01 March 2009

I missed that angle

The insightful Joe Paduda at Managed Care Matters notes one interesting thing about the Obama health care framework proposed last week:

There's something for everybody to hate, as everybody is required to "give" something, except for physicians.

Weird, when you think about it:
  • Higher premiums for affluent seniors;
  • Hospitals see reduced payments for bounce-backs;
  • Insurers kiss good-bye to Medicare Advantage;
  • Drug makers must increase the rebates on medicaid prescriptions.
But no hit to physician compensation.

In fact, when you look at the rest of the budget, the honesty in reporting guidelines he has adopted assume that Medicare Part B compensation to physicians will remain steady, instead of assuming the huge reductions that the Bush budgets did under the SGR formula. Though that's up to Congress to implement, it reflects the implicit assumption that physician compensation under medicare should not be further reduced. Or at least the political realities argue against it actually coming to pass.

Joe wonders whether this is a chess stratagem where Obama is trying to set up a "Doctors vs everyone else" situation by leaving physician funding intact. I doubt it -- it's too devious, and he's been pretty forthright in the painful compromises he's set forth. I suspect that rather than invoke the opposition of the doctor's lobby straight out, he has chosen to let Congress do the dirty work (if it is to be done) and "gore our ox" when the plan is somewhat further along. Given that only about two-thirds of the funding for universal health has been identified, it's hard to image this plan playing out without physicians being asked to give as well.

By the way, I think "gore our ox," sounds like an extremely perverse euphemism, though I'm not quite certain what for.

While the details are too sparse to make any predictions, EM is in an uncommonly sheltered position. Consider a hypothetical practice which sees 20% uninsured patients and collects about the medicare rate per RVU billed -- say $136/patient on 3.5 RVU/pt. (Remember this is actually collecting $170/pt on the funded patients and $0 on the uninsured.) Let's assume that a truly universal plan is enacted, and the 20% uninsured are equally split between medicaid and commercial insurance. For the sake of simplicity, that averages out in our state to be about the same as the medicare rate. So now that same practice will be seeing collections of $164/pt in this new reimbursement environment -- a 20% increase! Now the numbers in this example are pure fiction, but it doesn't matter -- the proportionate increase in collections should track closely to the fraction of a practice's patients which were uninsured, assuming the newly insured more or less match the existing blended payer mix. More lucrative practices with fewer uninsured and exceptional payer mixes will see much more modest revenue increases; practices with large numbers of uninsured will be very positively affected.

The same calculation would apply to any specialty practice, but due to the higher fraction of uninsured patients seen in the typical ER, the revenue side of universal health care brings an inherent positive for EM. If, as I suspect, the government asks doctors to "give" a bit, we will be buffered on the give-back, and stand a reasonable chance of coming out ahead or at the least even.

The other question I have is, if the negotiations involve some physician concession, how that might be accomplished. Medicare could do it with an across-the-board devaluation of CPT RVU codes, assuming that private payers would follow, but that is a very blunt instrument and would fall unequally across different specialties. Perhaps the assumption is that this would be part of a physician fee schedule restructuring to further swing the pendulum from proceduralists to cognitive specialists and primary care.

I don't know. I assume that the doctors are just too fat a target for the legislators not to go to the well, and it will come eventually. But for the moment, it's nice to see the basic framework developed in a way that has no direct negatives for practicing physicians.


  1. This has been my take on the plan as well - but people will still complain that now we will make more money and have to pay more taxes so null sum gain.
    We shall see.

  2. And why shouldn't ER docs make more? Most (if not all) estimates show that there are too few ERs, and everyone agrees that there aren't enough ER docs to staff the existing facilities. The projections I've seen indicate that enough board-certified EM specialists will be available sometime between 2040 and never.

    Perhaps this move is meant as a financial inducement for more budding MDs to consider EM as a career.


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