Physicians Reject a Basic Approach to Reimbursement Reform

Last Updated Nov 1, 2010 1:55 PM EDT

In discussions about various methods of reforming our healthcare delivery system, the assumption has been that physicians will go along with a shift from volume-based, fee-for-service reimbursement to other models such as the bundling of payments to multiple providers involved in an episode of care. But a new study in the Archives of Internal Medicine shows that only 17 percent of surveyed physicians favor payment bundling. And while delivery system reform must involve winners and losers, physicians will not support any change in reimbursement methods that penalizes them financially, the study makes clear.

These findings raise the possibility that physicians will have to be employed by hospital systems or large multispecialty groups before they will accept the painful but necessary changes that are coming. As long as they are in private practice, they will either oppose reimbursement cuts or find some way to get around them. Of course, that's human nature. But as things stand, there's no realistic way to "bend the cost curve" without reducing the compensation of some physicians.

Physicians reject the way they're being paid by Medicare, which is scheduled to cut their fees by 30 percent in the next few months unless Congress intervenes. But the study shows that doctors don't agree on what should replace the current system.

In the Archives survey, the most popular option was to reward doctors for providing optimal care and to penalize them for delivering suboptimal care. Nearly half of the respondents supported that approach. Eighty percent of the doctors thought that primary-care physicians should be paid more, but only 42 percent supported shifting money from procedures to evaluation and management services, which are most often provided by primary-care physicians. The idea of funding a pay increase for primary care doctors with a mere 3 percent cut in specialist reimbursement garnered only 39 percent of the votes.

This deadlock in the house of medicine is further explored in a Wall Street Journal piece that echoes health policy expert Bob Berenson's recent article about how Medicare payments get apportioned among different kinds of doctors. The WSJ discovered that, a few years ago, representatives of primary care physicians had threatened to walk out of a meeting of the AMA's RUC committee -- which advises Medicare on how to split the pie -- because the specialists on the committee consistently outvoted them. In the end, the delegates representing general internists and family physicians returned to the talks. But both then and later, they were outvoted on issues that concerned their reimbursement.

What this says is that primary care doctors and specialists will never see eye to eye on how they should be paid. And that -- in addition to their mistrust of hospitals -- is probably why they're not enthused about accepting bundled payments that they would have to divide among them.

In a reformed reimbursement system that involves payment bundling or shared savings through the new accountable care organizations (ACOs), the goal will be to keep people healthy or control their chronic diseases so they'll need less specialty and hospital care and fewer procedures. What that means, in a nutshell, is that specialists will be less influential and will earn less.

This won't happen, however, without a lot of kicking and screaming. Specialists and surgeons will not surrender a dime without a fight. But if ACOs really become the paradigm for U.S. healthcare, they may have no choice but to become hospital employees or members of an ACO network. Physicians must have a voice in the governance of these organizations; but at the end of the day, they'll have to accept what they're given.

Image supplied courtesy of Wikimedia Commons.
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  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.