How Do You Know if Your Doctor Is Doing a Good Job?

We’ve spent a lot of ink in this blog discussing how difficult it is to measure quality in the various US healthcare systems. One large-scale effort to measure quality is the “Medicare Merit-based Incentive Payment System,” or MIPS. MIPS is a big deal for health systems. Quality isn’t just for professional pride. The MIPS program has a significant impact on the reimbursement received by U.S. physicians.

Some of the surveys or questions you’ve undoubtedly had to answer in doctors’ offices the last few years are undoubtedly tied to their efforts to improve their MIPS score. MIPS rates physicians based on measures in four categories:

1. Quality (30% weight), mostly in terms of clinical outcomes and patient experience. Doctors might be scored on the percentage of hypertensive patients who have their blood pressure controlled or the percentage of their patients who report a high level of satisfaction with their care.

2. Promoting interoperability (25% weight), how well a physician uses technology to improve the quality and efficiency of their care. Measures in this category might include the percentage of patients using the electronic health record (EHR) portal or how many prescriptions are sent to the pharmacy electronically.

3. Improvement activities (15% weight), how well a physician is working to improve her practice through activities like quality improvement programs.

4. Cost (30% weight), how much a physician’s care costs compared to his peers. Think: the number of seemingly unnecessary tests and procedures ordered.

Because the work that, say, a psychiatrist does is so different from the work a urologist does, doctors who participate in MIPS may choose six of a possible 257 performance measures to report, only one of which must be an “outcome measure,” such as hospital admission for a particular illness. The others can be “process measures” like rates of cancer screening. Docs are given a composite MIPS score between zero and 100. To avoid a “negative payment adjustment,” (that is, a reduced fee) physicians must score >75, which seems high to me unless I frame it as a solid “C” grade. Also, 86% of the docs in the sample achieved at least that score, indicating that they either are good at gaming the system or that the score isn’t terribly difficult to achieve.

In spite of the massive effort put into MIPS by regulators, docs, and health systems, it’s unclear whether the MIPS program really reflects the quality of care provided by participating physicians. To investigate, investigators analyzed 3.4 million patients treated in 2019 by 80,246 primary care physicians using Medicare datasets (paywall). They looked specifically at five “process measures” like rates of diabetic eye examinations and breast cancer screens and the “patient outcomes” of all-cause hospitalizations and emergency department visits.

They found that physicians with low MIPS scores (<30) had worse performance on three of the five process measures compared to those with high (>75) MIPS scores. Specifically, the low-scoring docs had lower rates of diabetic eye exams, HbA1c screening for diabetes, and mammography for breast cancer screening. However, the lower-performing docs had better rates of flu vaccination and tobacco screening. In the “patient outcomes,” there was no consistent association with MIPS scores: emergency department visits were lower (e.g., better) for those with low MIPS scores, while all-cause hospitalizations were higher (worse).

Overall, these inconsistent findings suggest that the MIPS program may not be an effective way of measuring and incentivizing quality improvement among U.S. physicians. The “patient outcomes,” which I think most of us would be most interested in, showed no clear association with MIPS scores. In addition, the study found that some physicians with low MIPS scores had very good composite outcomes, while others with high MIPS scores had poor outcomes. Like every correlative study, there were outliers. This suggests that there may be other, more nuanced, factors at play that are not captured by the MIPS program that influence a physician’s performance.

The study is recent enough that we don’t have peer-reviewed criticism or hypothesizing yet about the potential mechanism of MIPS failure. But a blog post from Cornell puts it this way: “…there is inadequate risk adjustment for physicians who care for more medically complex and socially vulnerable patients and that smaller, independent primary care practices have fewer resources to dedicate to quality reporting, leading to low MIPS scores.” So, sicker patients going to smaller, independent practices may drag down results. Put another, more frank, way from Dr. Amy Bond in the same blog post, “MIPS scores may reflect doctors’ ability to keep up with MIPS paperwork more than it reflects their clinical performance.” For our comrades in Human Resources, I suspect this criticism rings especially true.

As the Medical Director of the Kansas Business Group on Health, I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH.

Center your care on a PCP

If you’ve been to a Kansas Business Group on Health meeting in the last couple of years, you know already that American health care is beset by “low-value” care. We spend inordinate amounts of money doing “executive physicals” that offer almost no benefit. We pay for expensive back surgeries that are sometimes no better, and often worse, than physical therapy. We fail to substitute cheaper generic or bioequivalent drugs for more expensive drugs in spite of evidence that the less expensive drugs work just as well. All these low-value services account for between $75 billion and $100 billion in annual U.S. health care spending. In a $3.5 trillion health care economy, that seems like a rounding error. But it’s a big number! $100 billion is an extra $300 per year on health care per American.

 What do most of these sins against our collective pocketbooks have in common? They mostly happen in specialist offices, not at the hands of primary care providers (PCPs). We’ve extolled the virtues of primary care often here at KBGH (although not necessarily the “annual check-up”). We’ve long known that primary care is the most cost-effective place to get your care. This was reinforced just last week in a new study looking at the sources of low value care.

 The investigators analyzed Medicare Part B claims from a 20% random sample of beneficiaries enrolled between 2007 and 2014. They excluded anyone in a given year who could not be linked to a PCP in the data, and they defined “low value services” as 31 services by various clinical guidelines:

Annals of Internal Medicine

When they looked at who ordered the low-value services, they found that PCPs accounted for a tiny fraction, 14.5%. But since many of the services you see above are not routinely done by PCPs, they looked further and found another 19.8% were performed or ordered by doctors to whom the patient was referred by the PCP, and another 5.6% was done by physicians to whom the patient had been referred by the PCP in the past.

The remaining 60.2% of low-value spending was “for services performed or ordered by a physician to whom the PCP never referred the beneficiary.” That is, almost two-thirds of the low-value spending was by physicians the PCP likely didn’t even know the patient was seeing! It’s possible the patient Googled “chest pain,” or answered a billboard for another service. The data doesn’t say.

This hurts me as a specialist physician. I wonder how many of the 31 low-value care items I’ve over-utilized in my career. Several of the items on the list, from certain thyroid tests to tests of vitamin D and parathyroid hormone, were right down my alley as an endocrine specialist. If it matters, the worst-offending non-primary care specialties for low-value spending were cardiology (27.3%), ambulatory surgical centers (8.9%), internal medicine (7.0%), orthopedic surgery (4.9%), and gastroenterology (4.8%). No endocrinology on that list. Whew!

All this isn’t to say that people don’t benefit from seeing more than one doctor. We’ve reviewed the myriad benefits of second opinions in past posts. But I do think that it reinforces the need for all of us to have a primary care physician directing our care. More than 84 percent of Americans have had contact with a health care professional in the past year, but only about half of those visits were to primary care offices, and only 75% of Americans have a primary care physician, a number that is declining over time.

None of us want to be accused of erecting barriers to good care. But I believe that adopting policies that encourage the use of primary care over, or ahead of, other services will be good for both the health of your employees and the bottom line of your company.

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH.

American Healthcare Primer, Part One: Public Insurance

With the pending transition in Presidential administrations and a historic pandemic killing more than 1,300 Americans daily, we are in for a lot of health care policy talk over the next few months. To refresh our fund of knowledge about American health care, we at KBGH have decided to outline the big features over a series of posts. Much of this comes from Ezekiel Emanuel’s excellent Which Country Has the World’s Best Health Care?

Contrary to popular media, there is no “American Health Care System.” Instead, we have a patchwork of independent and overlapping systems, each with its own problems, bright spots, and idiosyncrasies. This week we’ll cover public insurance.

What do we spend on health care?

The United States spends more than $3.5 trillion annually on health care, equivalent to about 18% of gross domestic product, accounting for almost $11,000 per person. This is roughly double the per-capita average of Organization for Economic Cooperation and Development (OECD) peer countries like Japan and western Europe.

Where does money come from?

Roughly 45% of American health care is publicly financed: 28% federally and 17% by state and local governments. Medicare costs almost $600 billion per year, or 2.9% of gross domestic product (GDP), and covers 55 million senior and disabled Americans. Medicare Part A, covering hospitalizations, is funded by a 1.45% payroll tax from employers along with a 1.45% payroll tax from employees (plus another 0.9% payroll tax for individuals earning >$125,000 or couples earning >$200,000 annually).

Optional Medicare part B, covering physician visits, is financed by income-linked premiums averaging ~$130 per month for people who elect for the coverage. The premium covers ~25% of the cost, and the federal government covers the remaining 75%.

Medicare part C, or “Medicare Advantage,” can charge enrollees additional premiums.

Medicare part D is paid for by premiums paid by elderly beneficiaries and by other general governmental tax revenue.

Medicaid and the Children’s Health Insurance Program (CHIP) collectively cover 65 million mostly poor patients along with certain blind and disabled persons. Some beneficiaries are “dual-eligible,” meaning they are also covered by Medicare. The federal government pays ~57% of the cost of traditional Medicaid as the “Federal Medicaid Assistance Percentage,” while states cover the other ~43%. Medicaid accounts for 1.9% of GDP, or roughly $400 billion per year from the federal government. In many states Medicaid is the single largest fraction of the state budget. In expanded Medicaid under the ACA, in which Kansas does not participate, 90% of the cost is borne by the federal government with 10% borne by the state to cover patients whose income falls up to 138% the federal poverty line.

Kansas uses a “managed” form of Medicaid in which Medicaid is facilitated through third-party payers (Sunflower Health Plan, UnitedHealthcare Community Plan of Kansas, and Aetna Better Health of Kansas).

In Kansas MediKan covers adults with disabilities who do not qualify for Medicaid but whose applications for federal disability are being reviewed by the Social Security Administration. MediKan covers a scope of services similar to that covered by Medicaid, but with additional restrictions and limitations.

CHIP provides health insurance for children whose parents make too much to qualify for Medicaid but whose private health insurance does not allow them to get their children insured. CHIP is not open-ended like Medicaid, but is rather a block grant system varying slightly by state. The federal government pays 72% of the cost up to a year’s maximum allotment, and the State provides the remaining 28%.

The Veterans Health Administration (VA) covers 9 million former military service members. 2.2 million people of Native American descent are insured through the Indian Health Service (IHS). 9.4 million active-duty military and their families are covered through Tricare.

Where does the money go?

About 85% of health care spending is for chronic conditions like diabetes, hypertension, chronic obstructive pulmonary disease, and high cholesterol. About a third of patients with a chronic medical illness also have a comorbid psychiatric disease like depression or anxiety. This is thought to increase the cost of care of those patients by 60% or more.

Hospitals consume about $1.1 trillion, or 33%, of all health care spending

Medicare Part A covers hospitalizations. Hospitalizations are covered according to “Diagnosis-Related Groups” (DRGs), fixed, pre-specified amounts paid according to the diagnosis codes attached to the hospitalization. Medicare’s DRG rates are set by the federal government. Medicare does not negotiate DRG payments; hospitals may take them or leave them. But Medicare does adjust the base DRG rate via special payments to rural and other hospitals, via “Disproportionate Share Hospital” payments to hospitals who provide a large volume of uncompensated care, and via two forms of additional payment to hospitals who provide graduate medical education to resident physicians.

Hospitalizations in Medicaid are covered according to DRGs, with prices set by the states.

The VA owns its own hospitals.

Physician payments consume about $700 billion, or 20%, of all health care spending

American physicians are well-paid: primary care doctors like family physicians, pediatricians, and internists make an average of $223,000 annually, and specialists make an average of $329,000, though that number is inflated by the relatively large salaries of proceduralists like cardiologists and orthopedic surgeons who make roughly five times what peers in other developed countries earn.

Nurse practitioners make an average of $105,000 per year.

Public insurance payments to physicians differ markedly by specialty. Pediatricians make a large fraction of their income from Medicaid, since more than a third of American children are on Medicaid at any given point. Cardiologists, who treat a predominantly elderly population, make the majority of their income from Medicare.

The DRG payment mentioned above does not cover physician costs in either public or private insurance; physician services are billed separately under “Common Procedural Terminology” (CPT) codes. Most ambulatory and inpatient physician payments are still fee-for-service, with “Relative Value Units” (RVUs) converted by each insurer. The purpose of RVUs is to create a common metric to measure physician services based on the time, skill, and intensity of physician work along with practice expenses and malpractice premiums. One RVU via Medicare is worth about $36. After conversion, that $36 becomes about $56 for an office visit and about $77 for a gallbladder surgery (procedural skills are generally more valued than medical skills in the system).

The Relative Value Scale Update Committee (RUC), a 31-physician panel owned and organized by the American Medical Association, assists the Centers for Medicare and Medicaid Services (CMS) with assigning and updating RVUs. The RUC guides ~70% of all physician payment in the United States, equal to an estimated $500 billion each year. Its recommendations are made based on survey results of only about two percent of physicians updated only every 5-20 years, but RUC recommendations are accepted without change by CMS more than 90% of the time.

Physician payments are still mostly fee-for-service with RVUs converted by the federal government, but alternative payments models developed through The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), like capitation, bundled payments, and global budgets, are growing in utilization, currently making up about a third of all payments.

Medicaid physician payments are mostly fee-for-service with an RVU conversion set at the state level, but managed Medicaid providers are experimenting with “capitated” payments, in which a lump sum payment is paid to the physician to encourage reduced overall spending.

The VA and IHS employ their own physicians on salary.

Pharmaceuticals consume about $500 billion, or 17%, of all health care spending.

Drug prices in the United States are 56% higher than in peer European countries and represent our single biggest source of excess health care spending. Americans make up only 4% of the world’s population, but we account for almost 80% of pharmaceutical revenue. Pharma companies point to spending on research and development, but those budgets are dwarfed by advertising budgets. Pharmaceutical and health product manufacturers account for 7.3% of all lobbying money spent in the US, while no other sector accounts for more than five percent. Pharma is by a large margin the most profitable business sector in America.

Of the 17% of the health care budget consumed by drugs, 10% is in the outpatient setting and 7% is in hospitals, nursing homes, or doctors’ offices.

Some drugs, though, are not sold through pharmacies, but through physician offices as part of the “buy-and-bill” system. The most prominent example is cancer chemotherapeutics. Medicare caps physicians at billing six percent higher than the average wholesale price. This incentivizes physicians to use more expensive drugs to generate higher payments.

Medicare part D pays for pharmaceuticals. It is forbidden by law from directly negotiating drug prices, but is allowed do negotiate indirectly through a pharmacy benefit manager (PBM). Pharmacy benefit managers create formularies and negotiate prices in both private insurance and in Medicare. They may limit drug choices in all but six categories: immunosuppressants (as might be used in autoimmune diseases or organ transplants), antidepressants, antipsychotics, seizure medications, HIV medications, and cancer drugs.

Medicaid covers drugs on formularies determined at the state level, usually with a nominal co-payment of a few dollars per prescription.

The VA and IHS, unlike other public health insurers, are free to negotiate their own prices on pharmaceuticals. The VA by law gets at least a 24% discount from the manufacturer’s average retail price outside the federal government. Outpatient drugs are available with a copay of $5 for generics, and many vets are eligible for free prescription medications.

Dental and vision care

Medicare does not cover dental care, but some Medicare Advantage plans do.

Medicaid covers dental care for children. Coverage for adults varies by state.

Long-term care

Medicare covers part of 100 days per illness of long-term “skilled nursing care” as long as the care is triggered by a hospitalization of at least three days related to the illness needing long-term care. Coverage declines from 100% of the first 20 days down to $167/day for the remaining 80 days.

Medicaid is the primary payer for long-term care in the US, covering 62% of nursing home care and 50% of all long-term care nationally. In order for Medicaid to pay, patients must have no more than $2,000 in assets, excluding their car and a home valued up to $552,000; and require assistance with “personal care” like bathing and dressing. Medicaid requires a “look back” of five years to insure that assets have not simply been transferred to others.

What do we get from our health care spend?

Outcomes in Medicare tend to be slightly better than outcomes in private insurance. Outcomes in Medicaid tend to be slightly worse, probably owing to social determinants of health. For example, In commercial HMOs in 2018 the rate of hypertension control was 61.3% and in commercial PPOs 48.8%. Medicare rates of control were 58.9% in HMOs and 68.8% in PPOs. The Medicaid HMO rate of control was 58.9%.

After Thanksgiving we’ll talk about private insurance. Have a great holiday!

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH.

How you can help your employees make decisions

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

Our work at the Kansas Business Group on Health straddles our employer-oriented pursuits and efforts to advance the goals of two grants from the Centers for Disease Control (CDC). One of the goals of our work with the CDC is to increase the number of people being screened for diabetes. For people who are “pre-diabetic,” meaning their blood sugars are higher than normal but not high enough to qualify for a diagnosis of “full-blown diabetes,” our goal is to get them into the Diabetes Prevention Program (DPP), a one-year behavior change program that, through dietary changes and increased physical activity, reduces the risk of progressing to diabetes by 58%.

This is a challenge. Though the DPP is a covered benefit through Medicare, it is not consistently covered by private insurers. And even with coverage, people’s enthusiasm for paying for and completing a program to treat a disease state that is asymptomatic is generally low. So we work with employers to make the DPP a covered benefit. You may have heard from us about this. If not, please contact us. But we also work with clinics on strategies to increase screening for diabetes and to increase patient use of the DPP.

So we were encouraged to see a paper in the Journal of General Internal Medicine this week (paywall) demonstrating a quick way to substantially increase the likelihood of patients agreeing to enter “intensive lifestyle interventions” like the DPP.

The investigators surveyed patients who qualified for the DPP to measure their intention to participate. 70% of patients at baseline said they would be willing to participate. Then the staff members of the health center presented this decision aid to the subjects by reviewing the icons, reading the written information out loud, and briefly discussing the participants’ needs and next steps:

Northwestern University

The backside of the decision aid, which I’m not showing here, contained open-ended questions assessing needs related to the prevention of type 2 diabetes and defining next steps for management. After seeing the decision aid, the participants in the study willing to participate in the DPP rose to 88%, a statistically significant increase.

This is encouraging for a couple of reasons. First, it didn’t matter who presented the decision aid to the participants. Staff members and medical assistants had similar results.

Second, this is the rare tool that has shown such a positive effect. Simply handing out pamphlets to patients repeatedly fails to change behaviors. When we try to induce behavior change through interaction with patients we have a bad habit of falling back on fear: “Quit smoking or you’ll die young.” “Don’t drink pop or you’ll get diabetes.” The trouble with this strategy is that it has almost no effect on complex, long-term behaviors like diet, physical activity, and smoking. Fear might work to convince someone to take an antibiotic for two weeks to keep from dying from pneumonia, for example. But for longer term decisions, we have to exploit people’s senses of autonomy, mastery, and purpose instead, just like we use in designing meaningful work for employees. (If you’re interested in this topic I recommend Drive by Dan Pink.) But those three components don’t lend themselves easily to a quick intervention. Doctors and nurses are trained in motivational interviewing to accomplish complex behavior change, but it requires a trusting relationship and time to work. This study showed that even a brief intervention, delivered both in writing and in person in a few minutes, can have a powerful effect. What if we could harness this strategy for other behaviors, like encouraging mask-wearing for COVID-19 protection?

The DPP, which is available both as an in-person class and via virtual platforms, has been shown to drastically reduce health care costs for employers of people at high risk of diabetes. If you want to know your own company’s potential savings, go to the American Medical Association’s Cost Saving Calculator. Let us know if we can help make this calculation. And if you’re interested in covering the DPP as a benefit to your employees, contact us!

What Are E-Consults, and Why Aren’t We Using Them More?

This is a re-print of commentary from a past Kansas Business Group on Health newsletter.

In the past, doctors routinely engaged in “curbside” consultation, where one doctor stops another one in the hallway or calls her on the phone to ask a question about patient care that he wasn’t quite sure rose to the level of needing an official in-person consultation. This was great for the system: the enquiring doctor got the information needed, and the patient theoretically benefited, all at zero cost. But the consulting, curbsided physician was not rewarded for her expertise. Enter “e-consults.”

With e-consults the inquiring physician, instead of paging or stopping the other doc, puts the question into a written format, usually through a secure online portal. Then the consulting doc can submit a written answer for a nominal fee. [disclosure: Justin Moore is an endocrine consultant for RubiconMD, an e-consult service]

This monetization of the curbside consultation has benefits: It keeps the care of the patient centered around his relationship with the primary care provider instead of fragmenting his care. It keeps the stakes low; if the primary care doc has chosen the wrong specialist by mistake, or asked a question that has little value, no one tends to be charged for the trouble. In the traditional system of consultation up to 40% of specialist referrals lack either medical necessity, correct specialist choice, or timely transmission of relevant documents. Finally, e-consults can be had immediately, often same-day. In the traditional system our most vulnerable patients, such as those cared for in Federally Qualified Health Centers (FQHCs), only 40% of intended specialist consults are ever scheduled, and there is a 40% no-show rate in those that are successfully scheduled.

This all translates to a $500 annual per-patient savings in one randomized trial of cardiology patients. Medicare even covers asynchronous consults like this now. So if your health plan doesn’t currently cover e-consults, consider a change in your benefits.

No one is padding numbers to increase COVID-19 case counts

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

I’ve heard a few times over the past couple weeks that hospitals are padding their case counts of COVID-19 patients in order to increase revenue. This is transparently, obviously false, as we’ll get into later. But before we wade into that, let’s take this chance for a quick review of how hospitals and doctors get paid for the care of patients.

The history and process for how physicians are paid

Once upon a time, billing for medical care was very informal. Hospitals and doctors largely set individual, almost artisanal, rates for each patient according to a “sliding scale” of what the patient was expected to be able to pay. Poor patients paid less, and wealthier patients paid more.

Once medical insurance became common, insurance companies, including Medicare, attempted to hold physicians and hospitals to the standard of  “customary, prevailing, and reasonable charges.” Unsurprisingly, this loose standard led to steadily inflated billing, so much so that the passage of Medicare is arguably what vaulted physicians from middle-class professionals into the upper reaches of national income. As early as 1970, congressional testimony referred to federal insurance as the “Goose that laid the golden egg” for physicians and hospitals.

Through a series of reforms in the 1970s, ‘80s, and ‘90s, billing for medical care became much more standardized (and in part led to the administrative bloat that is now the number one source of waste in American health care). Nearly every diagnostic or therapeutic procedure performed by a medical professional is now captured by a “Current Procedural Terminology” (CPT) code. For example, your dermatologist codes a “2029F” for a skin exam. A cardiothoracic surgeon codes a “33945” for a heart transplant. A routine, but fairly comprehensive new visit to a primary care doctor is coded a “99204.” All these codes are reimbursed according to the complexity of the task, taking into account the amount of time a procedure is expected to take, the amount of resources like syringes and protective equipment expected to be consumed, and the skill or level of training required to provide the service.

Hospitals themselves bill not according to CPT codes, but rather according to Diagnosis related groups (DRGs), which were introduced in the 1980s. DRGs are meant to make sure that reimbursement account for the severity and mix of the type of patients the hospital treats, and thus the resources that the hospital needs to treat those patients. For example, someone who presented with fever, cough, and a density on their chest x-ray, and who tested positive for COVID-19, would be coded a discharge diagnosis of “J12.81” for “pneumonia due to SARS-related coronavirus.” If that same patient needed ventilator support during her hospitalization, though, she would be coded “J96.01” for “Acute respiratory failure with hypoxia,” which pays in the ballpark of $54,000 (about three times as much as a COVID-related diagnosis). The additional payment is meant to pay for the increased duration of the visit and the increased intensity of treatment, since patients on ventilators are typically cared for by a single, specialized nurse, a respiratory therapist, a pulmonary physician, and others.

Our healthcare system has some inherent issues

The purpose of this post is not to defend current medical coding and billing. Our system is bizarre by almost any developed country’s standard. Take the way payment is determined for those CPT codes. The American Medical Association owns the Relative Value Scale Update Committee, or “RUC,” which is tasked with updating physician payment for those roughly 4,000 CPT codes. The RUC is powerful. It ultimately guides about 70% of all physician payment in the United States. Most of its 31 members are assigned by professional societies like the American College of Radiology and the American Society of Plastic Surgeons. Therefore, primary care doctors, the most cost-effective and crucial part of the health care workforce, make up only a tiny fraction of the committee. So the natural momentum of the committee is to steadily increase the payment for specialty care, while keeping reimbursement for routine care relatively flat. And the committee arguably works with faulty data. RUC recommendations are based on survey results of only about 2% of physicians, updated only every 5-20 years. Perhaps because of this, estimates of the time it takes to complete a given procedure—a vital component in calculating the complexity of care—are notoriously inaccurate.

In spite of these limitations, RUC recommendations are accepted without change by CMS more than 90% of the time, and commercial insurers largely base their payments on a multiple of the CMS charge as a baseline for negotiations with individual health systems.

Even though doctors can largely set their own rates without competition or pushback, they don’t get off scot-free. Because coding of routine visits is tied directly to the “complexity” of the patient, documentation requirements dictate that the average physician note in the U.S. is four times the length (paywall) of notes in peer countries. This is why you may have found notes from your doctor so long, repetitive, and bewildering. To make this worse, the advent of electronic health records has led to “chart bloat,” a phenomenon in which notes, thanks to cut-and-paste and other features, lead to an illusion of complexity and thus increased charges.

DRG rates, at least, are set by a slightly more predictable, scientific method. This isn’t to say that some gamesmanship doesn’t go into hospital billing; every physician in America has been coached on billing for the exact level of sickness of her patients at some point in her career.  The words, “Don’t bill a uroseptic patient for a simple UTI” still ring in my ears from residency.

So does this mean the number of COVID-19 cases are being inflated?

In spite of these faults, there is no evidence that we’re over-attributing illness to COVID-19. We are still under-testing compared to most of our peer countries, and this is reflected in the mortality data we’re seeing.  The “background” mortality rate in America is about 2.8 million deaths per year, with a little more than half of those deaths from cardiovascular disease and cancer. Deaths are seasonal and pretty steady year-over-year. But right now we’re seeing an excess mortality rate that is roughly double what COVID-19 accounts for. That is, only about half of observed excess premature deaths are in people diagnosed with COVID-19. So if anything, we are under-attributing deaths to COVID-19. After all, a patient who dies of a heart attack brought on by low oxygen levels and sticky blood due to an undiagnosed case of COVID-19 was still killed by COVID-19.

What about those increased payments for COVID-19 patients? It is true that hospitals make about 20% more for a patient infected with SARS-CoV-2. This is the result of the $100 billion slice of the federal stimulus passed in March that is allocated to hospitals. Why did hospitals get their own cut? Because volumes in hospitals are down by more than half as elective procedures like hip replacements and cardiac catheterizations—the lifeblood of hospital systems, for better or for worse—have been delayed or cancelled. Here is Harvard data on ambulatory visit volume through mid-April:

As a result, health care jobs—long considered “recession-proof,” are going away. Almost 43,000 health care jobs were lost in March alone. Health care is such a giant part of the American economy—a stunning $3.5 trillion per year, good for almost a fifth of gross domestic product, again, for better or for worse—that this reduction in health service delivery is thought to account for about half of our current loss of GDP. That’s why you hear our current financial predicament being referred to as a “health care-led recession.”

So if COVID-19 is a huge conspiracy to allow doctors, nurses, and hospitals to make extra money, it isn’t a very good one. 

COVID-19 is changing telemedicine for the better

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

I’m typing this while on voluntary quarantine at the recommendation of the Kansas Department of Health and Environment because of a recent trip to Orange County, Florida. But like many of you, I’m managing to stay busy at home. One of the things I’m doing is providing “peer-to-peer” consultation to other doctors through a platform called RubiconMD [disclaimer: they pay me for the work, but not for advertising or testimony]. Doctors who subscribe to RubiconMD can forward me labs, imaging, and chart notes for patients with tricky hormonal and metabolic problems, and I type a recommendation back to them, potentially saving the trouble and expense of an in-person visit. These so-called “store-and-forward consults,” or “e-consults,” are one form of telemedicine, and they have proven effective enough–saving ~$500 per patient per year in one study–that they are now covered by Medicare.

The more well-known form of telemedicine in which practitioners and patients interact through a screen is referred to as “real-time” telemedicine. Other than the fact that the patient connects to the practitioner through a secure internet platform, telemedicine visits look a lot like traditional in-person medical visits: someone on the patient’s end (the “originating site,” in telemedicine parlance) collects vital signs, the doctor or other practitioner conducts an interview and, with the help of the ubiquitous high-resolution cameras on modern devices and a few on-site gadgets, performs a physical examination. Then the practitioner bills for the encounter as she would any other visit, albeit with a modifier attached to the billing to indicate that the visit was done remotely.

The average patient seen in-person at a physician office spends 121 minutes on the visit: 37 minutes traveling, 64 minutes waiting, and 20 minutes with the doctor. So if you think the idea of skipping the waiting line (not to mention all the coughing and touching) at your doctor’s office is attractive, you’re not alone. Telemedicine visits have a roughly 90% patient satisfaction rate. Kaiser Permanente has seen more patients via telemedicine than in-person since 2017. Local telehealth provider Freestate Healthcare and national providers Access Physicians and Eagle Telemedicine, among others, provide remote physician services at several rural hospitals with no doctors physically on site. In our work with CDC grants around diabetes prevention, we are running a trial of Omada, a virtual diabetes prevention program, to reduce the risk of high-risk patients developing diabetes. More than half of medical schools now offer required or elective training in telehealth to improve trainees’ “webside manner.”

And telemedicine has a growing body of evidence to support its use beyond reduced wait times and patient satisfaction. The Veterans Administration has found that telemedicine use corresponds to a 59% reduction in inpatient bed days and a 31% reduction in hospital admissions.

In spite of this rosy picture, the growth of telemedicine has been slowed by a regulatory system that is not designed for rapid change. Medicare, for example, has historically enforced a “site of service” requirement for telemedicine, meaning that patients seen via telemedicine still needed to travel to a hospital or doctor’s office to get linked to the distant telemedicine practitioner. Medicare has also mandated that patients must be located in a “health professional shortage area,” meaning that patients in areas with more physicians were ineligible to receive care via telemedicine, even if it was difficult for them to travel, and even if they had a highly communicable disease. Laws have mandated that the treating physician be licensed in the state where the patient was located, meaning a doctor licensed only in Kansas couldn’t historically see a patient in Oklahoma. And federal regulators have long restricted the technology that can be used for the interface. You couldn’t simply Skype or FaceTime your doctor, since those platforms were not compliant with the Health Insurance Portability and Accountability Act (HIPAA). This is not, on its face, an unreasonable policy; health data is valuable, so it is not hard to imagine it being the target of hackers.

There has been movement on this in the last year. Medicare Advantage plans began covering telemedicine visits from home earlier this year. But the current coronavirus pandemic is forcing faster changes, probably for the better. This week Centers for Medicare and Medicaid Services (CMS) suspended site-of-service requirements and state licensure requirements for telemedicine, and the Office for Civil Rights at Health and Human Services (HHS) announced that it would waive potential penalties for using lower-security forms of video communication for telemedicine. That is, any live video chat software is acceptable for now. This means that, at least in the short term, you can Skype or FaceTime your doctor (although we still recommend a more secure platform if your doctor can offer one). And you can do it from home. This policy is extending to other insurance carriers as well. I called Aetna, who informed me that they are allowing all visits (with the usual rules on copays and deductibles) to be performed via telemedicine for the next 90 days.

...once people get a taste of life with more easy access to telemedicine, I can’t imagine them going back.

If you or your company want to seek out such secure platforms, encourage patients to talk to their doctors about starting telemedicine visits. We at the Kansas Business Group on Health believe that care continuity is important. Urgent care centers and emergency departments have an important role to play, but encouraging patients to see their own doctors, rather than unaffiliated urgent care practitioners or cash-only telemedicine companies like Teledoc, is good for patients’ care and good for your bottom line. Freestate, Zoom, Doxy, VSee, and many other HIPAA compliant platforms are available to your employees’ doctors. They should consider asking specifically about any platform’s use of business associate agreements (BAAs) to certify there are safeguards against data breaches. Even though FaceTime is now technically allowed to be used as a telemedicine platform, for example, Apple will not sign a BAA. But Skype for Business, again for example, will.

I guess if you are the type of person who tries to find the bright side of things, this blog post is for you. This is just one way that COVID-19 is going to change medicine long-term. For the next few months, telemedicine access will become what its proponents have advocated for for years: a broad-based, broadly covered service that can be provided in the patient’s home on widely available, inexpensive software platforms. This is important not only in the context of a worldwide viral pandemic. It is important because once people get a taste of life with more easy access to telemedicine, I can’t imagine them going back.

Should Specialists Be Paid Fee-For-Service?

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

How did the fee-for-service model originate?

Once upon a time, legends say, if you could not afford to pay your doctor cash, you could pay him with commodities like grain, chickens, Brussels sprouts, or milk. Whatever goods or currency were exchanged, we called this model “fee for service.” For decades it has been the dominant model in American medicine, and it defines the patient-doctor interaction as fundamentally transactional: the doctor gets something in return for the advice/diagnostics/prescription/procedure she provides you. So historically the way to increase your income as a doctor was to simply increase volume: the more patients you saw, the more money you made.

Quality was generally measured, if at all, by the likelihood of a patient returning to see the doctor. In cases of possible patient harm, doctors tried to hold one another accountable by reviewing peers’ cases and participating in meetings such as “Morbidity and Mortality” (M & M) conferences to catch obvious errors. Working within a model that so rewarded quantity of care over quality of care, it comes as no surprise that doctors may miss half of indicated care, and that somewhere between a fifth and a third of the care that doctors provide may not be indicated at all.

A move towards quality over quantity

We are gradually moving away from “fee for service.” With the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), a rare bipartisan bill, doctors can earn significant bonuses or incur significant penalties from Medicare by meeting or failing to meet certain benchmarks of quality of care.

We’ve long experimented with capitated Medicare Advantage plans that seek to incentivize private insurers to find cost savings and quality opportunities. And around half of payments from private insurers are now thought to be tied to some degree of value-based payment, or “pay for performance.” The goal of this change is to incentivize not just quantity of care, but quality as well.

We’ve even seen a modest rise in doctors operating outside the insurance system in so-called “Direct Primary Care” practices. These doctors ask for a modest recurring fee—usually $50-$100 per month—in exchange for unlimited access, with the underlying assumption that by limiting their patient panels (in part by eliminating administrative overhead), quality will inherently rise.

Should specialists be paid fee-for-service?

It was in this line of thinking that investigators recently undertook an examination of costs associated with specialty care in Canada. Canadian specialist physicians seeing patients with diabetes and chronic kidney disease can be paid under an American-style fee for service system, or they can be salaried with potential benefits tied to the quality of care they provide. *Disclosure: Justin Moore, MD, is a diabetes specialist by training*

Researchers compared the costs and quality of care associated with each one, and the results were surprising: diabetic patients were 12% more likely to have a hospital admission or an emergency department visit for a diabetes-related condition if they were seen by a salaried physician rather than a fee-for-service physician, although the difference was not quite statistically significant (1.63 admissions or visits per 1000 patient-days in salaried docs vs 1.47 in fee-for-service docs).

A lazy interpretation of this might lead you to believe that the salaried physicians, having their paycheck guaranteed, simply didn’t see the patients in clinic frequently enough. But the researchers actually found the opposite: patients seen by salaried docs had 13% higher rates of follow-up visits and procedures (and their associated costs) than the fee-for-service docs, although again, the numbers didn’t quite reach statistical significance (1.74 visits per 1000 patient-days in the salaried docs vs 1.54 visits in the fee-for-service docs).

From this data–admittedly in a Canadian system that differs in many important ways from our own–editorialists concluded that “It would appear that salary-based payment does not have the same association with reduced quantity of care provided for specialist physicians who treat chronic diseases as it does in some primary care settings.”

The lesson to be taken from this study seems to be, as it so often is, that we should proceed with caution. While primary care may be in some ways best delivered in a salaried model, for now a fee-for-service payment model may remain preferable in specialty care. When designing your benefits, or when thinking of innovative ways to contain costs in your high-utilizing employees, this might be worth keeping in mind.