Reforming Physician Payment Report of a Conference (1984) / Chapter Skim
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Politics As Usual and Customary?: Physician Payment in Transition
Politics As Usual and Customary?: Physician Payment in Transition
Pages 11-29
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From page 11... ...
2 As a component of total health care spending, the share of physician services has actually declined over the century. In 1935, the United States spent $744 million on physician services, $731 million on hospitals.
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From page 12... ...
One program after another -- Professional Standards Review Organizations (a program of physician review, but one aimed almost entirely at hospital use) , certificate-of-need programs, health planning, state rate-setting, and most recently, the Medicare system of prospective payment based on diagnostic-related groups (DRGS)
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From page 13... ...
incentives with some amusement. Their view, surely not implausible, is that a society that wants to spend less on physician services must simply resolve to pay less for them by means of fee schedules.
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From page 14... ...
As a New York journal explained in 1825: Owe are far from desiring that the physician should demand the same compensation from the rich and the poor; he must of necessity regulate his demand by the ability to pay of his patient; but in doing so, let him keep up the impression that his services are valuable, let him charge a proper fee, and then make such deduction as the pecuniary circumstances of his patient require and not openly profess to practice medicine at half price. By the 1880s there were separate fee schedules for city and rural practice and for the sick poor.l9 Health insurance plans, which grew during and after the Depression, essentially institutionalized this dichotomous approach.
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From page 15... ...
but Congress, fearful of driving physicians to boycott the program, avoided discussion of fee schedules.22 Before long, Congress -- or at any rate the staff of the Senate Finance Committee -- had second thoughts. By 1970 charges for physician services for Medicare beneficiaries were running well ahead of charges for people who received comparable services outside the program.23 The staff blamed the Department of Health, Education, and Welfare, which, ever in search of Supportive consensus,.24 had given the fiscal intermediaries a free hand in defining customary and prevailing charges as they saw fit.
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From page 16... ...
The department complied and the plan, attached to a bill to alleviate the problems of the Social Security System, made its way easily to President Reagan's desk in March 1983. Although it applied only to federal payments to hospitals in Medicare, the law also required HHS to report in 1985 on the feasibility of extending prospective payment based on DRGs to Medicare physicians services in hospitals, thus again returning the issue of physician remuneration to a prominent place on the health policy agenda.
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From page 17... ...
~ 30 The Reagan administration too has contr ibuted to the sense tea ~ change is necessary and desirable by proposing that Medicare payments to radiologists and pathologists be slashed and by calling for a year-long freeze on Medicare payments to physicians. Apart f ram a general and obvious concern with uncontrollable health care spending, which has increased policymakers' taste for cost containment on all health care f rants, six more particular factors explain the willingness of politicians to pick quarrels with physicians less than twenty years after they meekly wrote Medicare payment provisions aimed at appeasing them.
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From page 18... ...
Critics argued that such declarations by entering students were meaningless; the core attraction of specialist practice is the very high remuneration it can bring, and the best way to enhance the appeal of general practice is to pay specialists less.35 The emerging physician surplus is widely viewed as a calamity mainly, of course, because it implies strong, steady upward pressure on charges for physician services, and therefore for other services too, flying in the face of whatever cost containment policies might be implemented. Not everyone is pessimistic.
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From page 19... ...
Although practice has yet to catch up with theory, those diverse gatekeeping experiments have colored policymakers' thinking. It has come to be widely believed that health care costs might be d' sciplined economically if doctors could be disciplined organizationally and that changes in reimbursement policy are a powerful tool with which public and private payers can reward the growth of such organizational discipline among physicians.
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From page 20... ...
The application of various controls left no satisfying explanation but that physicians dif fered in practice styles and preferences. 39 The efforts of the Professional Standards Review Organizations to collect information on regional and local diagnostic and admissions patterns, to analyze it, and to discuss and refine into a shape sufficiently normative for peer review purposes likewise -20
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From page 21... ...
In politically favorable times the system permits individual physicians steadily to elevate their usual charges and physicians collectively to drive up the customary charges in their community. In politically difficult times federal policymakers may tighten definitions, reduce payment percentiles, disallow cost factors, and then reassure the public that all is well because physicians are being paid on the basis of their usual and customary rates.
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From page 22... ...
If spending on physicians continues to rise rapidly but the DRG-based system is thought to be in trouble -- because it fails to contain hospital costs, triggers many hospital closures, generates large uncontained cost shifts, is beset by ~gaming,. or for other reasons -- policymakers may well impose on physician services fee schedules that lack the elaborate methodological f ounda t i ons and validation of DRGs.
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From page 23... ...
for physicians in Medicare, like the new hospital payment system, will shift costs to non-medicare payers. Because about 90 percent of hospital charges are paid by third parties, cost shifting in the new system may be expected to meet with organized resistance and to generate pressure on state governments for redress.
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From page 24... ...
It would not be surprising if these issues were ignored or downplayed in legislation authorizing fee schedules for physician services, for there is now much indignation at the high fees specialists command and much sentiment in favor of trimming them down, both as a matter of equity and in order to reduce incentives for overspecialization. They play, so to speak, the political role of the hospital that charges $3,000 for a cataract removal or $8,000 for a hip replacement, in the growth of support for the prospective payment system, the egregious high-rollers in need of being brought down to earth.
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Mainly they will highlight the enormous difficulties the central government faces in trying to rationalize public health care programs in a system that retains and cherishes very large elements of pluralism and privatism.
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From page 26... ...
to curb costs, 38 percent named the Blues and commercial insurance companies, 27 percent the federal government, 20 percent state and local government, 19 percent hospitals, and 18 percent physicians. Nancy L
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From page 27... ...
^1. John Holahan and Bruce Spitz, physician Reimbursements in John Holahan and others, Altering Medicaid Provider Reimbursement Methods, (Washington, D.C.: Urban Institute, 1977 )
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From page 28... ...
36. Robert Gibson, National Health Expenditures, 1979,~ Health Care Financing Review, Vol.
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From page 29... ...
46. Exclusive Interview: Senator John Heinz Reviews Health Care Efforts of Congress in 1982,~ Physicians' Washington Report, Vol.
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