By Mike Dennison

HELENA, Mar. 23, 2008 (McClatchy-Tribune Regional News delivered by Newstex) --
A doctor who bills Medicare on her own gets a set payment, based on the procedure.

Yet a hospital that bills Medicare for the same service, performed by a hospital-employed doctor, can get a higher amount -- sometimes as much as 75 percent more.

Medi-care is the federal health-insurance program for the elderly and disabled, covering 43 million people.

The fact that some hospitals can bill Medicare for higher payments seems odd to private-practice doctors, who feel Medicare already is underpaying them for the same services.

They also think it's helping push more physicians to become hospital employees, rather than becoming -- or remaining -- part of an independent practice.

"Private practices are having much more trouble recruiting (doctors) than do hospitals," says Jon Miller, a Whitefish family doctor and president of the Montana Academy of Family Physicians.

Whether the trend of more hospital-employed doctors is good for health care in Montana is open to debate.

Hospitals can offer doctors a reliable income and hours, and can use their recruiting pull to target what types of physicians are needed in the community.

"(We) continually monitor our service area's population to make sure there is an appropriate mix of physicians to meet health-care needs," says Peggy Stebbins, spokeswoman for St. Peter's Hospital in Helena. "The hospital also monitors when physicians retire or leave the community, and works pro-actively to recruit their replacements." St. Peter's employs 31 physicians on its staff and at local practices that the hospital recently has purchased or opened itself. The Helena hospital has a Medicare status that allows it to get higher reimbursement for procedures performed by its physicians.

Of those 31 doctors employed by St. Peter's, two-thirds are "primary care" physicians: Family doctors or internal-medicine specialists.

At the Billings Clinic, the state's largest hospital, only one-fourth of its 210 employed doctors are primary-care physicians. However, the Clinic also employs 58 physician assistants and nurse practitioners and 11 pediatricians, who provide primary care, and has 15 doctors on its "reserve staff," providing primary care on a part-time basis.

Primary-care physicians believe more of these general practitioners are needed in Montana, and that a severe shortage is looming, particularly for Medicare-covered patients. They say a major reason for the shortage is low Medicare payments for routine office visits, which account for much of a primary-care doctor's income.

Tom Roberts, president of the Western Montana Clinic in Missoula, says the higher Medicare payments commanded by some hospitals help them employ badly needed primary-care physicians.

But he says there's also a business reason for hospitals to employ primary-care doctors: They can refer patients to hospital-employed specialists, who generate more income through their higher reimbursements for care.

"They want to corral a certain number of patients into the hospital, but it's more for the sub-specialty doctors who provide the bulk of the revenue," he says. "If you ask hospitals, they'll say they need to (recruit) doctors to serve the population. But they also need to have the business coming through their doors to run the hospital." Hospitals designated by Medicare as "provider-based clinics" can bill Medicare more for services provided by a physician they employ. One idea behind the designation, formalized about 10 years ago, was to enable hospitals to help attract doctors to underserved areas.

For a 15-minute office visit in Montana, Medicare allows a physician to bill about $55, and pays 80 percent of the cost. If that physician works for a hospital that is designated as a provider-based clinic, the allowable charge by the hospital is about $99.

This differential is on the high end for various procedures, however. And for some procedures, the provider-based clinic may be reimbursed less than a physician in a free-standing clinic.

On average, hospitals with the designation receive about 17 percent more for all physician services for which they bill Medicare, says J.J. Carmody, a reimbursement analyst for the Billings Clinic.

In Hamilton, Marcus Daly Memorial Hospital employs 12 physicians and owns several clinics in the Bitterroot Valley. However, it is not classified as a provider-based clinic.

Hospital Chief Executive Officer John Bartos says the hospital may apply for the designation, which could mean an additional $20,000 to $40,000 per year in Medicare reimbursement per primary-care doctor employed by the hospital.

The physicians themselves are paid based on how many patients they see and the complexity of the care, regardless of the type of reimbursement the hospital receives or doesn't receive.

The extra money could help erase part of a deficit at the hospital-owned clinics, caused in part by the low Medicare reimbursement for their physicians, he says. About half of the hospital's patients are insured by Medicare.

Yet even hospitals with the designation are having trouble recruiting primary-care physicians, such as internists who work with the elderly.

Earlier this month, the Billings Clinic had eight unfilled spots for primary-care doctors.

"Internal medicine is probably the toughest to fill," says Mark Rumans, physician in chief at the Clinic. "They take care of the most difficult, challenging patients. And reimbursement really has not kept up with the complexity of that."



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