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147

Chapter 9

How Will Health Care Reform Change the Way We Practice Medicine?

Most [doctors] are in practices with five or fewer other physicians. They keep their records on paper in longhand. When they need to consult a colleague, they reach for the telephone. They bill for each visit. They have little idea about how their skills compare to those of fellow practitioners, nor do most know what their patients really think about the care they give.

David.Brown,.Washington Post,.May.4,.2010

In 1978 I was a second-year medical student at the Louisiana State University School of Medicine in Shreveport. The medical school had been started nine years earlier with the goal of increasing the number of primary care physicians in the northwest part of Louisiana. Each Wednesday afternoon we shadowed a local doctor. I spent the year with Dr. Edward Butler, a family practitioner in Haynesville, Louisiana, a rural community of 2,500 people in north-central Louisiana, five miles south of the Arkansas border.

The first time I went to Dr. Butler’s clinic, he was sitting in his wood-paneled office, his boots propped up on his desk, enjoying a plug of tobacco. Two stuffed

Feldman, Arthur M.. Understanding Health Care Reform : Bridging the Gap Between Myth and Reality, Productivity Press, 2011. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/miami/detail.action?docID=826964. Created from miami on 2020-04-15 12:37:46.

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ducks extended from the wall behind his head, and his desk was covered with huge piles of medical journals. He had graduated at the top of his class from the LSU School of Medicine in New Orleans and had scored in the ninety-ninth percentile on the family practice boards, and he devoured each of those journals that sat on his desk. Dr. Butler returned to Haynesville after medical school following in the footsteps of his grandfather, who had been an army surgeon during the Civil War.

The Butler clinic was a long A-frame building nestled in the pine trees indig- enous to north-central Louisiana. There was a waiting room at one end and a small emergency care area at the opposite end. A surgeon from Eldorado, Arkansas, came to town once a week to perform elective cases at the local hos- pital. Patients needing emergency surgery were transported to one of the large private hospitals in Shreveport if they had insurance or to a charity hospital in Shreveport or Monroe, Louisiana, if they didn’t have insurance. Dr. Butler shared call with a partner. On some weekends and nights, a surgical or medi- cal resident from LSU-Shreveport would cover the hospital to give Dr. Butler a night off. While some patients had private insurance or Medicare, many of his patients had no insurance, and it was not uncommon for patients to pay for their care with fresh game or produce.

Haynesville has changed little since 1978. The population is largely the same size, most people who are employed work in the oil and gas or the pulp wood industries, and nearly a quarter of all families live below the poverty line. Haynesville is located in Claiborne Parish. The doctors who practice in the par- ish all have close links to the community. Of the seven primary care physi- cians who serve the population of 20,000, three are direct descendants of former Claiborne Parish doctors. As a result. Claiborne Parish is the best-staffed rural parish in Louisiana due in large part to the relationship between the doctors and the community.

Sam Abshire grew up in Abbeville, Louisiana, a tiny hamlet in South Louisiana. He exudes confidence and has that ideal mixture of compassion and concern that patients expect and admire. His passions in life are his family, his medical practice, and duck hunting. He joined the Butler Clinic when he fin- ished training, and it is now called the Butler-Abshire Clinic. Sam’s practice is much like Dr. Butler’s was thirty-some years ago. About 20 percent of his patients have Medicaid, and about 30 percent have Medicare. “In a good year, 15 percent of our patients have no insurance, and in a bad year, it’s 22 percent,” Sam told me. Patients without insurance pay a fee based on a sliding scale, or sometimes their care is simply written off. Sam told me that this past spring he received “so much produce that we could have filled a truck.” A surgeon still visits the clinic two days a week because many patients are unable to travel to Shreveport because of costs or lack of transportation.

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Sam makes house calls for patients who cannot get to the clinic because of their health problems or because they lack transportation. The doctors in the parish cover all of the community’s acute medical needs as well as preventive care. The hospital recently built a new and expanded emergency room. It is staffed by nurse practitioners during the day and covered from home by a doctor at night. There are four nurses and one nurse practitioner in the Butler-Abshire Clinic (who handle follow-up care and emergency visits). Sam’s practice has kept abreast of new technology, installing an electronic health record several years ago, and they have recently moved into a new office. How health care reform works in these rural areas will be as important as how it works in large multispe- cialty group practices and academic health centers.

In an article in the Washington Post, David Brown wrote: “Fifty years from now, it is likely that almost all doctors will be members of teams that include case managers, social workers, dietitians, telephone counselors, data crunchers, guideline instructors, performance evaluators and external reviewers. They will be parts of organizations that are responsible for patients in and out of the hos- pital, in sickness and in health, over decades.”1 I cannot argue with Brown’s vision—but is it realistic? What is health care reform legislation actually going to do to change the way that doctors practice medicine, how they are compen- sated, how the results of demonstration projects and pilot programs may trans- late into new health care delivery systems? How can we modify the health care reform legislation to ensure that it works for patients and doctors in both large cities and in small towns like Haynesville, Louisiana?

Physician Compensation No part of the health care reform act is more politically charged than the bill’s failure to address issues regarding physician compensation. As soon as a doctor raises the issue of compensation, the public immediately views us as self-centered money-grubbers. I don’t believe that every doctor should see an increase in com- pensation. We have to develop a more rational system that rewards doctors for the time they spend and for providing high-quality care. The belief that doctors make enormous amounts of money is a myth. This might be true for plastic surgeons, dermatologists, ear, nose, and throat specialists, and some orthopedic surgeons in large metropolitan areas, but it is clearly not the case across the country. The average salary for a primary care physician in the United States is approximately $160,000 per year, and that amount is less than the average salary of most execu- tives, bankers, and other individuals in the financial world. In addition, physi- cians graduate from medical school with an average debt of nearly $160,000.

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How are doctors paid for their services? Medicare and most private health insurers pay doctors a fee for each service they provide—the fee-for-service sys- tem. Each billable task receives a CPT code—with thousands of codes assigned to each different specialty. There are over 8,000 CPT codes that apply to cardiol- ogy procedures alone. The fee schedule was heavily weighted in favor of tests and procedures, and thus doctors who perform surgical procedures and tests such as ultrasound views of the heart or abdomen receive substantially more remunera- tion than primary care physicians In 1989, Medicare created the Resource Based Relative Value Scale, a formula to increase its fees on an annual basis to keep up with changes in the cost of living and in the cost of running a doctor’s office.

The current fee-for-service reimbursement system impedes the delivery of quality health care and raises health care costs.3 Physicians are paid almost exclusively on volume and not on value, and there are no reliable mechanisms for controlling overutilization of tests and procedures. Specialists are only paid when they see a patient in person despite the fact that many consultations could be handled over the phone or through e-mails. Payments for some services are exorbitantly high, while payments for other services might be so low that the physician who provides those services actually loses money. Under the current payment system physicians and hospitals are financially harmed when patients remain healthy and are rewarded when patients get sick.

Sustainable Growth Rate In 1997, Congress determined that total payments to all doctors in the United States per beneficiary should not grow faster than the economy as a whole. Congress set a cap on health care spending to slow the growth in costs and to address the fear that physicians would perform more procedures if reimburse- ments per procedure decreased. Since total spending equals price-times-volume and since total spending was capped, for any increase in volume there would have to be a corresponding decrease in price. That is, if total volumes increased, the fees paid to doctors would decrease. This formula is called the Sustainable Growth Rate or the SGR.4

The SGR is not influenced by the spending (or utilization) of a single phy- sician but links all physicians together. Individual physicians actually have a greater incentive to increase spending, in any given year because nothing they do will affect overall spending and therefore they cannot influence their own reimbursement. Another problem with the SGR is that the targets that were originally set for utilization were far too ambitious—policy analysts expected utilization (spending) to rise at a very slow rate. Spending after 1997 actu- ally rose at an astronomical rate. The SGR was created using a cumulative and

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prospective formula. If spending in one year exceeded that year’s target, spend- ing (including physician reimbursement) in the following year would have to be reduced. If spending in the subsequent year was not reduced to an adequate level, then additional reductions had to come in future years.

When spending continued to increase after 1997 at a rate that exceeded the amount budgeted, the SGR formula required that Congress cut reimbursements to doctors. Congress postponed the cuts in reimbursements to doctors each year because they didn’t want to anger doctors. The health economist Bruce Vladeck noted that “every time Congress postpones a formula-determined fee reduc- tion, it compounds the difference between actual and expected fees, making the (theoretical) eventual adjustment that much more severe.”5 In 2010, in the midst of the recession, the Senate finally decided to adhere to the SGR formula and refused to postpone the cuts. As a result, doctors faced a 21 percent across- the-board cut in reimbursement in the summer of 2010. Not wanting to set off a firestorm before the midterm elections of 2010, Congress once again passed a bill that deferred the cuts—but the problem didn’t go away.

The SGR remains a point of contention for both Congress and doctors because a considerable amount of money is at stake. Remember that the SGR formula is cumulative and prospective. Aggregate Medicare physician expenditures have only exceeded the budgeted amounts by approximately $20 billion since 1997; however, when the value is compounded by inflation over a period of over ten years, the cost becomes $250 billion. This amount is still a drop in the bucket when compared to the current U.S. deficit of $7 trillion, but is enormous when the cost is attributable just to doctors.5 Congress is reluctant to institute an increase in health care spend- ing of any size—a view that is even stronger after the 2010 midterm elections. It would have been far easier for Congress to simply “write off” the $20 billion debt, but unfortunately arcane rules do not allow Congress to write off debt. Congress is thus left with a difficult decision: appropriate $250 billion to pay the debt incurred by the SGR formula and anger the voting public or institute an across-the-board pay reduction for all physicians of 21 percent. A cut in reimbursement of this mag- nitude would be catastrophic not only for a small practice like Sam’s but also for a large academic medical center. Can you imagine what the response would be if the government announced that every lawyer or athlete in America was going to have their pay reduced in perpetuity by 21 percent?

How Did the Patient Protection and Affordable Care Act Change the Way Doctors Are Paid? The Patient Protection and Affordable Care Act does little to change the system other than modestly increasing reimbursement for primary care physicians. The

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legislation also requires state Medicaid programs to pay primary care physicians at least 100 percent of Medicare’s rates in 2013 and 2014—but there are no pro- visions for physician payment before 2013 and after 2014.6 The bill does, how- ever, lay the groundwork for a series of demonstration projects and pilot studies that will test a variety of new strategies for reimbursing both doctors and hospi- tals. How these strategies work and how they are implemented will undoubtedly have a major influence on the practice of medicine and patient care.

The American Medical Association authored a report that described fun- damental ways to modify physician payments—many of which are incorpo- rated into the Patient Protection and Affordable Care Act: (1) insurers can pay for certain services that doctors provide that are not currently paid for, such as telephone calls to patients and e-mail contacts with patients; (2) insurers can make payments based on the quality of the service that is delivered—so-called pay-for-performance; (3) the payments to two or more doctors for two or more services can be combined into a single payment to reduce the ability of a single physician to deliver unnecessary services while rewarding doctors for collabora- tive care (“bundled payments”); (4) payments can be made dependent on the cost of services delivered by other providers; (5) payments can be made that sup- port the development of new kinds of infrastructure or practice structure such as electronic health records and nurse-led disease management programs.7

Paying for services that are not currently paid for, such as answering a patient’s questions by e-mail, provides an opportunity for doctors to provide bet- ter care for their patients and to increase their income; however, if the payment they receive is too low for the amount of time the new service requires, it might make the practice less profitable. Sam Abshire makes house calls on patients he knows well. The house calls are great for his patients because they don’t have to leave their homes and worry about transportation, but they are incredibly time consuming for Sam, and he doesn’t receive any more compensation for a house call than he does for seeing a patient in his office. He could increase the number of house calls he makes—but only if the level of compensation were also increased. Payments for new services will only work if they do not result in increased physician costs or a decrease in reimbursements for existing services in an effort to ensure budget neutrality.

Pay-for-Performance Pay-for-performance.makes intuitive sense because it rewards doctors for pro- viding better care; however, it has important drawbacks that haven’t been con- sidered by health policy analysts. Many private insurers have already instituted pay-for-performance programs. Some pay-for-performance programs reduce the base pay for a service and then reward doctors with a “bonus” when it

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is determined that the patient has done well or that performance standards have been met. Small or midsized practices may have problems meeting their monthly cash flow needs if payments are withheld. Small practices like the Butler-Abshire Clinic may also be faced with unacceptably high administrative costs to collect the data that is necessary are demonstrate quality performance.

The greatest limitation of pay-for-performance programs is that they only reward what can be measured. It is also more difficult to achieve quality met- rics in patients with chronic disease or in those who are socioeconomically challenged. Pay-for-performance may therefore cause doctors to avoid complex patients or penalize doctors who care for a population that is socioeconomi- cally underserved.

Payment Bundling Payment “bundling” is one of the most popular payment reforms among health policy analysts. The reform act instructs the secretary of HHS to establish a pilot program to evaluate paying a bundled payment for an acute hospitalization for one of eight conditions by 2013. Services that will be bundled include any services provided during the three days prior to a hospital admission, the hospital admis- sion itself, and the thirty days following discharge from the hospital. The secretary of HHS will assess the ability of bundled payments to improve functional status and improve a patient’s perception of their care and patient outcomes. Bundling payments reduces the ability of an individual physician to provide unnecessary services since payments remain the same regardless of how many procedures are performed. Economists have predicted that bundled payments can reduce the volume of services and can reduce costs by 5.4 percent between 2010 and 2019.

The level of integration that is necessary to allow a group of doctors and nurses to work collaboratively in both the inpatient and outpatient settings is found at relatively few health centers in the United States. Another limitation of bundled payments is that the bundled payment for the care of a patient will be less than the payment that was historically made to the individual doctors and nurses who cared for a patient with the same group of problems. The hospitals and the participating doctors will, therefore, need an adequate flow of cash to offset any decreases in revenue that come about as a result of bundled payments. For small practices and rural hospitals, bundled payments may be problematic.

Bundled payments will only work if the payments can be judiciously divided among the doctors and nurses who provide care for the patient. Small primary care practices or small subspecialty practices will have little leverage in most hospitals when compared with large groups of surgical subspecialists who are responsible for the lion’s share of the hospital’s margin. This raises the concern that primary care doctors and medical subspecialists could end up receiving an

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inappropriately small slice of the health care “pie” if the distribution of the bun- dled payments is left to hospital administrators.

In 2002, the Butler-Abshire Clinic was bought by one of the large health systems in Shreveport. The relationship fell apart several years later when high overhead costs in the hospital led the hospital’s administrator to pass an increas- ing number of costs on to the two doctors. Drs. Abshire and Butler were able to untangle themselves from their legal agreements with the health system and happily returned to their earlier practice structure—an entanglement that might have been more difficult to unwind if it involved bundled payments.

Payment bundling also presents risks even for large practices. Large practices may not be large enough to provide economies of scale that would make it cost- effective to develop the infrastructure that will allow economic collaboration. Bundled payments also introduce elements of uncertainty for both physicians and their patients. Doctors don’t know exactly what they will be paid for any service provided and patients will worry that hospitals and doctors might with- hold desirable but higher-cost services to improve their profit margins.

Several models that modify the basic bundling structure will also be evalu- ated by demonstration projects and pilot studies. Paying for care on a warranty basis is one such model. A health care warranty ensures that neither the hospital nor the physician will charge for services that occur as a result of a preventable error including an infection or a surgical error that occurs during or after a hospitalization. But will patients feel the same way about their health care if it begins to resemble buying a car?

Global Payment Global payments are another form of payment restructuring. This system was designed to address the concern that payments that are predicated on a single episode of care do not encourage physicians or hospitals to reduce the total number of hospitalizations. In global payments, doctors receive a single pay- ment to cover the costs of all of the care needed for a fixed period of time regardless of the number of acute care episodes. This is the only payment sys- tem that rewards doctors for keeping their patients healthy and for avoiding hospitalizations. This is also the only payment system that requires doctors to take medical risk. That is, doctors can make money if they are able to keep their patients out of the hospital or are able to care for their patients without using expensive tests or procedures. Doctors lose money if the cost of the care for a patient exceeds the single payment. Health policy analysts suggest that this disadvantage can be mitigated by adjusting payment levels based on the types and severity of diseases for which an individual is being treated. The global payment system does not, however, account for the fact that patients

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How Will Health Care Reform Change the Way We Practice ◾ 155

from underserved areas where people have little access to preventive care are often unable to pay for their medications or that in these areas doctors may be scarce and invariably have higher costs of care. Poverty and poor adherence to medical regimens have long been recognized as substantial roadblocks to gaining improved outcomes for patients. Global payments will only work when health policy analysts can factor both medical and socioeconomic factors into payment formulas. Without careful attention to the many nonmedical factors that influence health care costs, doctors and hospitals will actually have incen- tives to avoid providing care to individuals who have a high risk because of multiple co-morbidities or because of poverty.

Most of the doctors I spoke with have little confidence that government regulators or health policy analysts sitting at their desks in Washington actually understand the needs of doctors or patients. They point to examples of how both public and private insurers have failed to reconcile these needs in developing new payment system policies. Sam Abshire shared with me a great example of the regulatory conundrum. Medicare pays for physician office visits for its benefi- ciaries and requires a $117 co-pay. Most of Sam’s Medicare patients can’t afford the co-pay, but Sam is legally bound to bill his patients for the co-pay regardless of their financial means. In fact, Medicare mandates that he bill the patient at least three times before he can write off the payment. The Butler-Abshire Clinic employs one woman who does nothing but handle government reimbursement and do the complicated bookkeeping that is required to ensure that “we don’t go to jail for Medicare fraud,” laments Sam.

Health care reform will also have an important impact on the relationships between practicing physicians and their hospitals. U.S. hospitals have begun to respond to what they perceive as the economic threats of health care reform by hiring physicians—both primary care physicians and specialists.8 A 2010 survey found that 74 percent of hospital leaders contacted planned to increase physician employment within the next twelve to thirty-six months.9 In the 1990s, hospi- tals employed primary care physicians because they perceived an opportunity to direct the flow of referrals to specialists who used their facilities. That turned out to be a bad decision as hospitals lost money on primary care, and referrals often went elsewhere.

Hospital economics have now come full circle due in large part to health care reform. Hospitals once again are purchasing physician practices but for different reasons. Hospitals now perceive that by purchasing physicians they will be able to reduce the costs associated with variations in physician practice, maximize asset utilization, control length of stay and patient discharge, utilize information technology, and standardize supplies. Large physician networks provide hos- pitals with greater power when they contract with health plans in the current fee-for-service system. It is unclear, however, whether purchasing physicians will

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lower hospital costs or the cost of health care overall. A recent report suggests that hospitals will lose $150,000 to $250,000 per year over the first three years for each employed physician they hire, and losses will persist even after year three.8 If hospitals can successfully transition through the initial losses, there is the real possibility that large and powerful integrated health systems can actu- ally increase overall health care costs by decreasing competition.11

It is less clear how the integration of individual physician practices into large health systems will affect doctors or patients. Doctors will clearly lose a great deal of their autonomy, and they will shift from guaranteed salaries to incentive- driven compensation that is based on productivity and the quality of care that they deliver. There is a real fear that hospitals will place productivity first and quality a distant second. Hospital employment may provide a buffer for physi- cians against the turmoil of health care reform; however, their options for tran- sitioning from employment back to private practice may be severely limited. Patients will hopefully see only benefits. Greater integration across the health care delivery system, greater use of electronic health records, and more effective quality control will hopefully balance any increase in health care costs.

Integration may not work for everyone. Many large academic medical cen- ters have successfully integrated the many practitioners into the medical center especially when those practitioners are located in close proximity to the hospital. The doctors are then able to take advantage of all of the opportunities afforded to them by an association with a large hospital including home care services, specialty referrals, nursing and pharmacy support, and quality assurance and quality improvement initiatives. For small rural practices like Sam’s, integration with a large hospital system that is located at a significant distance would be neither economically nor medically beneficial.

Electronic Health Records One infrastructure cost that all physicians will face by 2015 is the need to imple- ment an electronic health record. In 2009 in a speech to the joint session of Congress, President Obama noted that “our recovery plan will invest in elec- tronic health records and new technology that will reduce errors, bring down costs, ensure privacy, and save lives.” Nationwide utilization of an electronic health record is a cornerstone of health care reform.12 The Health Information Technology for Economic and Clinical Health (HITECH) Act, a part of the stimulus package, allocated $50 billion over the next five years for implementa- tion of electronic health records.

Physicians point to three important benefits of EHR: the systems can help avoid redundant tests, gather enormous amounts of data for research, and pre- vent doctors from prescribing drugs that interact adversely with one another.

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Advocates for EHR also point to the fact that EHRs can prevent or minimize diagnostic errors by supporting decision making, provide checklists for manag- ing various diseases, and remind doctors when it is time to take preventive steps or follow-up actions. Electronic health records can also provide a communica- tion platform between the numerous doctors who care for a patient and can help the primary care physician track follow-up to ensure that patients keep their appointments with consulting physicians, get their tests, or refill their medica- tions. EHRs provide consultants with ready access to information, maintain a dynamic patient history, track medication changes across different doctors, pro- vide information about new guideline recommendations that apply to a specific patient, and maintain a list of the patient’s problems that allows for continu- ous updating. They can also dump enormous amounts of information into data repositories that can be used to “grade” individual physicians based on how they compare with their peers.

In an article in the Washington Post, David Brown envisioned health care fifty years from now: “The records of what they do for a patient—and what every other doctor does—will be in electronic form, accessible from any com- puter. Software will gently remind them what to consider as they treat and try to prevent diseases. How the patients fare will be measured and publicized and used in part to judge practitioners’ performance.” Brown’s lofty goals are not universally shared. Dr. Thomas H. Lee, president of the physicians’ network at Partners HealthCare, noted that the administration’s views of electronic health records were based on “unrealistic expectations” and “unachievable timelines.”14

Only 17 percent of U.S. physicians currently use either a minimally func- tional or a comprehensive electronic health record system. When systems do exist, they often do not link physician practices with local hospitals much less with health insurers. Dr. David Brailer, former National Coordinator for Health Information Technology and White House information czar from 2004 to 2006, aptly described the current situation when he said, “The hard part of this is that we can’t just drop a computer on every doctor’s desk. Getting electronic records up and running is a very technical task.”16

Another major impediment to reaching the goals of the health care reform act is system costs.17 Large health systems can see a return on investment by using the electronic health record to seamlessly link the health system with regional practitioners.18 The cost of an electronic health record system can be prohibi- tive for a small hospital or for a small to medium-sized medical practice—even when factoring in the incentive provided through the American Recovery and Reinvestment Act. For some practices the changes in work-flow required by an EHR might also be problematic.

There is also no proof that electronic health records actually improve patient care. Some experts contend that the time-consuming process of entering

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electronic documentation can distract the physician from thinking about diag- nostic opportunities, can discourage independent data gathering, can cause the physician to pay more attention to the computer than the patient, and can per- petuate errors.19 Doctors spend too much time clicking boxes and not enough time dictating their evaluations and thoughts to referring physicians. Computer- based documentation is built around billing codes and legal requirements—not on what is going on with an individual patient.20 Howard Weitz is a colleague and friend who is the director of our cardiology program. Howard has spent his entire life in Philadelphia. Like Sam Abshire, he is an outstanding clinician and a warm and compassionate human being. Sam and Howard used the same adjectives to describe their electronic health record systems—“cumbersome and slow.” Howard took it a step further. He did an experiment. He compared how long it took him to see thirty-six patients a day—eighteen in the morning session and eighteen in the afternoon session—with and without EHR. The EHR added seven minutes to the time it took to see each patient—an additional three hours in his day. Not all doctors have the same problem. Some specialists can afford to have “scribes” follow them around in the hospital and in their outpatient offices and fill in all of the check boxes on the computer screen. Unfortunately, neither Sam’s practice nor Howard’s practice could afford a scribe.

Some health care experts have reported more sinister fears about EHR. The current EHR platforms are built on billing codes because it is the abil- ity to bill expeditiously, accurately, and efficiently that forms the groundwork for the return on investment associated with an EHR. Most doctors—myself included—have a poor understanding of codes, and therefore billing codes are often entered by “coders.” Scott Haig pointed out in an article in Time Magazine that the opportunity for a coder to change a code with the flick of a button is ominous.21 He gives the example of a patient who comes to see the doctor because of a “urinary tract infection.” If the diagnosis is “pyelonephritis”—an infection involving the bladder as well as the kidneys—the doctor can bill at a higher level than if the diagnosis is a “urinary tract infection.” If every time the doctor clicks on the button for “urinary tract infection” the button for “pyelone- phritis” also pops up (or is automatically activated), the doctor gets more money and our health care costs go up. How would anyone know that the patient only had a simple infection in the bladder and not pyelonephritis? They wouldn’t!

Electronic health records can also allow insurance companies to deny tests and treatments. In the absence of an electronic health record, doctors often order tests with the hope that the insurance company will eventually pay the bill. In an era of instantaneous feedback, the computer may simply refuse to allow the doctor to order a test if there is not enough justification included to warrant it. This type of system could lower health care costs. But who is the best per- son to decide on a patient’s care—the doctor, government regulators, or health

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insurance company administrators? EHR will certainly improve the practice of medicine despite its current flaws. The important point is that federal regula- tions and Congress must recognize that the full impact of EHR will be decades away as new generations of the technology will be required before its full effects can be harnessed.

Multispecialty Group Practices If you look at health care reform from 30,000 feet, it appears that the most effective structure for a physician practice in the future will be the large multi- specialty group practice. They have the level of management services, financial management systems, nursing support, and capital resources that facilitate their ability to effectively change their practices in the context of health care reform, and they can use their size to leverage their partner hospitals. Their large num- ber of patients precludes the ability of a single outlier patient to alter the overall statistics of the practice, and the large group has greater leverage in negotiating contracts with private insurance companies and with suppliers.

Many of the practices that are touted as being high-quality and low-cost performers fit into the category of highly integrated multispecialty group practices. These practices include integrated systems such as Denver Health, Intermountain Health Care, Geisinger Health System, and the Mayo Clinic. These systems have health information systems, sophisticated physician com- pensation systems that recognize the contributions of all physicians, and man- agement and financial systems in place that can effectively link the practice with payers and regulatory authorities. They have the structure and wherewithal to accommodate a bundled payment and, in most cases, are financially linked with one or more hospitals. These organizations are particularly effective when they are physician led as evidenced by the Mayo Clinic, the Cleveland Clinic, the Emory Health System, the Duke Health Systems, Partners Health Care, Johns Hopkins Medicine, and others. Each of these systems also has a long and storied culture of excellence that pervades every part of their operation. They also tend to be the dominant provider in their geographic areas—with little local compe- tition or redundancy in programs.

There are, however, no objective data to support the benefits of a multispe- cialty group practice or any other practice structure. The structure that works for one practice might not work for another. In large multispecialty group practices, low-performing members may negatively impact high-performing members, and the various members of the group may not have the same practice culture. Multispecialty group practices also have distinct disadvantages when they do not represent the best-performing specialists in the community, or if they do not have all specialties and therefore must contract with specialists who are not

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part of their practice. A multigroup practice would also be difficult to create in rural Louisiana because there aren’t enough primary care doctors or specialists. The great truth that health care pundits fail to recognize is that the structure of the health care delivery system is only one component of insuring high-quality and low-cost care. The physicians and the culture of their practice are the most important elements for the delivery of excellence in patient care.

The Independent Payment Advisory Board The element of the Patient Protection and Affordable Care Act that is causing some of the greatest angst among physicians is the creation of the Independent Payment Advisory Board. The board will be made up of fifteen members who are appointed by the president and confirmed by the Senate for six-year terms. It replaces the Medicare Payment Advisory Commission (MedPAC). MedPAC submitted annual recommendations to Congress on a broad range of Medicare issues but was not required to achieve budgetary targets and had no independent decision-making authority. Congress was not obliged to follow its recommen- dations. By contrast, the new board has the authority to recommend proposals to limit Medicare spending growth. If projected per capita Medicare spend- ing exceeds the target growth rate (0.5 percent in 2014 escalating to 1.5 per- cent in 2018), the Board is actually required to recommend proposals to reduce Medicare spending by specific amounts. The first recommendations are due in 2014 with implementation in 2015. MedPAC will now become simply an advi- sory body for Congress. The new board has incredible power. The law estab- lishes specific rules that govern how the recommendations of the board will pass through congressional committees, including rules governing the procedures that Congress must follow such as limitations on debate and timelines to ensure fast-tracking through committees. Non-germane amendments are not permit- ted, and Congress cannot consider any bill or amendment that does not meet the board’s targets. Congress can only repeal or change the fast-track congressio- nal consideration process for board recommendations with a three-fifths vote in the Senate. The health care reform bill also limits the board’s actions. The board cannot make any recommendations that ration care or reduce benefits; there- fore, any cuts must come from physician or hospital reimbursements. Medicare beneficiaries could, however, see decreased access to the kind of care they seek if the explicit limits on Medicare spending growth are unrealistic because of the emergence of new and expensive technologies.

Sam Abshire worries that the new board will not understand the daily prob- lems facing a doctor in Haynesville, Louisiana. Sam loves to tell the story of Medicaid in Louisiana. Each Medicaid beneficiary is permitted to have a fixed number of emergency room visits—whether they need them or not. A visit only

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How Will Health Care Reform Change the Way We Practice ◾ 161

“counts” for hospital reimbursement if the patient is seen by a physician. As a result, Sam and his partner must make a trip to the emergency room in the middle of the night not because the patient needs to be seen—but so that the hospital can be reimbursed. Sam points out, “In the thirty years I have been practicing medicine, a state Medicaid administrator has never walked into my hospital or my office in Claiborne Parish. If they had, maybe they would under- stand the downstream effect of some of their ridiculous rules and regulations.”

How Can the Patient Protection and Affordable Care Act Be Improved?

A group of specific and simple changes in how physicians are compensated and practices structured could markedly improve the quality of patient care and lower health care costs. The Centers for Medicare and Medicaid Services should undertake audits of the medical records—including audits of the actual stud- ies— to determine the medical necessity of the procedures and studies. A review of the audits must be performed by a panel of doctors who are in active clinical practice and not by CMS administrators. Second, physicians should only be reimbursed for services that are consistent with consensus practice standards—a step that will substantially decrease overutilization of tests and procedures. The broad implementation of electronic health records will allow both treatment and diagnostic algorithms to be audited on an almost ongoing basis. When there are disagreements, issues should be adjudicated by a panel of practicing physi- cians—not by administrators or specialists in other disciplines. There must also be opportunities for physicians to appeal the decisions of payers in a timely and cost-effective manner.

We must recognize that the basic mechanics of the Medicare Physician Fee Schedule are flawed.22 Efforts to increase payments for primary care and decrease reimbursement for procedural and interventional services simply haven’t worked.5 Let’s face the facts. There is no mechanism for equitably dis- tributing fees among the many different physicians who care for an individual patient—and if there were, it is certain that “distributional politics” would over- ride any efforts to do so.5 The lion’s share of payments would go to the physicians with the most political clout—not to the physicians who were doing the most work. Even in academic medical centers where physicians are salaried, there are often enormous disparities in salary across the various specialties due entirely to the fact that specialists who provide “high margin” services have far more politi- cal clout in the system than do doctors who perform “low margin” services. The

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most important concept is that we can’t change physician compensation and at the same time have budget neutrality—it just won’t work!

Arnold Relman, the former editor of the New England Journal of Medicine, is one of the few health policy experts who have actually proposed a “system” that would restructure physician payment.24 Relman envisions a health care system in which medical care is delivered by a national network of community-based, private, not-for-profit, multispecialty, and doctor-managed group practices. Physicians would receive a salary for caring for patients—but the salary would be based on value and not volume. Compensation must be adjudicated to account for the length of training and inherent risks in the specialty (and work hours) in order for this type of system to work. In the health care system that Relman envisions, groups would not be allowed to keep net income. They would compete based only on quality, and groups would be held harmless for losses due to caring for a population of patients that was high risk for expensive condi- tions. “Capitated prepayment of the groups would allow a central public agency to control the country’s total medical expenditures,” but patient care would be entirely in the hands of the doctor.3

I have worked in highly integrated health delivery systems—and, in gen- eral, I agree with his vision of the future—yet I think it is highly unlikely that we will see this type of utopian medical system any time soon. Relman himself notes that without a political awakening, “the economic incentives and orga- nization of medical care cannot be changed and the current slide of the system toward bankruptcy will continue.” In the absence of a utopian system we must begin to incorporate the model of an integrated health care system wherever and whenever possible. It will also be imperative that payment reforms and delivery system reforms evolve in a coordinated way. Much like the “chicken and the egg,” physicians will be unable to institute reform unless they have the revenues with which to support new organizational structures—but the new revenues will only come with the institution of new structures. Thus pay- ment reform will have to come in stepwise transitions and must be carried out with the recognition that costs will go up before they go down. The final caveat is perhaps the most important. A one-size-fits-all approach will not solve our problems—it will create more of them. Each region of the country and each specialty will have different and unique requirements. A health care deliv- ery system that works in suburban Philadelphia is unlikely to be successful in Haynesville, Louisiana, or urban Philadelphia. For small rural practices like Sam Abshire’s, maintaining the present fee-for-service payment methodology will allow Sam and Clint to continue to provide high-quality care at a lower cost than any new or novel payment system. At the end of the day, the structure that works best will be the one that provides the highest quality of care for the people of that particular region.

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Notes . 1. Brown D. New health-care law might make your doctor more informed, efficient,

responsive. Washington Post. May 4, 2010. 2. Elliott V. American Medical News. March 14, 2011. 3. Relman AS. Doctors as the key to health care reform. N Engl J Med. Sep 24,

2009;361(13):1225–1227. 4. MedPAC. The Sustainable Growth Rate System. Washington DC. March 2007. 5. Vladeck BC. Fixing Medicare’s physician payment system. N Engl J Med. May 27,

2010;362(21):1955–1957. 6. Bindman AB, Schneider AG. Catching a wave—Implementing health care reform

in California. N Engl J Med. Mar 30, 2011. 7. Miller HD. Pathways for Physician Success under Healthcare Payment and Delivery

Reforms, Executive Summary, AMA, 2010. http://www.ama-assn.org/ama1/pub/ upload/mm/399/payment-pathways-summary.pdf.

8. Kocher R, Sahni NR. Hospitals’ race to employ physicians—The logic behind a money-losing proposition. N Engl J Med—Health Policy and Reform. March 30, 2011.

9. Cantlupe J. Physician Alignment in an Era of Change. Brentwood, TN. September 14, 2010.

10. Kocher R, Sahni NR. Physicians versus hospitals as leaders of accountable care organizations. N Engl J Med. 2010;363:2579–2582.

11. Berenson RA, Ginsburg PB, Kemper N. Unchecked provider clout in California fore- shadows challenges to health reform. Health Aff (Millwood). Apr 2010;29(4):699–705.

12. Cutler DM. Will the cost curve bend, even without reform? N Engl J Med. Oct 8, 2009;361(15):1424–1425.

13. Blumenthal D. Launching HITECH. N Engl J Med. Feb 4, 2010;362(5):382–385. 14. Pear R. Doctors and hospitals say goals on computerized records are unrealistic.

New York Times. June 7, 2010. 15. Jha AK, DesRoches CM, Campbell EG et al. Use of electronic health records in

U.S. hospitals. N Engl J Med. Apr 16, 2009;360(16):1628–1638. 16. Goldman D. Obama’s big idea: Digital health records. CNNMoney.com. http://

money.cnn.com/2009/01/12/technology/stimulus_health_care ed; 2009. 17. Kluger J. Electronic Health Records: What’s Taking So Long? time.com. http://

www.time.com/time/printout/0,8816,1887658,00.html ed; 2009. 18. Shea S, Hripcsak G. Accelerating the use of electronic health records in physician

practices. N Engl J Med. Jan 21, 2010;362(3):192–195. 19. Hartzband P, Groopman J. Off the record—Avoiding the pitfalls of going elec-

tronic. N Engl J Med. Apr 17, 2008;358(16):1656–1658. 20. Schiff GD, Bates DW. Can electronic clinical documentation help prevent diagnos-

tic errors? N Engl J Med. Mar 25, 2010;362(12):1066–1069. 21. Haig S. Electronic Medical Records: Will They Really Cut Costs? Time.com. http://

www.time.com/time/printout/0,8816,1883002,00.html ed; 2009. 22. Ginsburg PB, Berenson RA. Revising Medicare’s physician fee schedule—Much

activity, little change. N Engl J Med. Mar 22, 2007;356(12):1201–1203.

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23. Wilensky GR. Reforming Medicare’s physician payment system. N Engl J Med. Feb 12, 2009;360(7):653–655.

24. Relman AS. A second opinion: Rescuing America’s health care. Public Affairs 2009; New York.

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