAN to implement, with considerable annual costs for IT support, and even some loss of efficiency, especially initially. And the potential economic benefits of EHRs largely accrue not to physicians but to insurance companies, because the savings brought about via reduction of duplication and (hopefully) better decision support provided by these tools, are typically NOT passed on to physicians.
AND, there has already been an accelerating tendency for physicians emerging from training to want nothing to do with the business side of medicine. They take one look at the morass of complex insurance systems, the need to implement expensive EHRs, ongoing medical liability costs, and the increasing power and dominance of integrated systems (hospitals, insurance companies and employed physician groups all owned by the same companies) with whom they have little hope of competing, and they say, "Forget it, just employ me". In fact, a recent review article in the New England Journal of Medicine notes that, "The percentage of U.S. physicians who own their own practice has been declining at an annual rate of approximately 2% for at least the past 25 years."
So, speaking as a physician with several decades of experience who has also actively participated in attempts at health system reform at various levels, I can say with a high level of confidence that a "Medicare for All" system that does not also include fundamental reform of the entire Medicare system (and by that I mean taking insurance companies out of the picture, and providing for more realistic reimbursement), guarantees the disappearance of independent medicine. And this will not be a gradual process. There will be a stampede, and lots of physicians in their 50's will simply retire, greatly worsening the already significant shortage of physicians in many geographic locations, especially in critical specialties like primary care and general surgery.
Perhaps the death of independent practice will happen inevitably in any case. I mean no slight to physicians employed by large systems, or the care they provide. But I would suggest that there is a different mentality in corporate medicine. Physicians are often less inclined to want to work extra hours, for example to fit someone in at 6:00 in the evening for an urgent problem. There is less of an inclination to take care of challenging, more seriously ill patients. And physicians in these systems have less control over the structure of their practices, and less ability to be innovative. For example, they often are subject to decisions determined by bean counters, with relatively little physician input. I would maintain that something important will be lost if independent practice goes away. Much of what has made American medicine as good as it once was derived from entrepreneurial, innovative physicians, who were willing to take risks to provide cutting edge care.
Sorry for the long post, but this is a complicated topic, which serves to highlight the complexity of the implications of system change. This is not to argue against health system reform: our system is horribly broken, and reform is desperately needed. Our nearly 50 million uninsured is a national scandal that must be fixed. But we have to go into this without preconceptions that this will be simple, and we must recognize that the implications of what we do will be complicated and challenging. If we value independent practice, then simply extending our current Medicare system to everyone may indeed go a long way to solving the problem of the uninsured, but will be accompanied by rather dramatic changes in how medical care is provided, and may paradoxically exacerbate access to timely care. Such changes will likely not be universally regarded as positive.
I look forward to your comments.
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UPDATE: The "Do Something About It" banner ad appearing right below this was NOT placed here with my knowledge or consent. I've just posted another diary about this.