The crisis in US medical care: A doctor’s perspective, Part 3. Some inequities in physician reimbursement for medical services (OR: Cheating Uncle Sam for some extra dough)

My name is Scott. I am a physician. Specifically, I am an anesthesiologist, practicing in Florida. Medicine has changed a lot during my 40 years in practice and not for the better. In fact, we all know it’s broken. The question is how to fix it. I don’t know the answer. But, as an “insider” I probably have a different perspective than you and can speak from first hand knowledge. Through this series, I will attempt to unravel aspects of our health care delivery system you may be unaware of in an effort to show you how complicated things have become and why the solution is so difficult.

My wife and I just returned home from my 40th medical school reunion weekend. What a walk down Memory Lane. We had a large class for a medical school; 250 compared to the usual 80-100. We were 20% out-of-state students; not unusual. Oh how I hated it when frequency was described as not unusually, not uncommonly or not infrequently (did that mean frequently?). Sadly, I understood what they meant. But, I digress. We were 25% women; an unusually large percentage. Instead of letter grades, we were Pass/Fail for the entire curriculum; unheard of, especially among medical schools. We had a cross-section of society. My point is, as with society in general, people go into the field of medicine for many different reasons. It was obvious in 1973 who were genuinely interested in helping people who were sick, who were interested in prestige, who were fulfilling their parents’ dreams and who signed up to make a lot of money. This led to thinking about just how screwed up getting paid became.

In the ‘old days’ insurance companies paid physicians pretty much what they billed, the “usual and customary” fee. You could increase your billing, say for inflation, and build up your profile.Your reimbursement would gradually increase. A newcomer could collect either the ‘usual and customary’ fee for the group joined or the community average if starting a new solo practice. Some fees were reasonable, some were outrageous. Fees differed from neighborhood to neighborhood, town to town and city to city. There was no one coordinating how much was paid for any particular service rendered. A lot depended on how long you were in practice and how quickly you increased your fees. There was no rhyme or reason to the value of any particular service. Some physicians got very rich pumping up the reimbursement for their services, giving the entire medical field a deteriorating reputation. Even worse, nobody discussed fees before service was given, so there was no way to comparison shop among physicians. And, there was no way to dispute the amount charged once service was given. Patients were stuck between a rock and a hard place.

Eventually (1980’s) the government decided medical care was too expensive and created a schedule for reimbursement of medical service provided based on relative value. Medicare publishes a book of relative values (for Anesthesiology it’s called the RVG - Relative Value Guide. For hospitals, medicine and surgery practices it’s called the DRG - Diagnosis Related Group) providing one payment for one service which is updated occasionally. At first, it was supposed to be “dollar neutral,” meaning DRG payment should be equal to “usual and customary” payment. After the initial introduction, DRGs were scheduled to decrease 5-10% annually to lower the cost of medical care. That ‘logic’ is beyond the scope of today’s discussion. Private insurers, of course, gradually introduced the relative values Medicare assigned. For example, if a 15 minute office visit to a Family Practitioner (FP) is worth 1x dollars, then an extended 25 minute visit may be worth 1.25x dollars and a new patient 45 minute visit may be worth 1.5x dollars. The fee schedule necessitates one payment for one service. It doesn’t matter if the 15 minute visit takes 15 minutes or 12 or 18 minutes. “It averages out” over time, so they say. But, slower doctors suffer, while faster doctors make more because they can see more patients in a day. A major problem is “up-coding” visits. This is when a physician codes for a higher level of service (e.g., extended visit) than was actually performed (e.g., regular 15 minute visit). Case reviewers look for trends (i.e., too many extended visits for a particular physician) and, if discovered to be purposeful rather than accidental, in addition to paying back the excess reimbursement, there are fines (with triple fines for the most egregious) and perhaps expulsion from Medicare for life. In Florida, where practices easily average 80% of patients insured by Medicare, expulsion effectively means losing your practice.

Looking further, the trickier part of reimbursement is navigating the values between specialties. Is a regular 15 minute office visit to a FP worth the same as a 15 minute appendectomy? Reimbursement has to take into consideration many factors, including: (1) Each service requires a different skill set. (2) After the Internship year, different specialties require differing numbers of years of training (residency). A Family Practice residency is shorter than either a General Surgery or Internal Medicine residency with a sub-specialty. (3) A Family Practitioner has to rent an office and hire staff while a surgeon operates in a hospital that provides operating room staff. (4) Does it require more skill to perform open heart surgery or remove a gall bladder?

Should the more demanding operation be compensated more or has sufficient additional compensation already been included because of the additional training required to perform such surgery? In general, reimbursement for medical specialties has always lagged behind reimbursement for surgical specialties and the reasons are beyond the scope of this article. Suffice it to say, instead of getting closer, the disparity has increased. Family Practitioners’ and Pediatricians’ incomes are a lot lower than general surgeons’ incomes. General surgeons make a lot less than specialists (heart surgeons, neurosurgeons, ENT surgeons, vascular surgeons). And, everyone makes a lot less than today’s DRG winners: invasive cardiologists, ophthalmologists and radiation oncologists.

There is also the issue of bundling. Open heart surgery requires certain monitors being placed for safety such as an arterial line (catheter placed in an artery to directly measure blood pressure) and a central line (a large bore catheter placed into a large vein closer to the heart to deliver medications and large volumes of fluids versus the usual small bore catheter placed in the hand or arm), both of which are already included in the DRG for the operation. However, some unscrupulous individuals bill separately for all three - another form of up-coding or unbundling. There are many other examples.

What if there are complications? If a wound gets infected after surgery the patient will require additional attention by the surgeon, additional care and, often, additional time in the hospital. However, the DRG does not increase. The additional workload has to be absorbed by the surgeon, taking away time that could be spent seeing another patient which would generate additional income (or the surgeon must work later into the evening generating an entirely different discussion about stress, lifestyle, burnout for another time).

At first, Medicare said not to worry. the original DRG and RVG were huge undertakings and corrections for obvious errors would be forthcoming. Some problems were corrected over the years, but, in reality, DRGs were a way for the government (through Medicare) to control and lower the cost of medical care. Careful inspection still reveals too many inconsistencies and glaring errors. There are so many over- and under-valued DRGs that can make or break an entire practice.

Extreme examples of over-payments were mentioned above. They are glaring inequalities. In 1985 it took 30-45 minutes to perform cataract surgery. With all the technical improvements since, it now takes an ophthalmologist literally less than 5 minutes to perform cataract surgery. According to the latest numbers I could locate online (very protected and difficult to find) reimbursement hasn’t changed much despite technical improvements and is still around $2,500. Most surgicenters can accommodate 40 patients in a day netting the surgeon $100,000. And this fee does not include the administrative fee to the surgicenter or the fee for supplies.

Radiation Oncologists determine how much radiation is necessary to treat your cancer, what area of the body must be included and what duration of radiation is required. Then they turn over the information to their technicians who perform all the work: fitting the shielding, setting all the dials on the machine, delivering and monitoring the treatments, etc. The fee to the MD, again to the best of my knowledge, is $10,000 per patient. They can see many patients in one day.

Back in the day, Cardiac Surgeons were the “main man” in every hospital since a CABG (Coronary Artery Bypass Graft) procedure was the best paying surgery a hospital could offer (and the Operating Room has always been the major money producer in any hospital). The number of cardiac centers (hospitals approved to perform CABG) was limited. Hospitals had to apply for and be granted a Certificate Of Need (CON) for bypass surgery based on population and distance between cardiac centers. The fee to the cardiac surgeon was, to the best of my knowledge, approximately $2,500 per bypass (1980’s dollars). That means a “4 way bypass” netted $10,000. A good surgeon could perform 3-4 operations per day. Today, an invasive cardiologist (not a surgeon but a medical cardiology physician specializing in invasive procedures) collects, to the best of my knowledge, $5,193 for deploying (placing into a coronary artery) a drug eluding stent. Often 2-3 stents are deployed per patient. The procedure takes about 1-2 hours (for a good cardiologist). This can add up.

Here is the most important example of extreme under-payment (to me). Anesthesia reimbursement was decreased more than any other specialty when relative values were first introduced. Anesthesiology reimbursement is different than any other specialty because there is no single DRG for anesthesia. Reimbursement is divided into two parts. There is one fee (RVG) for ‘putting a patient to sleep’ which includes the difficulty of the procedure and the severity of the patient’s condition. There is a second fee (Time units) determined by the length of the operation. The reasoning is the Anesthesiologist should be reimbursed for the skill required in a particular operation but should not be penalized for the speed of the surgeon. We do not select patients for surgery nor do we choose the surgeon (we shouldn’t avoid slow surgeons although some do by the way they assign operations to the anesthesiologists in their group).

Anesthesia reimbursement was decreased inappropriately, partially because there is no correlation between the RVG and the DRG guides. In fact, it was decreased so much that 65% of anesthesia practices required subsidization from the hospital they contract with just to break even with pre-DRG reimbursement. Although promised by Congress but delayed over and over again, the correction has never materialized. With the tight margins most hospitals work with, annual contract negotiations with Anesthesiology groups, just to keep up with inflation, have become strained, stressful and often unsuccessful. Between this and other rules and regulations imposed by organizations that credential hospitals, most independent Anesthesiology groups have been forced out of existence. They have been replaced by large (impersonal) corporate organizations. Anesthesiologists, I mean, anesthesia care providers (MDs, CRNAs and AAs) are becoming expendable and interchangeable corporate negotiating tools.

Let’s face it. Although some doctors purposefully unbundle procedures and frankly mis-bill insurance companies, the vast majority of physicians are honest and hard working. Yes, whether by plan or dumb luck, many physicians have excessively lucrative practices. And, the opposite is also true - many struggle to make ends meet due to underpayment. Medicare isn’t helping by ignoring billing problems (purposefully?) that already exist. Although universally blamed for the “high cost” of medical care, are physicians really responsible?

There are many pieces to the healthcare puzzle. Doctors and nurses take care of patients in hospitals, clinics, outpatient facilities and urgent care centers to name a few. Medical care requires medicine, tools such as stethoscopes and equipment such as X-Ray machines. If discharged from the hospital, but not ready to be on your own, there are visiting nurses, admission to a nursing home, if necessary and everything inbetween. A wheelchair or mechanical bed may be necessary (durable medical goods). According to the latest statistics I could find, physician reimbursement accounts for approximately 8-10% of the total healthcare dollars spent in the US. The other 90+ % is spent on all the rest. Doctors do not drive the cost of medical care. That is a national fallacy intended to create a scapegoat to bear the blame.

From another perspective, one recent study I found indicates US physicians receive a smaller percentage (8.6%) of their nation’s total healthcare expenditure than in many developed countries. Sweden is less (8.5%). However, Germany (15%), France (11%), Australia (11.6%) and the UK (9.7%) pay more to doctors. What are the implications? The United States is trying to control costs and contain the national debt in any way it can.

I am reminded of the interview given by Alan Shepard, the first American in Space, after his historic suborbital flight aboard the Mercury spacecraft, Freedom 7, on May 5, 1961. He was asked about his last thought before blasting off into space. It may be fact or fiction, but I remember his reply as “I realized that every component on this spacecraft was built by the low bid company.”

Sometimes you really do get what you pay for.

Future topics I am considering include:

1. What is Anesthesia and how does it work?
2. Are there different types of Anesthesia and what should I choose for my operation?
3. Don’t go near a hospital on July 1st (everyone ‘graduates’ and moves up on July 1st)
4. Non-Anesthesiologists don’t understand anesthesia yet are permitted to give certain types of anesthesia for their procedures (remember Joan Rivers)?
5. Possibly the most disruptive force in medicine today: The EMR (Electronic Medical Record)
6. We used to strive for the best care for each patient. Now we (must) strive for the most economical (cheapest) care for each patient. However, attorneys still hold us to the highest standards.

Let me know if you are interested in any of these by giving it a yea or a nay. Thanks