By David McKalip, M.D.
Do you want the $100 doctor or the $200 doctor? That is essentially the question you need to ask as a patient while the media and the Federal government attack physicians as charging “too much”. With the recent release of Medical physician payment data, the media is full of stories of doctors who are “over-charging” the system. While there is obvious fraud and abuse, that is not the main focus of these stories. Instead medical outlets like Pro-Publica and the Wall Street Journal run lists of doctors charging at the highest possible rate for their care and the percentage of time they charge that rate. They illustrate the larger alleged “overcharging” issue with anecdotes of obvious abuse, but ignore or minimize findings that the vast majority of billing and collecting by physicians is proper.
What is at the heart of the erroneous conclusion that doctors are “over-charging” Medicare is the fact that Federal government actually sets the prices for what doctors are paid. Think about this for a minute. Does the federal government set the prices for plumbers, lawyers, auto mechanics, nurses, or even local law enforcement or firefighters? The answer is no! It turns out that the complaints by the media about doctors charging “Top Dollar” (as ProPublica dramatically calls it) is about a doctor collecting $208.07 for a comprehensive medical evaluation. So if you go see your brain surgeon (like this doctor/author) and he spends about 45 minutes of his time on determining the diagnosis, prognosis and best treatments for your brain tumor, was $208.07 too much for that? What about a heart surgeon evaluating your damaged heart valve, or your internal medicine doctor looking at you and your out of control diabetes? Would it be better if that doctor were paid $108.31? That is the amount sought by some who want to see the “average” payment be the “middle code” (a level 3 out of five – as if some sort of arbitrary set of coding numbers accurately describes the correct level of payment – see table below)! Would you get the doctor to spend as much time and devote as much attention? Would they instead hire a nurse to do your care (which happens all too much already precisely due to low physician payment)? Would a student decide it was a good idea to invest the time to become a doctor, take on the debt, run their office, face the malpractice risk and devote time away from their family and leisure for $108.31 for full service? Don’t bet on it. In fact the true value for the care received by patients is probably closer to 250% of that rate (see table at end of story).
Consider the training of an internal medicine doctor. Four years of college then four years of medical school then three years of residency. Then consider they must become board certified and then maintain that certification with continuing medical education. Is the skill and experience of that doctor to do an initial history and physical worth only $208.07? How about for a neurosurgeon who spent seven to eight years in residency (after 8 years of college and medical school). Now consider the fact that the physicians have delayed much of their life to learn Medicine (during the prime of their young adult life), must buy malpractice insurance sometimes at the $100,000 level, comply with endless costly regulations of the government including computerized records costing tens of thousands and still keep their office open and staff paid. Is that visit really only worth $208.07? It turns out that Medicare has looked at this issue and discovered that the alleged “overpayment” is about $43 per case and the cost for investigating each one (which occur in 7% of cases for subsequent office visits) would be up to $55 per case. The investigation would cost more than the return on the findings. Further, most times the coding used is fully justified based on documentation. This is especially with the new computer systems the government coerced doctors into buying which have built in features designed to generate the highest possible code (a level 5). Paradoxically this pressure to buy computers led to higher coding and payment since it became easier to document all the things doctors have really been doing for years – a fact that stunned government officials! Further, the amount paid out to hospitals in alleged improper payments is twice that allegedly paid to doctors. Finally, the analysis of groups of data is not the same as individual audits of charts. It turns out that when physician coding is audited individually, it is often found to be accurate and physicians have a high rate of winning appeals against such “overpayment” claims.
This is a case of government price fixing producing what it always does: shortages. In this case there is a well-known shortage of primary care doctors since they can’t afford to stay in practice with the low payment from Medicare. That is why there is a proliferation of nurses, nurse practitioners and physicians assistants. This phenomenon is well known. Think of the gas lines when Richard Nixon imposed price controls on gasoline, or the waiting list for New York apartments with price controls or the Venezuelans lining for food with the price controls in that country. Price ceilings cause shortages, in this case a shortage of doctors willing to work for less to see more patients themselves.
The fact is that the Medicare fee schedule pays doctors far too little. It is a government price fixing scheme set by bureaucrats who are desperately trying to hide from the following fact: the Government can’t REALLY pay for the promised cost of Medicare it created in 1965. Rather than admitting that this big government programs can’t deliver (like the VA) it sets unreasonably low prices for valuable physician services. It is now trying to find other excuses to not pay for the doctor’s bill for care you need as a patient with so-called “pay for performance” (PFP). PFP (and global charges/bundling) is merely a scheme where doctors are given a single budget for your episode of care (say a heart attack) and penalized if they spend more money on you than the government and insurers want to spend. That leads to rationing of care as budgets are tightened.
The next time you see a story about a doctor charging “too much” for a Medicare visit, ask yourself how much it costs for an hour of labor to have your mechanic work on your car, your plumber to come fix your toilet, your lawyer to make a Will, your accountant to do your taxes and more. Do you really think that your brain surgeon is worth only $208.07 to see your for your brain tumor but it is okay to pay hundreds to have your transmission replaced, Last Will drawn up, or air conditioner fixed? There is only one reason why these stories are coming out now, and that is that the government is running out of money that it promised for health care in the massive government system called Medicare. It is about to get even worse with the supermassive system called Obamacare and the VA system is crashing as we speak. The easy target is the doctor, but the American people should recognize the real culprit if the government that created these programs in the first place.
There is no solution to be found in more price controls, regulations, audits, investigations, pay for performance and the like. There is no real solution for patients in the media/government/corporate demonization of doctors who are already spending less time with patients as they hustle to make up for lower payments and higher cost of practice. The real solution is to do the following: 1) confine government health care benefits to those who are either poor or combat wounded vets (with private vouchers), 2) allow people to keep their own money to buy all health care and health insurance tax free, and 3) allow the market to work as patients use their own money to shop and drive down costs and increase quality and access to care for all.
|Code – for 1st office visit||Medicare Payment 2014||Likely True Market Value*|
|99201 (level 1)||$43.08||$107.70|
|99202 (level 2)||$74.21||$185.53|
|99203 (level 3)||$108.31||$270.78|
|99204 (level 4)||$167.07||$417.68|
|99205 (level 5)||$208.07||$520.18|
|The payment rates for Level 1-5 codes paid by Medicare for Physician 1st office visit. This is the price fixed artificially by government bureaucrats that has led to physician shortages as their costs have gone up without compensation. These payments to doctors have barely budged for years. A more accurate representation of the actual value of these physicians services is also provided (*based on 2.5 x Medicare rate, applied across all specialties as an approximate value). Is $208.07 really “too much” to pay for an evaluation by a doctor of a brand new patient? The real problem is the limited Federal budget and the inability of politicians to deliver on their Medicare promises.|