Who decides doctors' pay?

By Mike Dennison

HELENA, Mar. 24, 2008 (McClatchy-Tribune Regional News delivered by Newstex) --
When Helena physician Jay Larson spends 45 minutes at his office with a patient who has several diseases, the visit is coded CPT 99215 -- and Medicare or another health insurer spits out the designated payment.

He doesn't get to raise the price if his costs have increased. He can't bill for his time spent coordinating drug prescriptions, answering patient e-mails or reviewing patient information from other medical sources.

And, chances are, another doctor out there is getting paid a lot more money for a different medical procedure that takes the same amount of time, or maybe less.

Such are the mysteries of the physician-payment scheme in America, where "primary-care" doctors -- the general practitioners of the medical profession -- tend to get paid much less than specialists.

Yet the way these payments are determined, while complex, is no mystery.

It's a twisting path that runs through the federal government, Congress, private insurers and the largest doctors' group in the country: The American Medical Association (AMA).

AMA committees, composed of physicians representing numerous medical specialties, decide the procedure codes and recommend to the federal government how these procedures should be valued. The feds, through their administration of Medicare, the government health insurance plan for the elderly, adopts 90 percent of these recommended values.

The values then are used both by Medicare and private insurers to calculate what physicians are paid for the specific procedure.

Larson and other primary-care physicians believe the payment scheme is skewed in favor of specialty care and procedures, rather than counsel and diagnosis by primary-care doctors, in part because the AMA panels making the recommendations are dominated by specialists.

"Less than 10 percent of the Medicare money is going to primary-care docs, to take care of people long-term," Larson says. "We're like the quarterback, the ones calling the plays, yet we get reimbursed like the center." Primary-care doctors, who are family physicians, internists and pediatricians, also say the payment scheme is a major factor behind a looming shortage of primary-care physicians in America.

Physicians coming out of medical school with six-figure debts are more inclined to choose lucrative specialties, instead of primary care and its lower pay or, in some cases, no pay for certain tasks.

"There is a growing amount of unpaid work that you do on a day-to-day basis," says James Yturri, a Great Falls internist who left his practice to become medical director at a nursing home. "For me, it was at least a couple of hours (a day)." Robert Mills, a spokesman for the AMA in Washington, D.C., says its role in the process reflects the "democratic view" of the AMA House of Delegates, and that primary-care physicians are among the largest specialties represented there.

Still, they're outnumbered by the other specialties. Mills also acknowledges a long-running debate between primary-care and surgical specialties over how much each get paid, and for what.

The 29-member AMA panel that makes recommendations to Medicare on how a procedure is valued, and thus how much money it receives, has a representative from family medicine, internal medicine, pediatrics and obstetrics, which are the primary-care specialties.

But it also has members representing 19 other specialties that generally are procedure- driven and paid more, such as cardiology, neurology, radiology, plastic surgery, neurosurgery, general surgery, orthopedic surgery, dermatology and anesthesiology.

Mills say the "bigger issue" with Medicare is not how it affects just primary-care doctors, but all doctors, because of proposed 10 percent cuts in physician reimbursement this year and further cuts in the future.

"All doctors are going to get killed under Medicare payments," he says. "You're talking about threatening the physician foundation of Medicare. It doesn't look like Congress is willing to budge on this one." The 10 percent cut, postponed until June while Congress considers a fix, is the product of a Medicare cost control system known as the "sustainable growth rate." The ratio, based on inflation and other cost factors, sets an overall projected annual budget for Medicare physician payments.

If spending outstrips the budget, the next year's payments for physicians must be reduced.

Every year since 2002, the ratio has called for a cut in physician payments -- and every time, Congress has stepped to override the cuts and approve a slight increase instead.

Physicians are especially concerned because current Medicare's allowable payments already are well below what private insurance pays and barely cover a physician's cost, they say.

In Montana, for a 10-minute doctor visit, Medicare allows a physician charge of $33.85 for a Medicare-covered patient. Medicare pays 80 percent of the charge; the patient pays the remainder.

Montana Blue Cross/Blue Shield, the state's largest private health insurer, for the same visit, allows a payment of $58.85.

Medicare spent about $436 billion in 2007 to cover 43 million people. Of that, about $60 billion went to "fee schedule" payments for physicians. The remainder was split among hospitals ($204 billion), prescription drugs ($49 billion), managed care and other services.

Because Medicare allows so much less than private health insurance companies, doctors in cities across Montana are declining to accept new Medicare patients.

It's especially tough for internists, whose practice depends on older adults. Larson says about 40 percent of his practice is Medicare-covered patients, and he is no longer accepting new Medicare patients.

While Medicare covers only 14 percent of the population, its pricing scheme has a greater reach. The values it attaches to procedures to calculate physician payment are used by private insurers. The only difference is that private insurers use a higher "conversion factor," which is a dollar amount, to come up with the final payment amount.

In January 2007, Medicare did increase allowable payments to physicians for office visits, saying it wanted to place more emphasis on "personalized care (that) will lead to better outcomes for patients." The American College of Physicians estimate that internists "will typically see an increase of $5,000 to $10,000 in total Medicare allowable charges" annually.

Yet the increase was the first significant change for these charges in several years. Larson says the increased income is less for primary-care doctors in non-urban areas, and that it doesn't come close to addressing the financial pinch that's discouraging people from going into, or remaining, in primary care.

Larson is proposing a "modifier" to the Medicare pricing model that would increase payment for most office visits by 20 percent.

Since office-visit payments to primary-doctors account for maybe $10 billion to $12 billion a year out of the $436 billion Medicare budget, increasing them 20 percent would cost just $2 billion a year -- and save money in the long run, he says.

More money for primary-care physicians means more primary-care access for patients, Larson says. And a patient who has a regular primary-care doctor is less likely to end up in the hospital emergency room for routine care and more likely to make health decisions that cost less money.

"If you start having all of these complicated chronic-medical-disease folks running around without a doctor, guess where they end up?" Larson says. "And once you get to know a (patient), and they're heading toward the end of their life, you can have those tough discussions with them: Do you go into the intensive-care-unit and spend (thousands of dollars) the last week of your life, or not?" Dennis Salisbury, a family doctor at Butte's Rocky Mountain Clinic, says respected studies have shown that if an area has a higher percentage of primary-care physicians, the general health of people in that area is better.

"Unfortunately, our society is geared toward a specialty type of care," he says. "It's one of the reasons we spend so much and get so little." Neither Medicare nor the AMA is talking about new ways to boost primary care payment. Primary-care physicians aren't terribly optimistic about that changing any time soon.

"I think Medicare's stance is that, until patients are upset about the lack of access, they're probably not going to do much," says Yturri. "I've heard that stated by representatives from Medicare."


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